Gas supply cut from Indonesia accounts for less than 2% of S’pore’s daily gas demand: EMA

“Power generation companies are further required to maintain sufficient fuel reserves for power generation, including diesel reserves.”

Meanwhile, one of Singapore’s largest gas suppliers said that its delivery of gas to customers here has been affected by “temporary reductions” in supply from its supplier in Indonesia.

The firm Gas Supply said it has been in direct communication with customers who are impacted and appreciate their patience and understanding during this period.

“(The company) continues to engage closely with our upstream supplier to manage the situation,” said the importer wholly owned by Temasek.

The gas cuts come after remarks made on Oct 22 by the country’s Energy and Mineral Resources Minister Bahlil Lahadalia.

Bahlil, who is also Coordinating Minister for Downstreaming and Energy Transition, said that Indonesia could stop exporting energy to countries that failed to show it mutual respect.

According to media reports, the cuts affected only Singapore because the pipelines from Natuna and Sumatra were connected directly to the city-state.

Exports from Natuna would be reduced by 15 BBTUD, while another 16 BBTUD would be cut from the Jambi Merang gas in Sumatra.

This had been framed in Indonesian media reports as part of the President Prabowo Subianto’s government’s moves to prioritise domestic energy needs amid growing concerns over energy security.

Checks by ST found that natural gas from Sumatra is exported to Gas Supply.

Meanwhile, gas from Indonesia’s Natuna Sea is transported through a direct subsea pipeline to a receiving facility operated by Sembcorp Gas.

According to Sembcorp Industries’ 2023 annual report, the company entered into a sales agreement valued at about $1.9 billion to import piped natural gas from the West Natuna gas fields.

Both agreements were expected to last until 2028.

ST has contacted Sembcorp with queries.

Indonesia has been planning to reduce gas exports to Singapore for several years to meet growing domestic demand. In 2022, Jakarta agreed to extend gas supplies to Singapore until 2028, but at lower volumes than under the previous contract.

 David Broadstock, an economist who monitors the energy sector, called the abrupt cut a “surprising event” for Singapore’s energy supply chain.

But he noted the Republic is well-prepared to handle it, with potential alternatives from countries like the US.

He pointed out the timing of the cuts, just before the Singapore International Energy Week commencing on Oct 26, and during a period of increased complexity between the two nations over transboundary haze enforcement.

Said Broadstock: “There is a question mark over whether there is a political element tied to this action, potentially making it a reaction to the haze issue.

“I wouldn’t say for sure that it is a definitive driving factor, but it certainly cannot be ruled out.”

Broadstock expects that buyers of natural gas will immediately look to secure alternative contracts, potentially drawing from the US or the Middle East to fill the gap.

Despite the need to source presumably more expensive alternatives for the shortfall, he does not foresee a major price surge for consumers.

He said: “We shouldn’t expect massive market disruptions.

“It isn’t the global market taking a shock, but rather a preferred supplier taking a step back.”