Indonesia to honor coal export deals with Philippines

SINGAPORE – Indonesia has assured the Philippines that it will honor long-standing coal supply contracts despite its move to centralize exports of key commodities to prioritize domestic demand, the Department of Energy (DOE) said.

“So we’ve been assured of the supply,” Energy Secretary Sharon Garin told Manila-based reporters on the sidelines of the Singapore International Energy Week.

The DOE had also asked Indonesia to keep coal export prices stable and avoid increases amid tighter controls on energy trade, she said.

The assurance comes as Indonesia begins cutting some of its natural gas pipeline exports to Singapore to meet rising local demand and accommodate maintenance requirements.

Singapore has said the impact of the cuts is manageable but stressed the importance of all parties honoring their commercial commitments.

“We don’t have the same issue as of yet that has been reported, like the issue Singapore has with its gas,” Garin said.

Still, the Philippines is not taking the assurances for granted, as coal supply contracts may contain force majeure provisions that could be invoked under certain circumstances, the energy chief said.

Coal accounts for around 60 percent of the country’s energy mix, leaving it with one of the most coal-dependent power grids in Southeast Asia.

The country imports about 95 percent of its coal supply, with Indonesia making up the majority of those imports.

To reduce its reliance on Indonesian coal, the Philippines is looking to establish its first coal terminal, where domestic coal can be processed and blended to meet the requirements of local industries.

Garin said the DOE has been pitching the proposal to both local and foreign companies to explore their interest in helping the Philippines pursue the initiative.

“Whenever I have meetings with different countries, when they’re looking for investments, I always mention that a coal terminal could be possible because we don’t have one here in the Philippines,” she said.

Meanwhile, Singapore has assured households and businesses that the government is on top of the situation amid Indonesia’s gas export cuts.

“The reduction is less than two percent of our total daily gas demand. We have dealt with similar disruptions in the past without incident because of all the measures we have invested in over many years,” Singapore Energy, Trade and Industry Minister Tan See Leng said.

He said Singapore would continue to expand its supply options and strengthen partnerships with other countries to bolster its energy resilience.

“We can keep calm and carry on. Our households and businesses can be assured that our energy security is always at the top of our minds,” Tan said.

Currently, natural gas accounts for roughly 95 percent of Singapore’s fuel mix, data from the Energy Market Authority show.