The government’s decision to further reduce natural gas exports to Singapore may strengthen domestic energy supplies, but it risks undermining the country's credibility as a reliable trading partner. The move, justified on energy security grounds, could unsettle investors, strain relations with Singapore and weaken ASEAN's efforts to build an integrated regional energy market.

Following a plenary cabinet meeting in Jakarta on Oct. 1, the government announced that it would reduce Indonesia’s natural gas exports to Singapore over energy security concerns during crises. President Prabowo Subianto pointed out that many countries prioritized their own needs in times of crisis and described the prevailing geopolitical environment as one lacking international order in which only strong countries would survive.

Prabowo has taken a more direct role in defining Indonesia's foreign policy goals and their implementation, which reflects his broader domestic policy orientation toward greater centralization under presidential control. One consequence of this centralized, personality-driven approach is that foreign policy decisions increasingly rest with him.

Given Prabowo's worldview that the nation is being exploited by domestic and global elites, along with his emphasis on survival during crises, it is hardly surprising that some within the government have adopted a more confrontational stance in international relations. After all, the Prabowo administration has a track record of attributing setbacks and dissent to “antek-antek asing” (foreign stooges). Indonesia's recent moves regarding Singapore appear to follow a similar pattern.

The two countries are already embroiled in a diplomatic dispute over the wildfires in Kalimantan, both sides blaming companies linked to the other for the fires. Adding to the tension is Jakarta’s allegation that Singapore was behind MSCI's latest announcement on possibly downgrading the Indonesia Stock Exchange to “standalone” status over market transparency concerns.

Even if energy security concerns are driving the government’s decision to reduce gas exports to the island nation, political factors cannot be ruled out. And the move could have far-reaching consequences beyond Indonesia's immediate relationship with Singapore.

Indonesia previously reduced gas exports to Singapore last year, also citing domestic energy needs as the primary concern. Afterward, Energy and Mineral Resources Minister Bahlil Lahadalia reassured gas exporters that there would be no further reductions to export quotas in 2026, whether for existing contracts or spot agreements. Local gas exporters were therefore caught off guard when Bahlil suddenly announced another cut in quotas to Singapore.

After all, gas processing is a highly capital-intensive business that involves advance planning for production capacity and facilities based on expected commercial returns, which can take decades to materialize. Any unexpected change to sales commitments can significantly affect producers' financial positions.

Beyond existing contracts, the government’s sudden move could also undermine Indonesia's future credibility as a trading partner, particularly in the gas sector. The country’s natural gas industry has benefited substantially from participation in international trade, since access to foreign markets has improved the financial viability of new production facilities.

Existing gas agreements have underpinned the production decisions of local gas contractors, which have allocated output to international markets while reserving supplies to meet their domestic market obligation (DMO). A sudden change in the country’s gas export policy could trigger a cascading effect, as any uncertainty is likely to drive foreign buyers away. Gas producers could then find it increasingly difficult to develop new facilities as access to export markets diminishes.

The timing of the announcement also makes it difficult to restore confidence. Indonesia is currently drafting new oil and gas legislation that includes a proposal to change the DMO requirement from a maximum 25 percent to a minimum 25 percent. If the bill pursues this policy direction, future efforts to restore confidence among foreign buyers could be undermined by a provision that allows the government to increase domestic supply requirements at any time.

More broadly, this development also reflects this administration’s foreign policy direction, which increasingly appears to emphasize relations with major powers at the expense of regional cooperation. While a more active role for Indonesia in international affairs is welcome, the country cannot afford disputes within ASEAN, which it helped establish in 1967.

Energy security, the stated reason to justify reducing gas exports, is also critical to strengthen regional cooperation. ASEAN is developing an interconnected regional power grid aimed at facilitating electricity trade among member states: The initiative requires sustained cooperation and mutual trust among member states, and disputes such as the one with Singapore could undermine its progress.

The government cannot claim to strengthen energy security while undermining the credibility of the national energy industry and antagonizing the very partners with whom it must work to build ASEAN’s energy security. It must therefore complement its more assertive global engagement with stronger regional cooperation, particularly in developing a more secure and integrated energy system for Southeast Asia.