Singapore, Indonesia to tackle concerns over gas supply and wildfire haze

SINGAPORE/JAKARTA - Indonesia will host Singapore's top diplomat on Tuesday, its foreign ministry said, as tensions simmer between the two neighbours over persistent haze from Indonesia's wildfires and Jakarta's decision to cut gas supplies to the city-state.

Jakarta cut pipelined gas to Singapore by about 8% as of Saturday, saying it was safeguarding domestic supplies. The move came days after Indonesia's energy minister threatened to review export contracts with countries "that are not cooperative and do not treat Indonesia with mutual respect".

He did not name the countries.

The visit by Singapore Foreign Minister Vivian Balakrishnan, which Singapore has yet to confirm, comes as frustration builds in the city-state and neighbouring Malaysia over transboundary haze from Indonesia's most intense forest fires in 11 years.

Singapore ​generates up to 95% of its electricity from natural gas, and though the supply cut from Indonesia amounts to less ​than 2% of daily demand, Prime Minister Lawrence Wong said on Sunday that he expects contract signatories to "honour their commitments".

Indonesia's energy minister, Bahlil Lahadalia, hit back on Monday, saying the amount of gas now being supplied to Singapore met the minimum level stipulated under their agreement.

"Our nation is a nation that honours contracts, rules. So don't teach Indonesia on how to honour contracts," Bahlil told a press conference, where he outlined details of gas exports to "so-called brothers and sisters".

'THIS ENTIRE REGION IS SUFFERING'

Indonesia's fires have raged for months and driven up pollution and respiratory illness across the country, with thick haze also drifting into Singapore, Malaysia and East Timor.

Singapore has not directly criticised the Indonesian government over the haze and has offered assistance, but it has sent notices to Indonesian companies it says are responsible for the blazes.

Singapore Senior Minister K Shanmugam expressed disappointment last week over remarks made about the haze by an Indonesian official, who said that Indonesia's forests provided Singapore and Malaysia with oxygen.

"Frankly, it is not right to say this when this entire region is suffering as a result of the bad behaviour of companies breaching regulations," Shanmugam said. "The people suffering the most are Indonesians themselves."

Singapore's state investor Temasek and its sovereign ‌wealth fund GIC were also on the defensive last week, rejecting allegations by a former Indonesian trade minister that they had pressured global index provider MSCI to consider demoting Indonesia's equities to "standalone" market status.

Indonesia's government has not commented on the allegation by the former minister.

Veteran Singaporean diplomat Bilahari Kausikan called the gas cuts an "attempt at intimidation" but said they would be ineffectual.

"The cost to Indonesia will far, far outlive any twinge we may feel," he posted on Facebook.

-Xinghui Kok in Singapore and Fransiska Nangoy and Stanley Widianto in Jakarta; Editing by Martin Petty/Reuters