INDONESIA CLAIMS 148 CARGOES OF LNG SOLD TO SINGAPORE ARE RE-EXPORTED - FALSE AND HERE'S THE RECEIPT
Bahlil Lahadalia, the Indonesia Coordinating Minister for Downstreaming and Energy Transition, says “I believe that not all of the 148 cargoes we send are used for Singapore’s own needs, but some are traded and subsequently exported to other countries.” This is so vague that it would be a fool to pin anything down. It is simply a politician's careless comment in an ambush interview, spoken with much ambiguity. The 148 cargoes -- which time frame? Some are traded -- by whom? Exported to other countries - how?
There used to be a TV comedy series anchored by Bill Crosby, yes the one who went to jail for aggravated indecent assault, it's called "Kids Say The Darndest Things". Well, ditto politicians sometimes. Bahlil's comment is the stuff that headlines are made of. It is a claim Singapore is profiting at the expense of Indonesia - a frenzy feed to legacy and social media following Suharto's accusation foreigners are stealing the country's wealth.
The knee jerk reaction of anti-establishment types in Singapore and Indonesians on social media is the Singapore government is playing a dirty game. Electricity bills will go up and some greedy buggers are making money.
The NPG (natural piped gas) is not the issue here. Indonesia has cut down a certain volume of NPG, whether it has breached contract quantum we do not know. Bahlil Lahadalia, the Indonesia Coordinating Minister for Downstreaming and Energy Transition has said it is within contract terms. We are just talking LNG here.
Indonesia used to sell some LNG through the spot market. But by 2026 their spot market sales has collapsed. The minister has a problem here. If he is talking about historical spot market sales, it is irrelevant.
Indonesia could still be making some spot market sales whenever they have excess capacity. In which case the physical deliveries could be DES or FOB.
Two-thirds of all spot deliveries are by DES. For DES the seller (Indonesia) is responsible for the entire maritime voyage. They procure the shipping vessel, pay for the freight insurance, manage the boil-off gas during transit, and physically transport the LNG directly to the buyer’s receiving terminal. Ownership changes hands at the flange connection - where the LNG flows from vessel to buyer's equipment. No buyer who takes DES delivery in Singapore will re-sell it offshore because of the logistics of re-export. There is a double-handling cost. The vessel must pull up, unload the liquefied gas into SLNG’s storage tanks, pay terminal regasification, cooling, and storage fees, and then a completely separate vessel must be chartered to pump that gas back out (known as a "reload" or "break-bulk" operation). Another cost is boil-off losses. LNG constantly turns back into gas during transfer and storage. Moving it between multiple ships and tanks causes "boil-off," physically eroding the volume of the cargo. So here is the problem for Minister Bahlil. If Indonesia delivers by DES to Singapore, the LNG is never re-exported.
Singapore’s Ministry of Energy, Trade and Industry (METI) issued an official statement clarifying that the country's local firms generally avoid the physical "cost + time" loop altogether. This refers to the DES deliveries.
FOB is also highly common in the spot market, but it is typically used when the seller is an upstream project producer (like Indonesia's Bontang or Tangguh projects when they have spare spot capacity). LNG is natural gas which has been converted to liquid form for transportation purposes. Upstream liquefaction plants often lack their own dedicated spot shipping fleets. Selling FOB allows them to monetize unexpected surplus gas quickly without having to charter expensive spot vessels themselves. It is most certainly the 148 cargoes the minister mentioned were shipped FOB. In FOB, the buyer arranges his own vessels. The minister has a problem here. Ownership changes hands at the flange connection as the LNG is pumped into the vessel. It is the buyer's right to where he wants to move the cargo.
There are some 50 international trading desks based in Singapore. These trading desks buy FOB and sell DES. They want to sell DES to make margins on shipping profits. But the real motive for buying FOB and selling DES is control over the cargo. When they buy FOB they send their own chartered vessels to pick it up. When they sell DES they arrange their vessels to send to buyer's destination. In both modes, they have total ownership of cargo whilst on the seas as well as destination freedom. This is very important.
Control is the oxygen of a commodities trading desk. By combining an FOB purchase with a DES sale, the trader captures complete operational sovereignty over the cargo from the moment it leaves the loading dock until it hits the buyer’s grid. Having this control allows traders to maximise profits in two ways -- chase price spikes and cargo swaps.
If a trader buys a spot cargo FOB in Indonesia initially intending to sell it to a utility in Japan, but a sudden cold snap strikes Europe causing prices to skyrocket mid-voyage, the trader can legally instruct the captain to turn the ship around and head for the English Channel instead. The producer cannot demand a slice of that extra profit.
Buying FOB and selling DES gives traders the logistical flexibility required to execute highly lucrative cargo optimization swaps. For example, a Singapore trading desk buys a cargo FOB from Indonesia's Tangguh project, meant to fulfill a supply commitment they owe to a buyer in France. Simultaneously, a European trader has a cargo sitting on a ship in the Atlantic meant for a buyer in Taiwan. Instead of both ships passing each other at immense cost, the Singapore desk swaps their Indonesian cargo with the European trader. The Indonesian gas goes straight to Taiwan, and the Atlantic gas goes straight to France. It could also work the other way. If the Singapore trader is delivering a cargo DES, he can also do a swap with another party. This optimization saves millions of dollars in canal transits, fuel, and time. Trading desks can only pull off these real-time structural swaps if they own the cargo on an FOB or DES basis and possess the legal right to change its destination instantly.
Apart from these international traders, who else in Singapore who may have bought Indonesian LNG? In Singapore, tracking is very simple. Singapore's Energy Market Authority (EMA) has streamlined the importation of LNG into two groups.
Power generation:
UN Comtrade and EMA import databases, the official receipts, track where the physical LNG burned in local power plants actually comes from. The physical LNG that arrives at the Singapore LNG (SLNG) Terminal and is regassified for the domestic power grid comes almost exclusively from Qatar (approx. 47%) and Australia (approx. 32%). The remainder is patched together from the US, Malaysia, and African producers. Indonesian LNG for Power is effectively 0%. Local Gencos do not sign direct seaborne LNG purchase agreements with Indonesian liquefaction facilities for domestic electricity generation.
Licensed legacy importers like Shell, ExxonMobil, and Sembcorp Fuels are permitted to continue buying gas independently, but only to supply industrial manufacturing plants (like petrochemical crackers on Jurong Island) or downstream retail operations, not the electricity grid.
Note: Municipal or "Town gas" is piped gas. Sole manufacturer and retailer is City Energy. It comes from PNG. As for cylinder LPG it comes from the local refineries of Shell, ExxonMobil and SRC.
Minister Bahlil's Math does Not Add Up
First understand why spot LNG market exists. Natural gas cannot be stored in open piles like coal. If a gas field is producing gas faster than its connecting pipeline can physically transport it, the upstream producer faces a massive operational crisis. It has 3 choices -- shut-in the wells, which can cause damage; flaring or burning the excess, which faces restrictive environmental regulations; or liquefaction, which is cooling them to minus 162 degrees Celcius turning gas into liquid (LPG) which can be loaded on vessels and sold in the spot market.
For Indonesia, that game is over. Their wells are drying up, there is no over-production of natural gas. Indonesia has long since shut down uncommitted spot sales of LPG. It is selling under long term SPAs (Sales and Purchase Agreements) committed long time ago to BP and Shell. Because of the controversy he himself started, Minister Bahlil had to assure BP and Shell that Indonesia will honour the SPA commitments.
Shell:
The absolute bulk of Shell’s current direct supply obligations from Indonesia comes from 2 areas:-
(1) The legacy contracts of Pavilion Energy - Shell inherited these SPAs when it took over Pavilion Energy from Temasek. Pavilion has multi-year, long-term Sale and Purchase Agreements (SPAs) with Indonesian upstream producers (specifically drawing from the Bontang LNG facility in East Kalimantan). This is estimated at 0.5 to 1.0 million metric tons per annum (mtpa) of contracted Indonesian LNG capacity (translating roughly to 8 to 15 physical cargoes per year).
(2) Shell operates as a foundational equity investor and portfolio buyer across Indonesian upstream projects. They have locked in some SPAs.
Shell’s total structural flow from Indonesia scales up to an estimated 1.5 to 2.0 mtpa over the course of these agreements. This translates to roughly 25 to 30 cargoes annually floating across its regional trading books.
BP is not merely a customer buying gas at a dock; it is the foundational operator and main stakeholder driving the engine of Tangguh LNG because BP operates the Tangguh LNG project in West Papua (holding a dominant 40.2% stake). BP successfully brought the massive Tangguh Train 3 expansion online. This multi-year, multibillion-dollar project drastically expanded Indonesia's national production capacity. The Indonesian government extended BP's production sharing contract (PSC) for Tangguh all the way through 2055. Because BP owns the technology, manages the infrastructure, and provides the direct foreign direct investment (FDI) needed to extract the gas, any threat to cut BP's allocated export volumes would severely damage Indonesia's credibility with its most critical upstream partner.
Both use their Singapore trading desks to deploy this LPG physical liquidity to optimize supply positions or satisfy term commitments across the Asia-Pacific region. These cargoes are contracted by their global trading desks in Singapore, but the cargoes are never delivered to the Lion City.
Volume discrepancy:
There is no re-export of LNG shipped to Singapore, whether the cargoes came from Indonesia or elsewhere, When Minister Sahlil claimed 148 cargoes from Indonesia shipped to Singapore were re-exported, is he referring to aggregate over a few years? In any case they are FOB so buyers have the right to deliver anywhere they want.
But Minister Shalil, if the 148 cargoes you mention is an annual figure, your math is wrong. Shell's 25-30 cargoes + BP's 16 cargoes add up to 41-46 cargoes annually. Could there have been a leakage of 100 cargoes?
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