Gas Distribution Through Pipeline in Indonesia By Michael Baskoro - PGN Maximizing the Value of Indonesian Gas in Partnership with Norway Hotel Borobudur, Jakarta, October 5 th, 2011 1
Disclaimer: The information contained in our presentation is intended solely for your personal reference. In addition, such information contains projections and forward-looking statements that reflect the Company s current views with respect to future events and financial performance. These views are based on assumptions subject to various risk. No assurance can be given that further events will occur, that projections will be achieved, or that the Company s assumptions are correct. Actual results may differ materially from those projected. 2
Supply vs Demand and Infrastructures Condition 3
Indonesia : A Major Producer of Natural Gas The largest proven gas reserves in Asia Pacific Ahead of Australia, China and Malaysia (BP World Energy Report 2010) Experience domestic natural gas shortages Due to fast growing demand and the limitation of natural gas infrastructure 3.71 1.32 53.06 21.49 7.96 7.76 24.14 26.68 6.18 6.39 6.30 6.31 Natural Gas: Proved reserves (BP World Energy Report 2010) 2009 share Trillion cubic metres 2005 2006 2007 2008 2009 of total Indonesia 2.48 2.63 3.00 3.18 3.18 1.7% Australia 2.35 2.34 2.29 3.08 3.08 1.6% China 1.53 1.68 2.26 2.46 2.46 1.3% Malaysia 2.48 2.48 2.38 2.38 2.38 1.3% Total Asia Pacific 13.48 13.75 14.65 16.00 16.24 8.7% Source: Director General of Oil and Gas Total World 172.28 173.18 176.68 185.28 187.49 100.0% 4
What the Users Need: More Gas Supplies! 2 500 2 000 1 500 Industry Demand 2011 2 093 1 247 No Subsidy of Fuel for the Industries Subsidies for industries revoked in 2005 Pricing and Efficiencies Significant price and efficiencies benefits by converting to natural gas, as well as environmental concerns 1 000 500 0 965 246 131 100 79 Conversion of Power Plants Pent up demand from the conversion of existing dual fired power plants pending availability of gas Demand from the industries Require natural gas to compete in the era of Free Trade Source: Ministry of Industry Republic of Indonesia & PLN 5
Current Low Consumption to Drive Demand Cost of Electricity Production Energy IDR/Kwh Oil 1,420 Natural Gas 339 Coal 366 Geothermal 542 Hydro 12 Source: PLN & Bisnis Indonesia (Januari 2011) Low level of current consumption of natural gas and electricity Ensure the continuing growth of demand for natural gas 6
INDONESIAN GAS BALANCE 2010-2025 7
Natural Gas in Indonesia Demand vs Supply Issues Demand for natural gas is concentrated in some industrial areas (West, Central & East Java, Banten, North Sumatera). Demand for natural gas is growing rapidly. To this day still very dependent on pipeline gas. VS Supply for natural gas is located far from markets and sometimes in remote areas/deep water. New natural gas explorations and productions are growing slowly. Several gas fields have been tied to long term export contracts. New infrastructures must be developed: Transmission and distribution pipeline LNG facilities (FSRU or land base) CNG, etc 8
Recent Indonesia s Infrastructures 9
PGN Current Position in Value Chain 10 Producers Shippers Natural Gas PGN Mediating Transmission Line Wholesaler Distribution Network Retailer GAS DELIVERY Other Bussines END CUSTOMERS Industries IPP PLN Commercial & Household 10
Our Sources of Gas Pertamina Medan DOH Rantau 44 BCF Medco E&P Lematang Lematang Block K A L I M A N T A N PSC Grissik Corridor Block 2581 BCF Grissik Medco E&P Indonesia South & Central Sumatra Block 14 BCF Pertamina Sumatera Selatan DOH Sumsel, Merbau Field, Pagardewa, Prabumenang, Tasim, Musi Barat 1006 BCF Pertamina JBB DOH Cirebon 338 BCF *) @ 1000 BTU/SCF Indonesia Pertamina TAC Ellipse Jatirarangon Field 41 BCF Pertamina Cirebon DOH Cirebon 15 BCF Kodeco West Madura PSC 52 BCF Lapindo Brantas Wunut Field 136 BCF Husky Oil BD Field 146 BCF Maleo Field 243 BCF 15
PGN s Role Connecting the Producers to the Consumers GAS SUPPLY Contracted for volume and prices Key Suppliers Under Upstream Authority / BPMigas PGN CUSTOMERS Contracted for volume Business tobusiness Prices Industrial Customers (Steel Millls, Petrochemical, Ceramics, Textile, Glass) Power Sectors (PLN, IPP) Commercial Customers (Hotels, Shopping Malls, Commercial buildings) Residential Customers Represented 98% of volume 12
Our Transmission Network & Facilities 13 PLN Medan Total transmission pipeline length: 2.076 km Panaran Station, Batam Duri KALIMANTAN Pagardewa Compressor St. Grissik Receiving Station Legend: Strategic Business Unit (SBU) I Strategic Business Unit (SBU) II Strategic Business Unit (SBU) III South Sumatera West Java Transmission Pipeline (SSWJ I & II) (1.002 km) Grissik Duri transmission pipeline (536 km) Pagardewa Station Terbanggi Besar St. Labuhan Maringgai St. Muara Bekasi Station Grissik Singapore transmission pipeline (469 km) Wampu - Belawan transmission pipeline (68,6 km) 13
Distribution Network for the Retail and Household Customers NORTH SUMATERA Dist P/L: 587 km (Future LNG RT) 70% PE P/L BATAM Dist P/L: 56 km 19% PE P/L PALEMBANG Dist P/L: 135 km 99,8% PE P/L Total distribution pipeline length: more than 3,750 km Cater for 44,4% of total retail infrastructure * PEKANBARU Dist P/L: 11 km WEST JAVA Dist P/L: 2,400 km (Future LNG RT) 50% PE P/L EAST JAVA Dist P/L: 709 km 30% PE P/L Dist. P/L PE P/L : Distribution Pipeline : Poly Ethylene Pipeline * Source : MEMR Decree No. 0225/ 2010 14
Conclusion Remarks The demand for natural gas in Indonesia is still increasing rapidly. It is a promising market to be exploited. Infrastructures development (transmission, distribution pipelines and facilities) are in progress and will continue to grow in order to connect producers and end customers. PGN is committed to take the leading role in connecting gas supply to the market. 15
Thank You Contact: PT Perusahaan Gas Negara (Persero) Tbk Jl. K H Zainul Arifin No. 20, Jakarta 11140, Indonesia Ph: 62 21 6334838 Fax: 62 21 6331632 http://www.pgn.co.id 16