Indonesia Cuts Gas Exports to Singapore While Importing Pertalite

JAKARTA, Jakartaweekly.com—Indonesia’s decision to cuts gas exports to Singapore has highlighted the interconnected nature of energy trade between the two neighbours, as the government seeks to prioritise domestic demand while continuing to rely on Singapore for some fuel imports.

The natural gas reduction, which took effect on October 24, involves 31 million standard cubic feet per day of pipeline supplies previously destined for Singapore. The government says the gas is being redirected to support domestic electricity generation and industrial demand.

At the same time, Energy and Mineral Resources Minister Bahlil Lahadalia has acknowledged that Indonesia continues to import part of its RON 90 gasoline requirements from Singapore. RON 90 is the fuel grade associated with Pertalite, one of Indonesia’s widely used subsidised gasoline products.

The parallel developments underscore the complexity of Indonesia’s energy security strategy: reducing exports to secure domestic supplies does not automatically eliminate its dependence on imported fuel.

Indonesia Says Gas Reduction Respects Contractual Limits

Indonesia’s gas export reduction involves supplies from Natuna and Sumatra. According to the government, 15 million standard cubic feet per day comes from Natuna, while another 16 million comes from Sumatra.

The redirected gas is intended to support electricity needs in Batam, Bintan and Sumatra, according to upstream oil and gas regulator SKK Migas.

Bahlil defended the decision on Monday, October 26, saying the reduction remained within the limits permitted under existing supply agreements with Singapore.

He said Indonesia’s pipeline gas exports to Singapore total approximately 409.55 million standard cubic feet per day, with the 31-million-cubic-foot reduction representing around 8% of that volume.

Bahlil maintained that the government was still meeting the minimum supply requirements stipulated in its contracts and denied that the reduction constituted a breach of those agreements.

He also said Indonesia continued to supply Singapore with liquefied natural gas (LNG), citing approximately 146 cargoes.

The minister has not confirmed whether the reduction will be temporary or become a longer-term policy. He described the situation as dynamic, depending on domestic requirements and compliance with contractual obligations.

Singapore Calls for Commitments to Be Honoured

Singapore Prime Minister Lawrence Wong responded to the reduction by stressing the importance of honouring commercial agreements.

Wong said Singapore expected all parties to fulfil their contractual commitments, adding that the country’s gas importer would take the necessary steps to protect its rights and interests under existing agreements.

Natural gas is particularly important to Singapore’s energy system, accounting for approximately 95% of its electricity generation. However, the reduction announced by Indonesia represents less than 2% of Singapore’s total daily gas demand, according to reporting on the issue.

Singapore has also invested in liquefied natural gas infrastructure to diversify its sources of supply and reduce dependence on any single supplier.

Indonesia’s decision comes amid broader discussions about energy security, domestic industrial development and the future of gas supply agreements between the two countries. Existing Indonesian gas supply contracts with Singapore are due to expire at the end of 2028.

Indonesia Still Imports Some RON 90 Fuel

While defending the gas export reduction, Bahlil acknowledged that Indonesia still imports some RON 90 gasoline from Singapore.

He said the government had considered the potential implications of its energy policy and was taking steps to secure alternative supplies. Bahlil also indicated that he planned to visit several countries, including India and China, to discuss the certainty of energy supplies.

The acknowledgement highlights a distinction between Indonesia’s natural gas exports and its gasoline imports. Although both are energy commodities, they serve different purposes and depend on different supply chains, production capacities and infrastructure.

Indonesia’s decision to redirect gas domestically therefore does not necessarily mean the country can immediately replace its imported gasoline with locally produced fuel.

The development also does not, by itself, establish that Singapore will retaliate against Indonesia by restricting fuel exports. Any potential effect on gasoline imports would depend on commercial arrangements, supply availability and subsequent decisions by the parties involved.

Energy Security and Regional Interdependence

The latest developments illustrate the challenge facing Indonesia as it seeks to strengthen energy independence while maintaining regional trade relationships.

Prioritising domestic gas supplies could help support electricity generation and industrial activity, particularly in areas requiring more reliable energy access. However, maintaining dependable fuel imports remains important while domestic refining and supply capacity continue to meet only part of the country’s requirements.

For Singapore, the reduction reinforces the importance of diversified energy sources and reliable contractual arrangements. For Indonesia, it raises questions about how the government can balance domestic supply priorities with its commitments to regional trading partners.

As both countries navigate their energy requirements, the central issue is whether Indonesia can strengthen domestic energy security without creating additional uncertainty for cross-border supply chains and commercial relationships.

Economic Risks of Cutting Gas Exports Remain Limited

CORE Indonesia economist Yusuf Rendy Manilet said that, given the scale of the policy, the decision to reduce pipeline gas exports to Singapore remains within reasonable limits. However, the way the policy is communicated warrants further scrutiny.

A reduction of around 8% from total exports of 409.55 billion British thermal units per day (BBTUD) would account for less than 2% of Singapore’s daily gas demand. Therefore, the policy is better viewed as an adjustment to gas allocation rather than a major supply disruption.

From an economic perspective, using gas domestically could generate greater added value, provided the gas is actually absorbed by the domestic market. For illustration, 31 BBTUD would be sufficient to continuously operate a gas-fired power plant with a capacity of around 130–180 megawatts (MW), or serve as feedstock for producing approximately 1,000 tons of ammonia per day.

If used domestically, gas could support the fertilizer, petrochemical, ceramics, glass, and power generation industries. The benefits could then extend to industrial output, investment, employment, and tax revenue. By contrast, the primary benefit of exporting gas comes from selling it as a commodity.

An evaluation of the Certain Natural Gas Price (HGBT) policy recorded approximately Rp592.89 trillion in economic value added between 2020 and 2025. However, this figure should be interpreted cautiously because it represents gross value and does not account for the reduction in state revenue resulting from lower gas prices. The benefits also depend heavily on supply certainty.

“If industries still struggle to obtain gas at competitive prices and ultimately have to buy gas at significantly higher prices, reducing exports will not automatically generate domestic added value,” Rendy explained.

He added that the impact on state revenue and the trade balance would be relatively small. A volume of 31 BBTUD is equivalent to approximately 11.3 million metruic British thermal units (MMBtu) per year. Assuming an export price of US$8-12 per MMBtu, the gross value of lost exports is estimated at around US$90-135 million per year, or approximately Rp1.5 trillion to Rp2.2 trillion. Compared with Indonesia’s total exports, this amount is relatively small. The portion that actually accrues to the state would also be lower after accounting for contractors’ shares.

Rendy added that the gas would not disappear from economic activity but would instead be redirected to the domestic market. Therefore, the net loss would not equal the entire value of exports, but rather the difference between the export price and the domestic selling price. If the gas can replace fuel oil in power plants or reduce the need for LNG imports, the impact on the trade balance could even be neutral or positive.

“The economic risks would become significant only if this reduction develops into a complete halt to pipeline gas exports to Singapore,” he added.

Government Needs to Clarify Domestic Gas Allocation Policy and Upstream-to-Downstream Infrastructure

Rendy emphasized that every volume of gas redirected from exports must already have a domestic buyer under a clear contract. The government should also be transparent about which sectors or industries will receive the additional supply so that the economic benefits can be measured.

The issue is not only the volume of gas but also the location of supply sources and demand centers. Areas with a surplus are not yet fully connected to industrial regions experiencing shortages, particularly western Java and Lampung. Gas from Natuna or Sumatra cannot automatically reach industrial centers if pipeline networks and supporting facilities are not yet available.

The pricing structure must also remain balanced. Industries need competitively priced gas, while upstream contractors require adequate project economics to ensure that production and investment are not disrupted. The HGBT policy needs to be better targeted and supported by reliable supplies. The government must also accelerate new upstream projects. If additional supplies expected to come online in 2027 are delayed, reducing exports will serve only as a temporary solution and will not resolve long-term supply problems.

Regarding investor confidence, risks do exist, but the issue is not simply the reduction in exports. Problems arise if the market perceives that contracts can be changed abruptly for political reasons. For upstream investors, market certainty is essential because gas projects require substantial capital and have long payback periods. Investors need to know in advance where the gas will be sold, at what price, and how government policy is expected to evolve.

Rendy also said that the way the policy was communicated was a particular concern. The government’s explanations appeared to mix issues involving well maintenance, domestic demand, and bilateral relations. This came despite the government’s earlier statement that gas exports would not be cut in 2026.

“I agree that domestic demand must be prioritized, but energy policy should be explained based on supply conditions and economic needs. If it is linked to diplomatic issues, the market may perceive the policy as unpredictable,” Rendy explained.

Looking ahead to 2028, the government needs to prepare a clear road map based on projections of gas production and domestic demand. If export contracts are not going to be renewed, the decision should be communicated well in advance, with an orderly transition period.

Prioritizing domestic demand is therefore the right direction, but the economic benefits will only materialize if supplies are available, infrastructure is ready, prices remain economically viable, and policy communication is consistent. As long as contracts are respected and policies are formulated transparently, investor confidence should remain intact.