Don't lecture Indonesia about honouring contracts: Energy minister says gas export cut to S'pore within limits

Indonesia has responded to Singapore's concerns about its gas export cuts, claiming that their actions are permissible under existing agreements.

According to The Straits Times, Energy and Mineral Resources Minister Bahlil Lahadalia stated at a press conference on Oct. 26 that Indonesia cut its gas exports by about 8 per cent, which is within contractual limits. 

This amounts to a reduction of 31 million standard cubic feet per day, from the previous total of 409.55 million standard cubic feet per day.

“Do not lecture Indonesia about its commitment to honouring and respecting contracts,” he said.

When asked if the export reductions would be permanent, he replied, “I think the situation remains fluid."

He maintained that the reduction was due to maintenance-related shutdowns and domestic demand pressures.

Force majeure

Bahlil later suggested the possibility of invoking force majeure.

Force majeure is a contractual provision that allows a party to leave their obligations unfulfilled under extraordinary circumstances.

“We respect contracts. But force majeure circumstances can arise, can’t they? Well, we’ll see,” he said, reported The Straits Times.

He also denied that any "conflict" was taking place.

“There is no problem at all. There is no conflict. Do you think there is a conflict? Is there one? No, there isn’t.”

PM Wong: S'pore expects all parties to "honour their commitments"

His comments were made in response to Singaporean Prime Minister Lawrence Wong's remarks that Singapore expected all parties to "honour their commitments", after Indonesia started reducing gas exports to Singapore on Oct. 24. 

PM Wong added that Singapore’s gas importer will take necessary action to "protect its rights and interests under these contracts".

Bahlil had previously suggested that would "not hesitate to consider stopping exports to countries that do not respect Indonesia" on Oct. 22, saying that he would review Indonesia's existing contractual agreements with other countries.

So far, Singapore is the only country affected by the reduction.

The Energy Market Authority (EMA) clarified on Oct. 24 that Indonesia's cuts amount to less than two per cent of daily demand, and that Singapore's gas importer was prepared to look for alternative sources.

Singapore's power generation companies also have ample reserves, it added.

Minister for Energy, Trade and Industry (Energy and Industry), Tan See Leng also suggested on Oct. 25 that the gas export cut would have little effect on electricity prices in the short term. 

He also affirmed on Oct. 26 that Singapore was looking to diversify its energy portfolio, and find alternative sources of energy.

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