The world refining industry grew rapidly prior to the 1970s when the end of the concessionary system and the two quantum leaps in oil prices radically altered the environment of downstream operations of the international oil industry (Mohnfeld 1984). World refining capacity expanded by 6.5 per cent in 1940-60 and 7.2 per cent in 1960-73 (Fesharaki and Isaak 1984, p. 7). It trailed behind the even more rapid increase in global consumption of petroleum products which grew by 7 and 7.6 per cent in the two consecutive periods (ibid.). This, in turn, led to high capacity utilization rates.

During the infancy of the international oil industry, most re-fineries were located in crude-producing areas. In the post-1945 era, however, new refineries were increasingly built in consuming as opposed to producing areas. While transportation differentials favouring the movement of bulk crude over smaller parcels of refined products may have played a role in the economics of refinery location, xthe decision by multinational oil companies to avoid placing major capital assets in the less developed countries in an era of rising nationalisms had a major impact. The fact that a refinery tied to a particular crude stream of a given oilfield is bound to be more constrained in its operations than a refinery located in a major consuming area and fed by a range of imported crudes provided another reason. Furthermore, developed country governments often encouraged the growth of domestic refining capacity for what were deemed to be “reasons of national security”.

The Development of Entrepot Refining in Singapore

Although the expansion of refining capacity in Singapore paralleled that of the world industry during the boom period of 1960-73, 3 the country's oil industry found its early beginnings in the colonial period when three bulk storage tanks for kerosene were built in Pulau Bukom in 1892. From 1892 to 1960, Singapore served as the storage, transshipment, and distribution centre for the Far East.