Indonesia says gas export cuts to Singapore remain within contract terms

[JAKARTA] Indonesia’s reduction in natural gas supplies to Singapore remains within the minimum export volume stipulated in their contract, and the government will continue to assess whether the cut should be made permanent, Energy and Mineral Resources Minister Bahlil Lahadalia said on Monday (Oct 26).

The government will continue to review its gas export policy, prioritising domestic energy needs as it balances contractual obligations with demand from the power and industrial sectors, Bahlil told a press briefing. The policy also takes into account maintenance work at gas facilities, which has affected supply.

“The reduced supply remains within the minimum export volume stipulated in the contract,” he said, adding that the contractual minimum was around 91 billion to 92 billion British thermal units per day (BBTUD).

“No one needs to lecture Indonesia on the importance of honouring contracts. We understand our obligations and take them seriously,” he said.

Indonesia seeks stronger domestic energy security

The move comes as Indonesia seeks to strengthen domestic energy security while maintaining its relationships with neighbouring countries, Bahlil said.He did not name any specific country in his remarks.

Bahlil emphasised that the government would continue to assess supplies from Natuna and other production areas, as it considers how best to allocate gas between exports and domestic consumption.

“Indonesia respects contracts and the rules governing cross-border trade, but its efforts to secure sufficient energy for domestic consumption must also be recognised,” he said.

He did not specify when the government would complete its assessment or whether the reduced volumes would be restored.

Bahlil also pointed to the commercial terms of Indonesia’s gas exports, saying the price offered to other countries had been relatively economical at around US$20 per million British thermal units (MMBtu).

Indonesia on Saturday announced it has reduced gas supplies to Singapore by 31 BBTUD, redirecting 15 BBTUD from Natuna to state-owned utility PLN in Batam. A further 16 BBTUD reduction in supplies from Sumatra was intended to meet electricity demand in Batam, Bintan and Sumatra.

The cuts represent almost 8 per cent of the 409.55 BBTUD of gas Indonesia exports to Singapore from Sumatra, according to data from SKK Migas, the Special Task Force for Upstream Oil and Gas Business Activities, which oversees Indonesia’s upstream oil and gas sector.

Singapore’s response

Singapore Prime Minister Lawrence Wong said on Sunday that the Republic expects all parties to honour their commitments under commercial gas supply contracts. The country’s gas importer would take the necessary steps to protect its rights and interests, he added.

Most of Singapore’s electricity is currently generated using natural gas, and a significant amount of gas is imported through pipelines from Indonesia, Wong noted.

The reduction affects pipeline supplies from both Natuna and Sumatra. The cuts apply only to Singapore, as the export pipelines involved connect directly to the city-state. An SKK Migas document shows that gas from Sumatra is supplied to Gas Supply, while the Natuna pipeline connects to a receiving facility operated by Sembcorp Gas.

Singapore’s Energy Market Authority said earlier that the cut in gas supply from Indonesia would make up less than 2 per cent of the country’s total daily gas demand.

BT has contacted Singapore’s Ministry of Energy, Trade and Industry, Energy Market Authority and Gas Supply for comment.

Bahlil said Indonesia would review its plans to export electricity and weigh various factors before making a decision, citing strong domestic demand.

He did not specify when the review would take place or which projects could be affected. The move comes as Indonesia and Singapore advance plans for cross-border clean electricity trade, with President Prabowo Subianto in July appointing state investment agency Danantara to lead the initiative.

Danantara has signed memorandums of understanding with Singapore’s Keppel Electric and Sembcorp Utilities to explore electricity offtake, as well as with Singapore Energy Interconnections on potential cross-border transmission links.