Indonesia Cuts Gas Supply to Singapore by 40%

Gas Supply

Singapore will certainly get additional gas supply after Indonesia extends the supply contract to Singapore from 2023 to 2028. Even though the contract is extended, the gas supply to the country will be cut by 30% – 40%.

Head of SKK Migas Dwi Soetjipto explained that the volume cut in this latest contract is considering the increase in domestic gas demand. In this way, gas supply will be prioritized for the domestic market.

“Because the domestic industry is increasing, Pupuk asked for more, then West Java also increased. Central Sumatra is the advantage, he also has to meet West Java through pipes,” he said when met at the Ministry of Energy and Mineral Resources building recently.

In addition, according to Dwi, the policy of gas exports to foreign countries is to keep gas production running. Moreover, the price of gas sold to Singapore has increased compared to the previous contract.

Meanwhile, the process of signing the gas purchase agreement contract itself is expected to be completed soon. Considering the gas sales contract to Singapore will expire in 2023.

“Maybe it will be (signed) soon because it will end in 2023, if not after being approved, we will have to move to LNG, right, we have to prepare the infrastructure,” he said.

The Ministry of Energy and Mineral Resources (ESDM) previously confirmed that Indonesia would extend the gas sales contract to Singapore.

The gas contract, which was originally set to expire in 2023, will then be extended for the next five years or until 2028.

Minister of Energy and Mineral Resources Arifin Tasrif revealed that Singapore had asked for assistance so that Indonesia would continue to supply natural gas.

The government’s decision to extend the natural gas sales contract makes Singapore a little relieved. This is because Singapore has been relying on natural gas imported from Indonesia for its power generation needs.

This indicates that Singapore still has a fairly high dependence on Indonesian gas sources.

“We still have gas, so we give it, so it’s extended by 5 years. 5 years first. We have supplies, there are things we need, we have to help,” said Arifin.

Arifin assessed that the contract period for gas sales to Singapore is up to five years, considering the condition of the domestic gas supply.

Even the volume exported for this new contract will experience a decrease compared to the previous contract.

“It’s not the same, because domestic demand is increasing again and the production of the wells has also started to decrease. Domestic demand is increasing,” said Arifin.