Indonesia just cut gas exports to Singapore: why 70 percent now stays home and what it means for Singapore's power

Is Indonesia cutting gas to Singapore? Yes, and the cut has already started. From Saturday 24 October, Indonesia began reducing natural gas exports to Singapore by 31 billion British thermal units per day, with 15 coming from the Natuna Islands and 16 from Sumatra, according to Djoko Siswanto, head of the upstream regulator SKK Migas, as reported by Malay Mail, citing Antara and Bernama.

Singapore is the only country affected, because the pipelines involved connect directly to the city state. The decision follows a signal from Indonesia's energy minister that Jakarta wants to keep more of its gas at home to feed domestic industry. It also lands in the middle of a bruising few weeks for relations between the two neighbours, from cross border haze to accusations over Indonesia's stock market crash.

What exactly did Indonesia announce?

Djoko Siswanto said the reduction would take effect immediately. "Starting tomorrow (Saturday), we will reduce gas exports to Singapore, 15 BBTUD from Natuna and 16 BBTUD from Sumatra," he said, according to state news agency Antara. He confirmed that Singapore was the only country affected because the export pipelines run directly there.

The announcement followed remarks on Wednesday by Bahlil Lahadalia, who serves as Coordinating Minister for Downstreaming and Energy Transition and as Energy and Mineral Resources Minister. He said the government was considering not extending gas exports to neighbouring countries and would review its export allocation to prioritise domestic consumption, especially for downstream petrochemical industries.

Bahlil said Indonesia currently exports about 30 percent of its natural gas production and consumes the remaining 70 percent domestically, and that this split would be reviewed. The Saturday cut is the first concrete step in that review.

Why Indonesia wants to keep its gas

The policy fits a long running theme in Indonesian economic strategy known as downstreaming. Rather than exporting raw commodities, the government wants to process them at home, creating jobs and capturing more value. It has applied the same approach to nickel, where export restrictions pushed foreign investors to build smelters in Indonesia.

Gas is a natural next step. Petrochemical plants, fertiliser producers and industrial estates need reliable, affordable gas, and the government wants to guarantee supply to attract investment. Higher global energy prices, driven by the Middle East conflict, also make domestic energy security a political priority.

Indonesia is applying its nickel playbook to gas: keep the resource at home and make industry come to it. Singapore is simply the first customer to feel it.

Previous Indonesian governments discussed similar cuts for years. In 2022, Jakarta extended its gas supply contract with Singapore for five years but said volumes would be lower to prioritise domestic demand. The difference now is that the cut is happening immediately and is framed as part of a wider review.

What it means for Singapore

Singapore generates most of its electricity from natural gas and imports all of it, through pipelines from Indonesia and Malaysia and as liquefied natural gas shipped from around the world. Pipeline gas from Indonesia has long been an important part of that mix, so any reduction has to be replaced.

The practical impact depends on how much spare capacity Singapore has elsewhere. The city state has invested heavily in LNG import infrastructure precisely to reduce dependence on pipeline supply, and it can buy additional cargoes on the global market. But LNG is typically more expensive than long term pipeline gas, especially when Middle East tensions are pushing up energy prices, as we covered in our report on Brent's jump to 116 dollars.

That raises the risk of higher electricity costs for households and businesses, including energy hungry data centres. The key questions for Singapore include:

• How quickly additional LNG cargoes can replace the lost pipeline volumes
• Whether electricity tariffs rise as generators pay more for replacement gas
• Whether Indonesia extends the cuts beyond the initial 31 BBTUD
• How long term supply contracts with Indonesia will be renegotiated
• Whether Malaysia's pipeline supply can provide extra volumes

The diplomatic backdrop

The timing is hard to separate from politics. Indonesia, Singapore and Malaysia have been shrouded in haze for weeks, and Singapore's environment agency has issued notices to 10 companies it says are responsible for the forest fires. Former Indonesian trade minister Muhammad Lutfi linked the haze dispute to Indonesia's stock market crash, accusing Singapore's Temasek and GIC of pressuring MSCI, claims both firms called untrue, as we reported in our analysis of the Temasek and GIC denials.

Indonesian officials have framed the gas decision as an economic policy, not retaliation, and there is no evidence it is linked to the haze row. But the sequence of events, haze notices, market accusations and now a supply cut that affects only Singapore, will inevitably be read through a political lens in both countries.

Both governments have strong incentives to keep the dispute contained. Singapore is one of Indonesia's largest foreign investors, and Indonesia needs foreign capital to stabilise its markets after the MSCI shock.

What happens next

The next step is Indonesia's broader review of its gas export allocation. If the government decides to cut exports significantly from the current 30 percent share, more contracts could be affected, including LNG shipments to other Asian buyers. Watch for statements from SKK Migas and the energy ministry on further reductions.

For Singapore, the response will be practical: securing replacement supply, managing costs and accelerating diversification, including electricity imports from the region and longer term energy alternatives. The cut is modest on its own, but it is a clear signal that Singapore can no longer assume Indonesian gas will always be available.

Indonesia's decision to cut gas exports to Singapore turns a long discussed policy into reality. It reflects Jakarta's determination to use its natural resources to build domestic industry, and it arrives at a moment of heightened tension between the two neighbours. For Singapore, the immediate impact is manageable, but the message is unmistakable: energy security now depends on diversifying away from any single neighbour.