Impact of Attack at Saudi Arabia Oil Supply Facilities on Singapore’s Economy

Mr Leon Perera asked the Minister for Trade and Industry with regard to the recent attack on Saudi Arabia's oil production facilities (a) what has been the impact on Singapore's oil imports from Saudi Arabia; (b) whether oil prices are expected to rise and impact inflation as a result of these attacks and their aftermath; and (c) what is being done to manage the risk of rising oil prices.

In the immediate aftermath of the 14 September 2019 attacks on Saudi Arabia’s oil infrastructure, the benchmark Brent crude oil price surged from US$60 to US$71 per barrel. However, it retreated when Saudi Arabia and the US pledged to maintain a steady supply of oil, and has since stabilised at around US$59 per barrel. For 2019 as a whole, the Brent oil price is projected to average US$63 per barrel, lower than the US$71 per barrel in 2018.

Given that global oil prices have stabilised and oil production capacity in Saudi Arabia has returned to normal, MTI's assessment is that the impact on the Singapore economy is likely to be limited. First, our oil supply remained sufficient throughout the period of outage. Second, the impact on consumer prices is likely to be small.

However, this incident is a useful reminder to us about the importance of energy security, especially given on-going tensions in the Middle East. This is particularly pertinent to Singapore as we import almost all our energy.

The Government adopts several strategies to secure our energy supply and keep energy prices competitive. First, we ensure resilience in our energy supply by diversifying our sources of crude oil and gas. We encourage our oil and gas traders to import from multiple sources, while our oil refineries leverage their global resources and supply chains, as well as the wider oil trading eco-system, to ensure a continuous supply of crude oil if there is a disruption in any supply source.

Second, while electricity prices in Singapore cannot be insulated from global energy price movements, Singaporeans can enjoy competitive electricity prices because we continue to promote competition in our electricity market. The Open Electricity Market (OEM) is one such initiative to give households and small businesses more choices of retailers to buy electricity from. Since we launched the OEM in May this year, households and small businesses have reported savings of about 20% to 30% on their electricity bills.

I would like to thank the Senior Minister of State for the answer. I only have one supplementary question. As the Senior Minister of State had noticed, when oil prices abroad rise, it is usually symmetrical. When oil prices rise, prices at the petrol kiosks rise as well. But my question is related to the Senior Minister of State's first point, in terms of our strategy to search for alternative sources of energy. Can MTI share what are our plans in terms alternative energy sources for Singapore, going forward? My concern is that the incidence of such things happening in the Middle East may intensify or increase, particularly from drone attacks and possibly from geopolitical tensions arising out of the Middle East as well.

Mr Speaker, I can re-assure the Member that our oil trading eco-system is pretty well diversified. Our traders have sourced for oil not just from the Middle East, but places in the US as well. So, I think the diversification is a robust strategy to make sure that we are not threatened by a single source, where there may be problems that occur with that supply.

In terms of electricity, the generation comes largely from gas – whether it is piped or Liquefied Natural gas (LNG). So, in terms of electricity supply, that ensures our needs. That is something that we can be well assured about. With the diversified sources of LNG, where we can source from different places, our electricity supply is well take care of.

Sir, I would like to ask the Senior Minister of State, since the introduction of electricity market contestability, especially for households, what percentage of households has elected for alternatives other than Singapore Power (SP)?

Mr Speaker, this is something that changes from month to month, but on average, it is about 18% to 20% of the households have chosen to switch. Of course, over time, more households may come on. I do not have the updated number as of this moment, but we do see that there are fluctuations from month to month.