Global energy giant ExxonMobil of the United States is one of the oldest American companies operating in Singapore, and as the city-state grows from strength to strength, Chairman & Managing Director Gan Seow Kee reveals his firm’s plans to go along for the exciting ride.
What do you think about the potential of ASEAN and what does it mean for the future, specifically for international businesses?
In a single word, it would be "growth". ASEAN is one of the growth engines in Asia Pacific, together with China and India. For us, ASEAN, along with China and India, is an important growth market, with a rapidly growing middle class in this part of the world. That has created a tremendous potential for many industry players, including ourselves – both as a supplier of reliable and affordable energy and as a provider of solutions to consumers and to manufacturers of high-performance products and consumer goods. Some of these products from our manufacturing process go into the plastics that make your mobile phones, as well as lighter cars which are more energy efficient.
Singapore has been working with international companies for a long time, but it is facing increased competition from other manufacturing hubs such as Thailand, Indonesia or even Malaysia. We see that Singapore, as a means to remain competitive towards the economy, is undergoing transformation as a result of the CFE and the implementation of the 23 ITMs. One ITM is directly programmed for the energy and chemical sector. This is your 125th year in Singapore. How important is this constant evolution that Singapore is going through and what are the expectations of the impact in your particular business?
First of all, we have been actively engaged from the build-up to the development of the CFE report, as well as the ongoing monitoring and implementation of the manufacturing-related ITMs through the CFE's sub-committees that have been formed. We are working very closely with the government and with other industry players.
We are most engaged in the energy and chemicals ITM, since itis the one that impacts us the most. We have participated in that, and are contributing to theprogress of all the key areas that have been identified inthe energy and chemicals ITM; digital manufacturing, energy-related research& development, and human capital development. All these relate to the theme of transformation, with all the technology, advancement and changes that are going on for Singapore to remain relevant. And for our business in Singapore to remain relevant, we too need to transform.
We have been progressing several initiatives at our manufacturing complex towards digital manufacturing, and this has contributed toimproved safety, reliability and productivity. We are also increasingly deploying data analytics to help us optimize our operations; our maintenance as well as our supply chain, to help us better understand our customers’ andmarkets. In the digital area, we are in the midst of deploying a whole slew of initiatives, and this is in line with the digital manufacturing part of the energy and chemicals ITM.
On R&D for energy, we announced, late last year, our first energy center partnership outside of the U.S. in Singapore with the two main universities herewhich are engaged in technology - the Nanyang Technological University and the National University of Singapore. This Singapore Energy Center will be led by the two universities. We are the founding member, and we will provide certain sponsorships as well as link-ups to our researchers within ExxonMobil. This center will focus on advancing cutting-edge technologies in several areas related to energy – increasing energy production, including from non-traditional sources, improving energy efficiency, and emission reduction measures to mitigate the risks of climate change. It’s a whole slew of R&D areas related to the energy platform and sustainability.Later this year, we will announce more specific details, including the areas that we are working on and the structure of the governance board.
This complements a lot of the technology work that we do in-house in ExxonMobil. For example, Singapore is the location where we have first-time deployment of new ExxonMobil proprietary technology into the manufacturing processes of our site here. We are in the investment planning and development stage for deploying more of that technology to enable us to produce cleaner, higher-value products in a more sustainable manner.
The other third important leg of the energy and chemicals ITM is human capital development. Nothing will happen if you don’t have the people to manage this and deploy the latest technology. In this regard, ExxonMobil has been involved in various SkillsFuture initiatives, such as working with the government, and the institutes of higher education here likethe polytechnicsand universities. We are also engaged in exploring how we can better prepare students to transition from school to industry, especiallyin an environment of fast-changing technology. How do you make education relevant and how do you set up a process through which there is continuing lifelong education? We support this because we are one of the larger employers of STEM talent in Singapore. Thus, it is in our interest to make sure that Singapore, which already has a very good educational system, continues to produce the talent to help us resource our growth plans here.
Singapore is also competitive in chemicals because of its strategic location. As the journey of ExxonMobil evolves, what role does location play for you within your global operation today?
It’s quite remarkable that Singapore has become one of the global centers for petrochemical and chemical production, considering that there are no indigenous raw materials and not much of a domestic market here. We are thrilled at ExxonMobil to be part of this journey, witnessing it and to be one of the factors that caused this growth. The location is a big plus, especially when you are starting up.
Singapore is well-positioned to serve the growing demand in the region. Sound long-term oriented fiscal policies, a stable regulatory environment, a strong education system that produces a pipeline of good talent, and a business-friendly environment are some of the key drivers.
Singapore continues to invest in the supporting infrastructure and facilities to meet the needs of a very dynamic petrochemical industry. For example, the whole Jurong Island ecosystem is a plus, because of the co-location and the concentration of different players in the value chain on one island which never existed before. There is also the presence of well-developed supporting businesses, such as financial institutions, shipping and logistics companies, and a thriving trading center.The commercial side is also important to support the manufacturing investments and businesses.
You have been increasing your investments in Singapore with new plants and facilities. Can you tell us the reasons behind this increase in investment, and what do you believe the future for ExxonMobil is in Singapore and in the region?
Fundamentally, we are optimistic about Singapore's long-term prospects, and the growth opportunities in the Asia Pacific region that underpinsouroptimism. We take a long-term view of the business, our investments are large and there is a long return recovery cycle to it. By choosing Singapore to be our hub for this part of the world, we fully intend to grow with Singapore and the region. One of the trends that we have seenthat has led to our investments, is moving up the value chain. Most of our investments in recent years have been in the high technology, high value-add specialty chemicals and lubricants areas - that is where we can deploy our proprietary technology to have competitive advantage in the marketplace. That’s also where the demand for the kind of products that we make will increase with the growing middle class.
In June 2018, we announced the commencement of production from a very large investment that we made in butyl rubber and resins. There are a few plants that we have which are the largest of its kind in the world, and resin is one of them. We are also now the largest aromatics producer in a single location.
The same month, we also announced that we are progressing plans on a multi-billion dollar investment in Singapore, to upgrade our product mix into cleaner, higher-value products and to enhance our lubricants base stock manufacturing position here. We will make our final investment decision in 2019.
There is also an advantage of scale when you grow to a certain size.The incremental investments you make will be more competitive than those who are making grassroots, greenfield type of investments, especially in the highervalue-add specialty product ends of the business where you already have base operationsthat can produce feedstock to make the higher value-added products.
Whether we are talking about energy efficiency or social development, there is a lot of pressure for big companies to make a positive impact in the world. How do you incorporate the concept of sustainability within your day-to-day operation? Would you share some examples of initiatives which are important to you?
Sustainability is very important to us; we have been in this journey for a long time. It has become more fashionable to talk about it lately. Our operations in Singapore can be divided into two areas; one is about running our manufacturing complex itself. Over the years, we have invested in and continue to deploy a whole suite of technologies to improve energy efficiency, to reduce emissions and strengthen our overall environmental performance. Apart from carbon emission, there are other emissions that we take care of like particulates and sulfur dioxide. We have managed to improve our energy efficiency atour refinery andpetrochemical plants significantly over the past decade. Part of it is the disciplinein the operations process, beingdiligentin ensuring you minimize steam leaks, and carry out good maintenance programs.
We have also invested significantly. Over the years, we invested in three large-scale cogeneration plants, and our total capacity is over 440 megawatts, which is quite significant for one site. We are now approximately self-sufficient in electricity requirement from our cogeneration units, which can generate steam and produce electricity at the same time. Weare able to makesteam and electricity for our manufacturing processes in a more energy efficient and lower-carbon emission manner.
The other aspects of sustainability are in the products that we make. For example, we have deployed technology to make products that help our customers and consumersimprove their energy efficiency and reduce their emissions. Some of the examples would be lighter weight and more durable thin-film plastics that go into packagingfood products which reduces wastage. For customers who have to transport their goods over long distances, the lighter and more durable packaging materials reduce their energy costs when they distribute their products.
The other area is our production of high-tech, synthetic, butyl rubber; for example, for use in car tires to improve energy efficiency for motorists. Our products also go into the car parts that are more durable and lighter. Fuel efficiency for cars has improved a lot over the years. Actually, a lot of the efficiency has not come from the engine itself but fromcars becoming lighter and being still as safe, if not safer. Some of the products that we make go into the car part components that replace metal which is heavier, and also the whole process to get the metal into the car ismore energy intensive. These are some of the ways which our products help in the whole sustainability equation, not only in our operations but also in our customer’s operations.
Does the public realize how important that process is, and that it is not just about renewable energy?
These do not get a lot of headlines, but are effective in improving energy efficiency and reducing carbon emissions.
We are very much in the renewable energy space, from a research and early deployment standpoint. For example, using algae for biofuels, and a process for carbon capture and reuse in powergeneration that we have announced a breakthrough, and are now piloting on a commercial scale at one of the powerplants in the U.S.
Our approach to the renewable energy space is by participating where we can add value, based on our strengths in technology and business know-how.
Could you share some thoughts about wind energy?
We hope wind energy takes off in a big way, as we are one of the largest suppliers of lubricants to the wind mills. This is where technology comes into play, because you don’t want to haveto make frequent oil changes in wind farms, especially those big farms in offshore locations. We are very active in the lubricant business.Through our research and technology, we are able to develop and deploy high-quality lubricants that can operate well under a wide range of extreme weather conditions, and thatis lasting to minimize the frequency of oil changes.
ExxonMobil is the second-oldest American investor here in Singapore and the largest one. In Singapore, you sell, you produce and develop some of your technology. Do you have a final statement for the American audience as the chairman of ExxonMobil Asia Pacific?
We have a very remarkable, long journey and history here in Singapore -this is our 125th year. We started in 1893 with a handful of people selling kerosene for home lighting, andtoday we have over 4,000 employees here. We have invested more than 25 billion Singapore dollars here.
The theme of growth is important, and we are well-positionedhere to participate in this growth. Another is having an open and fair rules-based trade system, not only for goods but also for investments. ExxonMobil is a global business, and having an open, rules-based free trade system is critical for our ability to compete in the global marketplace.