David Keat: Energy Security Expert on the deal with Singapore to protect fuel supplies during economic shocks
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What is the significance of the fuel supply deal with Singapore?
Singapore deal got signed officially yesterday, even though it's actually been in force since late last year, of course. It locks in essential goods, including the fuel. It's being incorporated into the existing FTA. David Keat is an energy security expert and he's with us. David, morning to you. Yeah, good morning, Mike. How much of this is intent? Like, we'd really like to help you and we're all, you know, versus cold, hard delivery in tight times. I mean, is this worth what it's printed on?
Well, no and yes, if I can answer. It's a good idea to have a good relationship with anyone on these as you say, difficult times. So I think, in a sense, it's a good thing to have. It's better than having nothing at all.
How will this agreement affect fuel prices during economic shocks?
But in practical terms for fuel supply, it won't do a great deal. We're worried about two things, aren't we? Availability and price. It won't do anything for price, because the price on the day we activate this thing will be whatever it is, which will be probably quite high. In terms of ability to deliver... So the refineries will deliver what their contractors supply under any circumstances until they can't. And if they can't, well, the Singapore government telling them to won't change that reality.
Exactly. I'm not worried about supply. You know more than I do, but I've never been worried about supply. People like Singapore, Korea, Malaysia, et cetera, they will die looking for supply to supply customers because that's what they do, isn't it?
Oh, I think it's slightly less emotional than that. No, in reality, like you, I haven't been too worried about supply at all. The reality is that there's still 90% or more of the crude that was originally available is still available. So there is a shortfall around the world, which is why the price is high. So it basically comes down to rich countries pay more, which is what we're doing, and poor countries miss out. And of course, demand is growing. reduced because of the high price. So we've reached a new equilibrium, if you like, over the last few weeks. We've got a price around $110-ish a barrel and product prices extraordinarily high. And this is an equilibrium, if you like. It'll change if the war escalates a lot more or the refineries can't supply for whatever reason.
It could be they have a problem themselves or there's a hurricane in the South China Sea area, or there's some kind of other disruption to the supply chain.
What are the implications for fuel availability from Singapore?
But at the moment, we're in a kind of an equilibrium.
Yeah, exactly. All right, David, appreciate your expertise. David Keat, energy security expert.
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