To The Moon

• Over the weekend, Indonesia cut their natural gas exports to Singapore by 9%, or 31 billion British thermal units per day (bbtud), which works out to be around less than 2% of Singapore's daily gas demand

• Singapore currently relies on natural gas for 95% of its electricity needs, with gas pipped in from Malaysia and Indonesia, or in liquefied form from all over the world

• So what does this gas cut mean for SIngapore and which are the companies affected?

• Hear from Macquarie Research in a research note published this morning on 26 Oct 2026

• Read more for the full article as well as important disclaimers:

Key points

• EMA stated the supply cut to be "less than 2% of daily gas demand".

• Singapore saw larger disruptions with less supply resilience in 2H21. Spark spreads widened.

• MQ expects spark spreads to widen, but to a smaller magnitude. SCI is the more exposed beneficiary in a higher spark spreads environment

Indonesia reduces piped gas exports to Singapore. On 24 October, The Straits Times reported that Indonesia would reduce piped natural gas (PNG) exports to Singapore by 31 bbtud, effective that day: 15 bbtud from offshore Natuna fields and 16 bbtud from onshore Sumatra fields. Singapore's Energy Market Authority (EMA), however, states that the "total reduction amounts to 17 bbtud over a period of 18 days", representing "<2% of Singapore's daily gas demand".

Companies affected. Gas Supply Pte Ltd (GSPL) and Sembcorp Industries (SCI SP) contract PNG from Indonesia: GSPL from South Sumatra's Corridor PSC and SCI from the Natuna fields (Fig 5). Keppel Ltd (KEP SP) contracts its PNG from Malaysia and is therefore unaffected by the cuts.

Historical precedent. Larger supply cuts in 2021 attracted limited attention, as Singapore's power sector drew less investor interest at the time. Implied supply reductions from unplanned outages reached as much as 90 bbtud over September–December 2021.

Physical market impact: MQ expects higher spark spreads, but a smaller increase than during the 4Q21 outage. Average spark spreads rose from S$18/MWh in the first nine month of 2021 to S$315/MWh in 4Q21, reflecting Singapore's weaker supply resilience at the time. Singapore is now better prepared, although global gas supplies remain tight. Spot electricity prices had already risen in response ahead of the supply cut. Industry contacts indicate that positive spark spreads remain achievable even using gas priced at spot JKM levels.

Stock implications: Likely positive for SCI and KEP. MQ sees greater upside from higher spark spreads than from gas trading, as EMA will require all excess gas to be allocated to power generators before it can be traded. Both SCI and KEP have gas trading businesses. However, MQ expects weak market sentiment to prompt initial selling of directly affected companies

• $Sembcorp Ind(U96.SI)$ : Gas and Related Services (GRS) reported clean PATMI of S$181m in 2H21 (+53% HoH) despite the outages. However, spot capacity exposure was approximately 30%, versus an estimated <10% currently. MQ believes SCI has sufficient gas, given its flexibility as a PNG and LNG license holder and the spare gas availability highlighted in its 1H26 commentary.

MQ has a Neutral rating on SCI with a 12-month target price of $6.39 based on a Sum-of-Parts stock methodology.

• $Keppel(BN4.SI)$ : Limited spot capacity—8% of capacity under contracts shorter than one year, versus double-digit exposure in 2021—reduces its exposure. MQ still expects KEP to benefit from higher spark spreads, although less than SCI.

MQ has an Outperform rating on KEP with a 12-month target price of $12.87 based on a Sum-of-Parts stock methodology.

Note:

Macquarie Research is independent from the Warrants business, what the Macquarie Warrants desks quote from Macquarie Research may not reflect the complete analysis of Macquarie Research on the relevant company over time.

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Macquarie has trending call warrants 94BW and 9HPW tracking stocks KEP and SCI respectively.Trending warrants refer to those with the tightest spreads and highest liquidity amongst warrants tracking the same underlying.

The call warrants will move in the same direction as the underlying shares they track.

KEP call warrant $KeppelMBeCW261230(94BW.SI)$ (https://warrants.com.sg/tools/livematrix/94BW)  costs $0.014 while KEP shares trade at $10.38 and moves 11.9 times more than Keppel shares, based on its effective gearing level as of 905AM.

SCI trending call warrant $SembInd MBeCW270225(KYRW.SI)$ (https://warrants.com.sg/tools/livematrix/KYRW)  costs $0.031 while SCI trades at $5.71 and moves approximately 6 times more than SCI shares.

There are no put warrants available over both stocks.