Singapore gas importer to assess contract breach after Indonesia cuts supply
Indonesia will reduce pipeline gas exports to Singapore, prompting Gas Supply to review contracts and seek commercial remedies, while officials say the impact on electricity prices will be limited.
Singapore's gas importer Gas Supply will examine its contracts with Indonesian suppliers to determine whether a breach has occurred after Jakarta announced a cut of 31 billion British thermal units per day (BBTUD) from Oct 24. Minister for Energy, Trade and Industry Tan See Leng said the company will pursue commercial remedies if needed and that Singapore has sufficient replacement gas, including liquefied natural gas, to meet demand.
The Energy Market Authority (EMA) noted that the reduction represents less than 2 % of Singapore's daily gas requirement of over 1,000 BBTUD. Tan added that electricity prices are unlikely to be significantly affected in the short term, as gas prices are tied to global indexes and Singapore can draw on diversified sources.
Gas Supply, wholly owned by Temasek, reported that its deliveries were impacted by "temporary reductions" from its Indonesian supplier. EMA said the total shortfall amounts to 17 BBTUD over 18 days. The cuts affect pipelines from Natuna and Sumatra, which feed directly into Singapore.
Singapore relies on natural gas for about 95 % of its electricity generation. The government highlighted multiple safeguards, including diversified import sources, diesel reserves for power plants, and the construction of a second LNG terminal. Tan said further details on the country's energy mix will be outlined at the Singapore International Energy Week.
Prime Minister Lawrence Wong emphasized that all parties are expected to honour commercial commitments and that the gas importer will take steps to protect its rights and interests.