Indonesia won’t cut gas supply to Singapore

Strait Times, Friday, September 30th, 2011
Indonesia will not cut its supply of natural gas to Singapore or change the price, officials said yesterday, a week after a minister suggested that the country should stop its gas exports.

What it will change, however, is the source of gas: it will come from the Natuna Sea in the north instead of South Sumatra, where Singapore’s gas is piped from now.

‘There won’t be any change in the volume, only in the source,’ the spokesman for the country’s upstream oil and gas regulator BPMigas, Mr Gde Pradnyana, told The Straits Times yesterday.

‘It should start in October. We hope to get government approval before then,’ he added, but declined to give further details on why the switch is being done.

His comments came after Indonesia’s Coordinating Minister for Economic Affairs Hatta Rajasa last week urged the government to cut what he called excessive shipments of natural gas to Singapore, so as to cater to rising domestic demand.

‘Indonesia needs its own gas,’ he had told a parliamentary commission. ‘The gas supply to Singapore is too much… exports to Singapore should stop.’

Mr Hatta said he had asked Energy Minister Darwin Zahedy Saleh to set up a legal team to renegotiate all gas sales contracts with Singapore.

The minister’s call came amid rising demand for energy and dwindling crude oil reserves in Indonesia, and this has seen the country turning increasingly to non-oil energy sources such as natural gas.

Indonesia, the world’s third-largest exporter of liquefied natural gas after Qatar and Malaysia, sells more than 60 per cent of the gas it produces.

Singapore uses natural gas to generate 80 per cent of its electricity, and relies heavily on imports from Indonesia to meet its needs.

Indonesian companies and Singapore firms SembCorp Gas and Gas Supply have signed two long-term contracts, under which the Singapore companies will get gas from South Sumatra till 2023. Hundreds of millions of cubic feet of natural gas are piped every day from several fields in South Sumatra and the Riau Islands.

Dr Hooman Peimani of the National University of Singapore’s Energy Studies Institute told The Straits Times there was no emergency in Indonesia to justify a cut or halt to its gas exports.

But, he added, changes in sources were normal when countries exporting the gas needed to redeploy energy resources for domestic use.

Mr Raden Priyono, head of BPMigas, was reported in The Jakarta Post yesterday as saying that Singapore will get part of the gas supply from the Gajah Baru field in Natuna, while fields in South Sumatra that are channelling gas to Singapore now will deliver gas to domestic users.

This swop, he said, would enable more gas to be delivered from Sumatra to Java and to state utility firm Perusahaan Listrik Negara.

Gas from the Natuna field cannot be delivered to Java because of a lack of pipeline infrastructure.

Source:  Srait Times

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