Friday May 23, 2008

Batam threatens to block Indonesian natural gas supply to Singapore

tradingmarkets.com :

The regional Indonesian assembly of Batam threatens to block the gas flow pipes from ConocoPhilips via Batam to Singapore unless Perusahaan Gas Negara (PGN) normalizes gas supply to the industrial island. "We and the people of Batam will block gas flow to Singapore," a regional assembly leader Batam Ruslan Kasbulatov said. Ruslan said the state-owned gas distributor has increased supply to Singapore at the expense of supply to Batam. "As an Indonesian state company PGN should give priority to Batam instead of Singapore," he said.

PGN President Sutikno said the threat was wrongly addressed as PGN is only a transporter pointing out the owner of gas is ConocoPhilips. PGN through subsidiary PT Transportasi Gas Indonesia operates [a] 476 kilometer gas pipe transporting gas from the Grissik field of ConocoPhilips in South Sumatra to Singapore via Batam.

Apparently gas supply has been reduced to Batam as the price is higher in Singapore. Chairman of Batam Authority Mustofa Wijaya said the image of Batam as an industrial area has been damaged because of shortage in gas supply. Investors often complained about power failure because of scarcity in gas supply, Mustofa said.

- At the time of writing, I am unable to confirm this news as the above seems to be the only source carrying the article. If this is true, then it is a potentially destabilizing situation to Singapore, since 80% of Singapore's electricity is generated by natural gas, and Indonesia and Malaysia are our main suppliers of the commodity. This is seriously ringing alarm bells in my head, since as a peakoiler I am keenly aware that Indonesia's fossil fuel production has been in decline in recent months, both crude oil and natural gas. If the information is accurate, then the energy security of Singapore could be in jeopardy.

The decline of Indonesia's natural gas fields is well documented on this blog. In fact the Indonesians are building their own LNG terminal to import liquefied natural gas from other countries. Actually I was not specifically looking for this article. I saw this in today's [22 May 2008] Business Times an article titled : "Uneasy summer pushes power tariffs to new highs" :

Singapore is poised to set some records it could do without. Electricity tariffs are being hit with a double-whammy this month and could dwarf April's all-time high. Coinciding with skyrocketing oil prices - some glitches in Indonesian gas supply to power stations also caused spot electricity prices here to shoot to new highs in the last week or so ... there was tighter electricity supply - arising from cogeneration plant shutdowns for maintenance and exacerbated by the supply outages of Indonesian gas.

- Those keywords (highlighted in bold) immediately got me searching for news on the situation of Indonesian natural gas supply to Singapore. I really hope that there is some diplomacy going on because on the same day, CNA reported this :

Singapore plans to open a consulate cum trade office on the neighbouring Indonesian island of Batam by year's end. The facility will help Singaporean businessmen and visitors to the island. It will also give a further push to the Free Trade Zone of Batam, Bintan and Karimun - jointly developed by Singapore and Indonesia.

Singapore needs to build up its energy security and I don't mean just that LNG terminal alone. We need something more secure, more reliable, more powerful, and more efficient. We need something that can scale and we need something that isn't intermittent like wind or solar. We need something that isn't a fossil fuel and gives off no emissions. Singapore needs to go nuclear.

Update : Fellow blogger simontay78 has some additional details.

See also :

1. Indonesia's LNG supremacy wanes as Chevron's fields run short
2. Indonesia likely to terminate gas exports
3. Japan faces Indonesian gas cuts
4. Indonesia to cut LNG supply to 6 million tons after 2010
5. Indonesia considers quitting OPEC
6. Work on Singapore's first LNG terminal to start by early 2009
7. LNG at best an interim measure, alternatives must be looked into
8. Indonesian firms to build LNG terminal (and why Singapore should go nuclear)

(2008-05-23 00:13:36 SGT) [Energy] Permalink

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