JAKARTA (The Straits Times/ANN): Indonesia has defended its gas export cuts amid concerns raised by Singapore, saying it would not be lectured on honouring contracts and that the reductions do not breach existing agreements.
Energy and Mineral Resources Minister Bahlil Lahadalia said on Oct 26 that Indonesia had reduced piped gas exports by 31 million standard cubic feet per day, or about 8 per cent of the 409.55 million supplied through pipelines from the Natuna Sea and mainland Sumatra.
“Do not lecture Indonesia about its commitment to honouring and respecting contracts,” he said, stressing that the cuts remained within the minimum limits allowed under existing agreements.
“The 31 million that we have reduced is still within the minimum contractual limits. If we had reduced supplies by 10 per cent, then we would have breached the contract.”
Bahlil said the reduction was due to maintenance-related shutdowns and domestic demand, adding that Indonesia remained committed to respecting contracts and regulations.
Asked whether the export reductions would be permanent, he did not give a definitive answer.
Speaking to reporters later, he also raised the possibility of force majeure, a contractual provision that may excuse a party from fulfilling its obligations under certain circumstances, although he did not say Indonesia had invoked it.
“We respect contracts. But force majeure circumstances can arise, can’t they? Well, we’ll see,” he said.
Asked if there was a conflict, he said: “There is no problem at all. There is no conflict. Do you think there is a conflict? Is there one? No, there isn’t.”
His remarks came after Indonesia began cutting natural gas exports to Singapore on Oct 24, redirecting supplies to meet domestic electricity needs in Batam, Bintan and Sumatra.
Indonesia’s upstream oil and gas regulator SKK Migas announced cuts totalling 31 billion British thermal units per day (BBTUD).
Singapore’s Energy Market Authority said that based on information from importers, the total reduction amounted to 17 BBTUD over 18 days, or less than 2 per cent of the Republic’s daily gas demand.
Singapore Prime Minister Lawrence Wong said on Oct 25 that the Republic expected all parties to honour their contractual commitments.
“We expect all parties to honour their commitments, and Singapore’s gas importer will take the necessary steps to protect its rights and interests under these contracts,” he said at a People’s Action Party conference.
Singapore’s Minister for Energy, Trade and Industry (Energy and Industry) Tan See Leng told reporters after the conference that the two countries maintained very good relations at the highest levels of government, particularly between President Prabowo Subianto and PM Wong. He acknowledged that Indonesia might have domestic supply needs and bottlenecks.
At the opening of Singapore International Energy Week on Oct 26, Tan warned that resource nationalism, which undermined existing contracts, could deter energy investments, as Singapore unveiled a five-year plan to expand its energy infrastructure to meet rising demand.
The cuts followed Bahlil’s warning on Oct 22 that Indonesia could review or halt energy exports to countries that failed to show mutual respect, although he did not identify any country.
“I will not hesitate to consider stopping exports to countries that do not respect Indonesia,” he said.
A day earlier, he had raised the possibility of not renewing gas export contracts with neighbouring countries to prioritise domestic needs.
Indonesia’s existing gas supply contracts with Singapore run until the end of 2028.
The reductions also come as the two countries negotiate plans for electricity exports from Indonesia to Singapore, with pricing differences yet to be resolved. Singapore has granted conditional licences to six Indonesian electricity import projects with a combined capacity of 3 gigawatts.
Bahlil signalled that electricity exports could be some way off, saying Indonesia was still reviewing the plans because of its substantial domestic electricity needs.
“Maybe not in the near future,” he said. “We will review everything again.”
He told reporters that Indonesia’s own data centres needed 20 gigawatts of electricity, adding: “Our data centres need 20 gigawatts. How can anyone say we do not have a market?”
“I will continue to prioritise domestic needs first. Only after that will we export,” he said.
Nuclear power
Bahlil also said Indonesia was considering building a nuclear power plant in the Riau Islands, potentially in Batam, as part of efforts to strengthen domestic energy security.
Asked by The Straits Times about potential sites, he said the government was studying several locations, including Halmahera, Kalimantan and Sumatra, with the Riau Islands among the options.
“We are doing feasibility studies,” he said.
He added that all options remained open, including developing nuclear plants at multiple locations.
“If it is best for the nation that we develop all those locations, we will do so,” he said.
He stressed that Indonesia was free to choose its nuclear plant locations as long as they met feasibility requirements. “Why should other countries interfere and tell us what to do?” he added.
He noted that a proposed nuclear power plant in Halmahera was being studied, possibly in cooperation with Russia. -- The Straits Times/Asia News Network
