No drastic energy measures yet for Singapore due to long-term strategy; more steps needed if crisis is prolonged: Shanmugam
Singaporeans should also be prepared for some disruption to food supply due to the Middle East conflict and exercise flexibility in choosing alternatives, said the Coordinating Minister for National Security.
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SINGAPORE: Singapore has not had to take more drastic measures seen in neighbouring countries amid the Middle East conflict, but may need to take further steps if the crisis is prolonged, said Coordinating Minister for National Security K Shanmugam on Tuesday (Apr 7).
He noted in parliament that while several countries have taken steps such as implementing export restrictions on fuel or fuel rationing measures since the Middle East conflict began, Singapore does not see a need to do so for now.
“The position we put ourselves in before the crisis, and the steps we have taken since the crisis, have helped us remain relatively stable,” said Mr Shanmugam, who chairs the Homefront Crisis Ministerial Committee.
“Nevertheless, if the supply disruptions increase, and if more suppliers are unable to supply fuel or gas, then potential disruptions to our domestic energy and electricity supply cannot be ruled out.”
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That, however, remains a low-probability scenario for now, and the government is continuing to monitor developments closely, said Mr Shanmugam, who is also Home Affairs Minister.
Mr Shanmugam was the third Cabinet minister to deliver a ministerial statement on the impact of the conflict in the Middle East and Singapore's response to it on Tuesday. His speech followed that of Deputy Prime Minister Gan Kim Yong and Acting Transport Minister Jeffrey Siow.
In his speech, Mr Shanmugam also emphasised the security of Singapore’s food supply, noting that Singaporeans should be prepared for some food items from some countries not to be available and to “exercise flexibility in choosing alternatives”.
Earlier, Mr Gan said in his speech that as a small and highly open economy, Singapore will not be able to insulate itself completely from the crisis.
He said the government recognises that the impact will be felt by households and businesses, and will do what is necessary to support them. He also called for everyone to do their part to conserve energy, so that Singapore can weather this crisis and emerge stronger from it.
DELIBERATE LONG-TERM ENERGY STRATEGY
For now, Singapore has not tapped its fuel reserves nor implemented fuel rationing in the ongoing crisis, said Mr Shanmugam.
Nevertheless, it is planning to increase its fuel reserves, in a move that he said “will be costly but we think it necessary”.
The country’s fuel reserves comprise a mix of natural gas and diesel, owned either by the government or by power generation companies, he said.
Power generation companies here also have pre-arranged contractual access to additional fuel, which suppliers are required to deliver within a set number of days upon activation, said Mr Shanmugam.
“We are prepared, if necessary, to direct the power generation companies to exercise their legal rights to secure the additional fuel,” he said, adding, however, that some of the additional fuel itself may be subject to supply disruption abroad.
Singapore’s energy and fuel resilience is part of a "deliberate long-term strategy”, which includes building up its capabilities as the world’s third-largest oil trading hub and sixth-largest refinery export hub over decades, said Mr Shanmugam.
“Because of this, we are deeply connected to global energy flows of energy. That gives us access to diverse sources of energy and fuel supplies. So we are able to respond to disruptions more flexibly and we continue so far to have access to crude oil,” he said.
However, there is uncertainty over how long the global disruptions will last, he said.
Mr Shanmugam said that oil prices are likely to remain high even after hostilities cease, due to damage to infrastructure in the Middle East which would take time to repair, such as large oil facilities in places like Saudi Arabia and Bahrain.
Even if the Strait of Hormuz fully reopens tomorrow, global oil and gas export capacity will not return to pre-conflict levels quickly, he said.
“In the longer-term, we are concerned about broader disruptions to global supply chains which can affect goods critical to Singapore’s economy and essential services,” said Mr Shanmugam.
Singapore has secured crude oil supplies from alternative sources, but at prevailing prices which are “much higher”, he said.
Singaporeans are also feeling the impact downstream through higher prices, noted Mr Shanmugam.
“If the conflict is prolonged, then we have to expect much sharper increases in electricity prices,” he said.
Singapore remains committed to decarbonising its economy, but energy security remains the immediate global priority, with fossil fuels still part of the mix, he added.
He added that Singapore will continue its role as a refining hub while improving efficiency and exploring alternative sources like nuclear energy, which requires careful study and strong technical expertise.
ALTERNATIVE FOOD CHOICES
Singaporeans should also be prepared for supplies of some foods from some countries not to be available, as only essential food types are part of the national stockpiles, said Mr Shanmugam.
He said Singapore's strategic food stockpiles will help mitigate the impact of any unforeseen supply disruptions. At the same time, the government is relooking and strengthening supply chains.
Mr Shanmugam said the government's primary concern is with inflationary pressures on food products.
"Natural gas is a key feedstock for fertilisers. With disruptions to gas supply, fertiliser prices will go up. Food crops and animal feed will therefore cost more, and the prices of our imported food products will rise. As fuel costs go up, it will also cost more to transport and store food products," he said.
Singapore has sufficient buffers and contingency plans in place, and these arrangements are regularly reviewed and strengthened to ensure they are robust, he added.
He declined to disclose the extent of national fuel reserves and food stockpiles, saying this was government policy and a deliberate choice.
"Disclosing such details would reveal where our limits lie, and that could be used against Singapore in times of crisis," he said.
The Homefront Crisis Ministerial Committee, which was stood up a few weeks ago, has been looking at a broad range of issues, said Mr Shanmugam.
Aside from energy and food resilience, it has also looked at resilience for other essentials, domestic and external security developments, support measures for Singaporeans and public communications, and foreign affairs and diplomatic relations.
Mr Shanmugan said that the committee will continue to closely monitor the situation and that the government will respond as a whole-of-government to take care of Singapore and Singaporeans.
“We will work together to get through the crisis and emerge stronger as we always have,” said Mr Shanmugam.
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