Sembcorp Gas cancels deal to import natural gas from Indonesia’s Mako fields due to approval delays.

Sembcorp Industries has officially terminated its gas sales agreement (GSA) to import piped natural gas (PNG) from Indonesia’s Mako gas fields, citing regulatory challenges. (Refined for clarity and conciseness.) The deal, signed in September 2024, was expected to supply 111 billion British thermal units (BTU) per day for Singapore’s energy needs. However, the failure to secure Indonesian regulatory approvals forced the Temasek-backed firm to abandon the project.

Singapore has long relied on natural gas imports from Indonesia’s Natuna and Riau gas fields to meet its energy demands. Sembcorp’s now-canceled deal with West Natuna Exploration, Empyrean Energy, and Coro Energy Duyung (Singapore) was intended to secure gas supply beyond 2028. However, bureaucratic challenges and regulatory delays proved insurmountable, leading to the agreement’s termination on March 13, 2025.

Regulatory Hurdles Block Gas Deal

Despite signing the agreement on September 2, 2024, Sembcorp failed to receive the necessary approvals from Indonesian regulators. Without these clearances, the company was unable to proceed with the planned imports from the Mako gas fields. This development highlights the complexities of cross-border energy agreements and the regulatory risks faced by foreign investors in Indonesia’s energy sector.

Sembcorp stated that the cancellation will not impact its energy costs or gas supply commitments in Singapore. The firm reassured stakeholders that it will continue leveraging alternative gas sources, including liquefied natural gas (LNG), to fulfill market demand.

Sembcorp’s Alternative Gas Supply Strategy

Following the termination, Sembcorp confirmed that it will shift focus to its existing natural gas supply network, which includes LNG imports. The company has previously secured long-term gas supply agreements, including a USD 1.9 billion deal signed in June 2023 to import gas from Indonesia’s West Natuna fields via Medco E&P Natuna.

Despite the setback, Sembcorp’s financial outlook remains stable, with analysts noting that the company’s energy diversification strategy is expected to mitigate any potential supply disruptions.

Impact on Singapore’s Energy Market

The scrapping of the Mako field gas deal raises concerns about Singapore’s future energy security and dependency on Indonesian gas exports. Regulatory barriers continue to be a major hurdle for Singapore-based companies operating in Indonesia’s energy sector.

Singapore’s energy market remains heavily reliant on natural gas, with over 95% of its electricity generated from gas-fired power plants. The government has been actively expanding LNG import capabilities to reduce dependence on piped gas from Indonesia and Malaysia.

Sembcorp’s Stock Performance and Market Reactions

Following the announcement, Sembcorp shares closed 4 cents higher, up 0.661% at SGD 6.09 on March 13. Investors appear unfazed by the termination, reflecting confidence in Sembcorp’s resilient energy supply chain and diversified fuel strategy.

Industry analysts suggest that Singapore’s shift towards LNG imports will enhance long-term energy security and reduce exposure to regulatory risks in foreign gas markets.

A Shift in Singapore’s Energy Strategy

While the collapse of the Mako gas deal marks a setback, Singapore’s increasing focus on LNG and diversified energy sources ensures that its energy supply remains stable. The regulatory roadblocks faced by Sembcorp underscore the challenges of securing long-term gas deals with Indonesia, signaling a shift towards more independent energy solutions for Singapore.

Sources: Tempo (2025), The Edge Singapore (2025)

Keywords: Sembcorp Gas Termination, Mako Gas Fields, West Natuna Gas, Singapore Energy Supply, Regulatory Hurdles Indonesia, LNG Imports Singapore, Piped Gas Agreement