By Sing Yee Ong and Benjamin Liu
(Bloomberg) — Singapore is diversifying suppliers, adding storage and building new infrastructure to try to protect itself from the growing risk of resource nationalism, its energy minister said on Monday (26 Oct), days after Indonesia announced it would cut gas exports to its import-dependent neighbor.
Indonesia announced the reductions unexpectedly over the weekend, pointing to the need to bolster its domestic energy supplies. Singapore has said it expected all parties to honor commitments, but has also played down the impact of the move, emphasizing the reductions represent less than 2 per cent of daily gas demand. Speaking at a conference on Monday, Minister for Energy, Trade and Industry Tan See Leng underlined there was no risk of shortages.
“We can keep calm and carry on,” he said in his opening address for Singapore International Energy Week. “Our households and our businesses can be assured that our energy security is always at the top of our minds.”
Singapore plans to add more capacity to import liquefied natural gas from a wider array of suppliers, while building new power plants and increasing stockpiles to guard against potential disruptions, Tan said.
“Singapore will not be able to insulate ourselves from global or regional shocks,” he said. “When there is a supply crunch, countries may also prioritise their own domestic needs, and this trend of resource nationalism is particularly concerning.”
Singapore’s energy minister Tan See Leng said there was no risk of shortages after Indonesia cut gas exports, which make up under 2 per cent of Singapore’s daily demand. (Photo: Yen Duong/Bloomberg)
Indonesian Energy and Mineral Resources Minister Bahlil Lahadalia said in Jakarta on Monday that the reduction would not count as a breach of contract, as a violation would require cutting more than 10 per cent of piped supplies.
“We are a country that honors contracts and rules,” Lahadalia said. “Don’t try to teach Indonesia about commitment to honor and respect contracts.”
Singapore relies on imported natural gas for almost all of its power generation, but it has significantly reduced its dependence on pipeline supplies from Indonesia, thanks to LNG shipments.
“About half of our gas is imported as LNG from a global diversified portfolio of sources, such as the US, Africa, the Middle East, and Australia,” Tan said. The country expects to increase its LNG capacity by 50 per cent once a second import terminal starts by 2030, he said.
Indonesia, meanwhile, has seen overseas shipments decline in recent years as a growing share of output is directed to domestic use. The nation ships LNG to countries including China, Japan and South Korea, and pipes the fuel to Singapore and Malaysia.
“The bigger test will come when existing export contracts start expiring in 2028,” said Prateek Pandey, head of oil and gas analysis at Asia Pacific for Rystad Energy. “Indonesia has good reason to prioritize its own energy needs.”
The current cutbacks should be manageable for Singapore unless cuts deepen or production fields are affected, he added, a position others supported. Morgan Stanley said in a report on Monday that higher imports from Malaysia or more spot LNG should be able to offset the shortfall, though it would raise gas costs.
Singapore LNG Corporation, the nation’s state-owned LNG terminal operator, said it was ready to manage disruptions.
“We are always prepared,” Leong Wei Hung, SLNG’s chief executive officer, said in an interview. “We actually do exercises within the operations just in case something like this happens,” he said.
Tan separately announced a non-binding agreement between Saudi Arabia and the city-state to store Saudi crude oil in caverns beneath Jurong Island from the second half of 2027.
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