Ministerial Statement on the impact of the Middle East situation on Singapore – Speech by Mr K Shanmugam, Coordinating Minister for National Security and Minister for Home Affairs

Introduction

1. Thank you, Sir. Mr Speaker, as the Prime Minister said last Thursday, we stood-up the HCMC, which is the Homefront Crisis Ministerial Committee, soon after hostilities started.

2. At the civil service level, there is the Homefront Crisis Executive Group, or HCEG.

3. The HCEG coordinates across government agencies, to anticipate potential emergency scenarios, ensure the necessary contingency plans are prepared, and respond to the impact of any homefront crisis or emergency.

4. The HCEG reports to and receives directions from the HCMC.

5. The HCMC is a structure that was formalised after the SARS outbreak in 2003.

6. Its role was set out and explained in Parliament in 2004 by then-Minister for Home Affairs Mr Wong Kan Seng.

7. Structurally and organisationally, from the time it was set up, the Minister for Home Affairs has been designated as the chair of the HCMC.

8. The PM asked that the HCMC be stood up some weeks ago to deal with the current crisis.

9. DPM Gan is the Advisor to this HCMC.

10. The key Ministries, and their Ministers, all play an important role.

11. We have also brought in newer office holders to complement the team.

12. They will bring additional perspectives as they deal with specific issues related to the ongoing situation.

13. With your permission, Mr Speaker, may I ask the Clerks to distribute Annex A, which shows the composition of this HCMC. Members may also access these materials through the MP@SGPARL App.

14. There are 13 members in this HCMC, and their names are in the Annex.

15. Over the past month, both the HCMC and the HCEG have met several times.

16. The HCMC has been looking at a broad range of issues, including:

(a) Energy and food resilience, including supply chain resilience;

(b) Resilience for other essentials;

(c) Security developments, both domestic and external;

(d) Support measures for Singaporeans and public communications; and

(e) Foreign affairs and our diplomatic relations.

17. In response to the heightened threat environment, from the security perspective, we have put in place additional measures:

(a) ICA has increased security checks at our checkpoints upon the escalation of the conflict.

(b) Police have also stepped up patrols at areas of concern.

18. We also activated contingency plans to repatriate Singaporeans in the Middle East affected by the conflict.

19. Flights were organised by MFA and MINDEF. They were executed at short notice and required close coordination between the Ministries. MFA began assessing evacuation routes upon the escalation of hostilities, given the possibility of prolonged airport or airspace closures in the region.

20. MCCY and MUIS have also been engaging Singaporean residents in the Middle East, as well as key partners such as the Association of Muslim Travel Agents Singapore, for Umrah and Haj arrangements in light of this conflict.

21. You have heard about the impact of the conflict from DPM. I will highlight a few points. More than half of our total crude oil imports comes from the Middle East. Prior to the crisis, about 9 percent of our natural gas would have been imported from Qatar, if it had carried on as per normal through the year. Many other critical supplies pass through the Strait of Hormuz, including helium, and aluminium. We can no longer rely on such supplies in the same way.

22. I will speak in a little more detail about two key sectors: first, fuel and energy; and second, food supplies.


Fuel and Energy Security

Oil

23. First, on fuel and energy security.

24. Since the start of the conflict, several countries have announced export restrictions on fuel, or implemented fuel rationing measures.

25. We have not done so. So far, there has been no need to do so.

26. Global energy majors and trading companies have a sizeable presence in Singapore. We are the world’s 3rd-largest oil trading hub; and the 6th-largest refinery export hub.

27. These capabilities were built up over decades.

28. It is the result of a deliberate long-term strategy.

29. Today, they underpin our energy and fuel resilience.

30. Because of this, we are deeply connected to global flows of energy.

31. That gives us access to diverse sources of energy and fuel supplies.

32. So, we are able to respond to disruptions more flexibly.

33. And, we continue, so far, to have access to crude oil.

34. And we have been meeting our domestic needs and international obligations for fuels.

35. However, we do not know how long the disruptions will last.

36. As Minister Tan See Leng said a fortnight ago, we need to brace ourselves for a bumpy ride ahead.

37. No one can say what the situation will look like, or will be like if there are more serious disruptions and if they last longer.

38. We have secured crude oil supplies from alternative sources.

39. But we have to pay prevailing prices, which are much higher. Brent Crude has surged as high as 70 percent since the increase in hostilities on 28 February. Singaporeans are feeling the impact in higher prices as fuel and energy costs rise.

40. Prices are likely to remain high even after hostilities cease. Damage to infrastructure in the Middle East will take time to repair. We have already seen damage to large oil facilities in Saudi Arabia, Bahrain and other places. Even if the Strait of Hormuz fully reopens tomorrow, global oil and gas export capacity will not return to pre-conflict levels quickly.

41. In the broader term, we are concerned about broader disruptions to global supply chains which can affect goods critical to Singapore’s economy and essential services.

42. MTI is monitoring the situation closely and working with the industries.

Electricity

43. As for electricity, we have taken steps to reduce risks to disruption of our supplies, to meet our electricity needs. And there are four aspects to this.

44. First, our sources are diversified.

45. Apart from the Middle East, we also import liquified natural gas from Australia, one of our key suppliers; the United States; and Mozambique.

46. GasCo was set up last year to centralise gas procurement for the power sector. GasCo has begun buying replacement natural gas to replace the disrupted supply from Qatar.

47. Second, while 95 percent of our electricity is generated from natural gas, our power plants can switch from natural gas to diesel when needed.

48. Third, and relatedly, we have fuel reserves.

49. These reserves comprise a mixture of natural gas and diesel. Some are owned by the Government. Some are owned by power generation companies.

50. We are also planning to increase our fuel reserves. It will be costly but we think it necessary.

51. We have so far not tapped on our fuel reserves nor have we implemented fuel rationing.

52. The Energy Market Authority (EMA) also requires power generation companies to have pre-arranged contractual access to additional fuel. Fuel suppliers are required to deliver the fuel to the power generation companies within a set number of days upon activation. And we are prepared, if necessary, to direct the power generation companies to exercise their legal rights to secure the additional fuel. That said, securing the additional fuel by the power generation companies may be subject to force majeure events. Some of the additional fuel may be sourced from overseas and may be subject to supply disruptions again.

53. Fourth, EMA strengthened regulatory requirements on electricity retailers in 2023.

54. This ensures that they are sufficiently hedged and will be better able to handle an extended period of gas price volatility.

55. The position we put ourselves in before the crisis, and the steps we have taken since the crisis, have helped us remain relatively stable.

56. 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.

57. However, this remains a low-probability scenario for now, though we continue to monitor developments closely.

58. But prices will go up.

59. DPM spoke earlier on the regulated electricity tariff. Even though the cost of gas accounts for almost half of the regulated tariff, this has so far only partially transmitted to the tariff price. If the conflict is prolonged, then we have to expect much sharper increases in electricity prices.

Energy Security Policy

60. The situation has caused many countries to take a closer look at their energy security.

61. I will make two points on our situation.

62. First, on refineries. As I said earlier, we are a major refining centre. When countries began imposing controls on their export of fuel, many asked us if we would still be able to supply them with refined fuel products. Some of these countries supply crude oil and other essential products to us. In turn, we supply them with refined products, which they need. This creates a mutual interdependence. It keeps Singapore relevant in the international energy trade. And this has enabled us to have continued access to crude oil.

63. Some have also questioned the role of refineries, over the medium term, given our green transition.

64. We remain committed to de-carbonising our economy.

65. But as stated before, our path to net zero will depend on technological breakthroughs and sustained international cooperation.

66. For now, the priority worldwide is energy security. Countries everywhere need to keep the lights on.

67. Fossil fuels remain part of the global energy mix. Because renewable energy is not yet able to meet all of the demand.

68. In that context, Singapore will continue to play a role as a refining hub.

69. And we will continue to work with our refineries to improve their energy efficiency and reduce their carbon footprint.

70. Second, we must continue to press on with our efforts to diversify our sources of energy.

71. We have made good progress on domestic solar energy deployment. We have already achieved our 2030 target of 2 gigawatt-peak in 2025. At the Committee of Supply debate in March, the Government announced that it would raise the target to 3 gigawatt-peak. In the near term, we will continue to deploy solar energy domestically and pursue electricity imports from the region.

72. In the medium to long-term, we are assessing other sources of energy to diversify our fuel mix.

73. One potential source is nuclear energy. Advanced nuclear energy technologies have the potential to provide safe, reliable, and clean baseload power. Nuclear fuel is energy dense, and can be efficiently stockpiled. Five uranium pellets, one-inch-tall, can generate the same amount of electricity as one Olympic-sized swimming pool of natural gas.

74. But adopting nuclear energy requires very serious consideration.

75. It needs to be studied very carefully, to ensure that it is safe for deployment in or around Singapore. We have been building up the technical expertise to evaluate the technology as it develops. And we are partnering overseas governments and companies who are leaders in this field. We really need the best expertise on this.

76. We will continue to study this very carefully and rigorously.

77. And there are dedicated teams in Government that are doing this.


Food Security

78. Let me turn to food security.

79. Our primary concern is with the inflationary pressures on our 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.

80. Singapore maintains strategic food stockpiles. That will help us to mitigate the impact of any unforeseen supply disruptions. Meanwhile, we are relooking at our supply chains – with a view towards strengthening them.

81. However, we are only able to maintain stockpiles of essential food types. Singaporeans should be prepared for supplies of some foods from some countries to be unavailable, and will have to exercise flexibility in choosing alternatives.

82. There have been questions about the extent of Singapore’s fuel reserves and food stockpiles.

83. As a policy, we do not disclose these. That is deliberate. Disclosing such details would reveal where our limits lie, and that could be used against Singapore in times of crisis.

84. What matters is that we have sufficient buffers and contingency plans in place.

85. And we regularly review and strengthen these arrangements to ensure that they remain robust.


Conclusion

86. Sir, in conclusion, the HCMC will continue to closely monitor the situation.

87. We will respond, as a Whole-of-Government, to take care of Singapore and Singaporeans.

88. We will work together to get through the Crisis and emerge stronger.

89. As we always have.

90. Thank you Sir.