The Unrequited Love of the Singaporean Fossil Fuel Trade

Despite lacking natural deposits, the oil and gas trade is important, and has been for decades, to the economic miracle of Singapore. However, as the battle rages on against climatic disaster, can the little red dot carry its weight?

The Unrequited Love of the Singaporean Fossil Fuel Trade
Original Images: Mike Enerio and Tasos Mansour (via Unsplash)

Despite lacking natural deposits, the oil and gas trade is important, and has been for decades, to the economic miracle of Singapore. As the busiest port and most robust trading hub in Southeast Asia, oil and gas flow in and out of the city-state at immense volumes at a time. However, as the battle rages on against climatic disaster, can the little red dot carry its weight?

The Cash-Cow That Never Dies: Singaporean Fossil Fuel Trade

In 2023, Singaporean Oil (Domestic) Exports were valued at around S$112 Billion or around 17.5% of total Merchandise Exports. This was a 14.4% reduction in exports (in S$ terms) year-on-year. Furthermore, oil imports fell 19.0% year-on-year. 

At first glance, the environmentalists among us would rejoice. A drop in oil exports and imports could mean many things to an untrained eye. It could be due to lower demand for oil in the Asia-Pacific, Singapore’s primary trade market, or it could be a reduction in oil supply – both indicating a world less reliant on oil. However, in reality, the volume of oil exported actually rose by 2.3% and the drop in export value stemmed from the cheaper price of oil.

What this tells us is: no, the oil trade in Singapore is not going away…yet.

Source: Enterprise Singapore & Singapore Department Of Statistics

But, looking at a much longer period, over the last 20 years, the oil trade has indeed become less and less important to Singapore. It peaked in February 2009, when oil made up about 30.1% of the total merchandise trade; this is in comparison to February 2023, when it was only 19.3%. Although it experienced somewhat of a rise in value during the period, the reduction in oil’s importance to trade will hopefully continue and enable the complete decoupling of oil from the Singaporean economy, and by extension, the Asia-Pacific. 

However, a king still needs an heir, and it seems that, instead of renewable energy, natural gas is inheriting the throne.

Speaking at a fossil fuel conference, Tan See Leng (Second Minister of Trade and Industry) mentioned that S$327 billion worth of Liquified Natural Gas (LNG) flowed through Singapore in 2022. He then goes on to highlight natural gas’ importance in Singapore’s energy transition.

Lifecycle GHG emissions of renewable energy, nuclear energy and fossil fuels / Source: Special Report of the Intergovernmental Panel on Climate Change (IPCC), Renewable Energy Sources and Climate Change Mitigation (2012)

As a more efficient, stable, reliable, and less carbon-intensive fuel, natural gas is being proposed by many nations as a key transition fuel. However, natural gas’ lifetime emissions still far exceed renewable energy solutions. A fossil fuel is still a fossil fuel, and, as we get closer and closer to the 1.5ºC mark set during the 2015 Paris Agreement, we need to eliminate emissions as much as feasibly possible – not just slight reductions.

In the same vein, Singapore continues to depend on natural gas to reach carbon neutrality and to ensure energy security, in part due to its small size which prevents it from partaking in mass renewable energy production. To maintain its position as the leading Asia-Pacific trading hub, Singapore needs oil and gas storage and refinery facilities. Here, Singapore faces a difficult choice: should it prioritise climate action at the risk of economic hardship?

Banking On Oil

Discussions on climate change have typically focused on the role of fossil fuel companies. But such discussions fail to recognise the source of the money used to upgrade oil facilities, build natural gas pipelines, and fund oil explorations – for decades, banks and other financial institutions have been directly complicit in perpetuating the fossil fuel industry and trade.

buildings near ocean
Image: Peter Nguyen (via Unsplash)

Beyond trade and energy, Singapore’s position as the primary financial hub of Asia means its banking sector bears the responsibility to transition away from providing financial services to expand fossil fuel usage or drilling throughout the continent. 

DBS, Singapore’s and Southeast Asia’s largest bank, operates throughout Asia and continues to fund oil exploration, refineries and natural gas pipelines, despite internal net-zero targets. Furthermore, failing to have an oil and gas exclusion policy, it is likely that DBS will continue to place profits above the environment in the foreseeable future.

In contrast, Singapore’s 2nd largest bank, OCBC vowed to not provide “project financing or project refinancing” to new oil and gas exploration and production projects approved by governments after 31st of December 2021. OCBC’s commitment has made it one out of a tiny group of major Singaporean banks promising the end of oil and gas financing.

On the side of regulation, the Monetary Authority of Singapore (MAS)  has remained neutral. Although there have been increased engagements with banks to encourage decarbonisation in their financing and investment portfolios, no clear guidelines or regulations nor deliverables for banks to adhere to have been implemented. As of now, banks have no regulatory push to decarbonise faster.

The Oil-less Future

With an economy built on trade, it is unreasonable to expect the end of Singapore’s oil and gas trade tomorrow. However, mitigation policies must be employed to further discourage the fossil fuel industry. 

In 2019, Singapore pioneered the first Carbon Tax in Southeast Asia. Starting with a low base rate, the government planned to increase the tax rate gradually to avoid a shock to the economy, and provide sufficient time for corporations to adjust to the new regulatory framework and requirements. The tax supposedly covers 80% of total Greenhouse Gas (GHG) emissions from the city-state and involves all major industries, including oil and gas.

Source: International Energy Agency, Greenhouse Gas Emissions from Energy Data Explorer

However, since the implementation of the carbon tax, a significant reduction in GHG emissions has not been observed (bearing in mind the emissions data is limited to the period between 2019 and 2021). Perhaps due to the low tax rate, the social costs of emissions have not been fully translated into the operation costs of oil and gas refineries, power stations, and storage. However, with the tax rate increasing five-fold this year, perhaps a future analysis may paint a more conclusive picture.


As it stands, Singapore needs to reevaluate its place in the global supply chain. A key transit hub for oil and gas trade, policies enacted by the city-state will have ripple effects up and down the chain. Singapore must first consult its financial institutions if it truly aims to contribute meaningfully towards climate action.

by Putera Daniel Hakeem

Disclaimer: The views expressed in this article do not necessarily represent those of The PublicAsian.