Philippines Sees No Impact from Indonesia's Reduced Gas Exports to Singapore
Key Takeaways
- •Indonesia reduced its natural gas exports to Singapore by 31 million standard cubic feet per day in order to strengthen its domestic supply.
- •Philippine Energy Secretary Sharon S. Garin said Indonesia has committed to honoring long-term coal supply contracts and that Manila expects no supply disruption.
- •Indonesia accounts for approximately 85% of Philippine coal imports, while coal makes up about 60% of the Philippine power generation mix.
- •The Philippine government plans to build a coal blending facility and is in discussions with the United States, Russia, and Australia about participating in the project.
- •Garin emphasized that sourcing 85% of a key fuel from a single country carries risk and highlighted the need to diversify energy suppliers.
SINGAPORE — The Philippines does not expect any disruption to its energy supplies from Indonesia's decision to reduce natural gas shipments to Singapore, with Energy Secretary Sharon S. Garin saying Jakarta has assured Manila that coal and gas deliveries will continue.
Speaking on the sidelines of Singapore International Energy Week, an annual energy industry conference, Ms. Garin said Indonesia has committed to honoring long-term coal supply contracts with the Philippines.
“We also asked them if the price could be maintained,” she said. “But we don't have the same issue (that has been) reported regarding Singapore gas.”
Indonesia cut its natural gas exports to Singapore by 31 million standard cubic feet per day to shore up its domestic supply, Reuters reported on Oct. 24. The cut is significant for Singapore, which depends on imported natural gas for the bulk of its electricity generation.
While Indonesia is not a major gas supplier to the Philippines, it accounts for around 85% of the country's coal imports. Coal makes up about 60% of the Philippine power generation mix. Indonesia is also the world's largest coal exporter, and its supply decisions are tracked closely in coal-reliant economies across Asia.
“Indonesia… is a very important part of our power system. We have to make sure they understand this,” Ms. Garin said.
To reduce its heavy reliance on Indonesian coal, the Philippine government has floated plans to build a coal blending facility. A coal-blending terminal receives various types of coal to produce a blend that meets a customer's specifications, and imported coal is typically mixed with locally produced, low-grade, sub-bituminous coal for various uses.
Ms. Garin said the government is in talks with the United States, Russia and Australia to gauge their interest in joining the project. Progress in those discussions, along with whether Jakarta maintains pricing on long-term coal contracts, will be the near-term markers of how far Manila can broaden its supplier base.
“Having 85% of our supply of a particular fuel coming from one country carries a certain level of risk. We have a good relationship with Indonesia, but we also need to diversify our sources,” she said. — Sheldeen Joy Talavera
Source: BusinessWorld
