Indonesia’s energy minister said on Monday that the amount of natural gas it is supplying to Singapore is still meeting the minimum level stipulated under a contract, despite reducing the amount to divert supply to its domestic power sector.
Singapore’s Prime Minister Lawrence Wong said on Sunday that he expected all parties in commercial contracts to honour their commitments after Indonesia cut 31 million standard cubic feet of gas per day from its pipelined exports to Singapore.
“Our nation is a nation that honours contracts, rules. So don’t teach Indonesia on how to honour contracts,” Energy Minister Bahlil Lahadalia told a press conference.
Mr Bahlil said the cut represented 8% of Indonesia’s gas supply to Singapore through pipelines, adding that Indonesia had also exported around 149 cargoes of liquefied natural gas this year.
The cut represents 2% of Singapore’s daily gas demand and is unlikely to have a significant impact on its energy security now, said Rystad Energy analyst Prateek Pandey, but the bigger test will come when existing contracts start expiring in 2028.
Mr Bahlil said the cut was due to a shutdown for maintenance and higher domestic demand in Indonesia, where earlier this month Batam and several cities in its Riau Islands province suffered a blackout lasting 16 hours.
Last week, Bahlil said he would prioritise natural resources for domestic needs and review contracts to maintain energy security. He has also said he will review Indonesia’s existing electricity export deal.
“Indonesia has good reason to prioritise its own energy needs, but redirecting more gas domestically will require investment in infrastructure,” Mr Prateek said.
“Singapore has been preparing for this by diversifying its gas supply, so the current reductions should be manageable unless the cuts deepen or production at the fields is affected.” REUTERS
