SHELL Singapore is today more integrated than ever with the global group, presenting with it expanded development opportunities for its employees here.

In an exclusive interview with The Business Times, outgoing chairman Lee Tzu Yang said: "We've always been a very core part of Shell given our history ... In a way, we're now even more integrated into the mind and management of the group."

This offers opportunities for both Shell's business and its people. While Shell in Singapore has never been about the Singapore market alone but also the regional market, now it is the global market that its employees serve, he said.

Mr Lee, 59, will retire at the end of this month, and will be succeeded by Goh Swee Chen, who will concurrently remain as vice-president for commercial fuels and lubricants in the Asia-Pacific.

During the past 14 years when Mr Lee was at the helm, Shell has moved two global businesses to the Republic: the global commercial business, which takes care of large business customers such as airlines, and the integrated gas business, including its liquefied natural gas operations, which shifted here last year.

Singapore's position in Asia also enables Shell to draw many talents here. "So we're very rich in terms of talent both domestic and the region and even from the world."

Mr Lee was careful, too, to emphasise that Singaporeans are the ultimate beneficiaries of this.

"It is important that for international companies for whom development of talent is one of our key considerations, and for whom Singapore is a key location for the development of talent ... that we continue to have adequate mobility in order that we can move people in and out," he said. "Singaporeans are actually the beneficiaries, because they are able to move out. And even if they don't move out, they also benefit from being able to work with the diversity of the group within Singapore."

Shell Singapore, with its 3,200 staff, is one of the largest employers in Singapore. The group, which has invested over S$10 billion in the Republic, was also recognised recently by the Singapore government with the inaugural "Honorary Partner-in- Progress" award, given to past Distinguished Partner in Progress award winners who have continued to contribute significantly to Singapore.

Royal Dutch Shell set up Singapore's first oil-storage installation in 1891 and also the country's first oil refinery in 1961. It broke ground for two new petrochemical units here last year, but also earlier this year wrote off US$2.3 billion - mostly for its Singapore Bukom refinery - in what industry observers saw as a reflection of pressured refining margins globally.

Asked how much rising costs have affected Shell's operations here, Mr Lee said: "When I became chairman in 2000, Singapore was already not a low-cost manufacturing base. But in the last 10-15 years we've faced higher cost escalation." This included manpower, land and energy costs.

Nonetheless, while costs are one of the factors the group has had to keep an eye on while "steering the ship", "I wouldn't say there is a particular rock or something we've had to steer around", he said. "Having said that, we're at the highest cost we've ever been for Singapore in overall history, but that's perhaps not unusual for Singapore alone. It's a general fact of inflation."

In this aspect, the move by the government into procuring liquefied natural gas for power generation is "definitely a good thing", not just for energy security but also to better "optimise the cost and security options". With one of the largest gas assets in its global portfolio, "we have the full intent to participate in that, not just as a consumer but also as a provider", said Mr Lee.

The group is continually looking at energy efficiency, not just in its plants, but also to simplify processes in order to cut costs. "I don't think the battle is won. It is a continuous journey so we will never be able to say we can rest on our laurels."

Given growing emphasis on environmental concerns, the growth areas for the group will be in gas and petrochemicals, said Mr Lee. "Gas does have the lowest carbon to energy ratio of many of the fossil fuels, so you can meet the energy demands with relatively less carbon emission and less local emission."

The petrochemicals business, too, is a positive overall in the context of climate change. "It's almost like sequestering carbon, because rather than burning them you are using them."

Whether Singapore will remain competitive in this area will depend on whether it can attract other investors, such that a cluster of plants sitting side by side can provide feedstock to one another and produce higher-value products, said Mr Lee.

"So creating these clusters of investments is important, and convincing all of them that the cost base in Singapore is sustainable and that Singapore will still be a favoured location for trade and logistics - that's the challenge.

"And that's something we'll be doing our bit, but it'll depend very much on working with government agencies in terms of creating confidence."