Study of: PERFORMANCE AND BUSINESS OPPORTUNITY OF GAS IN INDONESIA, 2010 - 2014 (Equipped with Acceleration of City Gas) February

, 2010

Oil exploitation in Indonesia has been going on for more than one century periodically draining the existing oil potency, crude oil reserve in Indonesia (2009) was 7,998 MMSTB (proven reserve 4,303 MMSTB and potential reserve 3,695 MMSTB), with production level of 357 million barrels per year, it is predicted that oil in Indonesia would be exhausted in about 10 years. While during the last fifteen years, the development of natural gas reserve tended to increase, as of January 2009, it was recorded about 159 trillion standard cubic feet (TSCF). With production level of about 2.74 TSCF per year, the natural gas reserve exploitation is predicted to go on for about 40 years. Along with the issuance of UU Migas No 21/2002, and Kepres No. 57/2002, it is potentially changes the management pattern of oil and gas in Indonesia, such as the distribution of government, regulator, and business player of oil gas function, sorting the business chains of several main activities (unbundling), and focusing on the liberalization of downstream oil and gas sector. Paragraph 8 article 1 of UU No. 21/2002 firmly stated that the government should prioritize the utilization of gas for the domestic consumption needs. During the last five years, domestic gas needs was increased significantly or almost reached 100% from 29.6% (2002) to become 49.5% (2008), during the period of 2003 – 2008, 96 gas business contracts has been signed with various users. Accumulatively, the gas contract volume reached 14.56 TCF, consisted of industrial sector 5.9 TCF (41%), electricity 5.83 TCF (40%), fertilizer industry 2.83 TCF (19%). However, until now, the limitation of infrastructure and economy often cause domestic gas supply scarcity. By the end of June 2009, it was reported that DESDM has prepared a short-term program (2010 – 2014), such as simplifying the bureaucracy of exploitation license, increasing production and energy utilization for domestic market obligation. Referring to the statement of the Directorate General of Oil and Gas, Evita Legowo, in the 2010 budget, there are seven oil and gas priority activities, such as development of gas transmission and distribution, service and monitoring natural gas business, front end engineering design (FEED) of LPG mini refinery development. Considering that the APBN fund source was still below the level of 10% (of the needs), the private sector needs to participate actively in the gas development activity in Indonesia in 2010 – 2014. By discussing the issue of gas industry in Indonesia, including the production progress and its utilization, enriched with the prospect of domestic natural gas resource,

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and acceleration of energy diversification policy implementation, made this study is very useful for the players in the gas industry, including the government and involved corporations, also financing institution, either domestic or international. This study is prepared in 500 pages, and we offer at the price of Rp 5,500,000 (Five million five hundred thousand Rupiah) per copy for the Indonesian version, or US$800 (Eight hundred US Dollar) per copy in English version. To order and further information about this study, please contact PT Media Data Indonesia by telephone number (021) 809 6071 and facsimile (021) 809 6071 by filling the attached form. For overseas or outside Jakarta order, additional delivery fee would be charged. Thank you for your kind attention.

Jakarta, Februari 2010 PT Media Data Riset

Drh H. Daddy Kusdriana M.Si Direktur Utama

PT MEDIA DATA RISET Office : Jl. SMA XIV No.12A, Cawang-UKI, Jakarta Timur, Phone.021-809 6071, Fax.021-8096071 Website :


Study : PERFORMANCE AND BUSINESS OPPORTUNITY OF GAS IN INDONESIA, 2010 - 2014 (Equipped with Acceleration of City Gas) February, 2010
1. INTRODUCTION 2. ENERGY IN INDONESIA 2.1. Hydrocarbon conclave in Indonesia 2.1.1. Oil and Gas Reserve 2.1.2. Coal Resource, Reserve, and Terminal Potency and Location Plan for Coal Liquefaction Coal Bed Methane (CBM) Indonesia 2.2. Resource and Production of fossil energy 2008-2009 2.2.1. Progres Status of Non Fosil Energy 2008-2009 2.2.2. Potency of Geothermal in Indonesia 3. GENERAL POLICY OF ENERGY IN INDONESIA, 2002-2025 3.1. Energy Diversification (Primary) 3.1.1. Energy Conservation 3.1.2. Investment Incentive for Domestic fuel supply 3.1.3. Acceleration of Value Added National Energy 3.2. Obligation of minimum utilization of biodiesel 2009 – 2025 3.2.1. Obligation of minimum utilization of bioethanol 2009– 2025 3.2.2. Obligation of minimum utilization of pure vegetable oil 2009 – 2025 3.2.3. Target of Domestic goods and services utilization 2025 3.2.4. Target of National Human Resource utilization 2025 3.3. Projection of Energy Needs in Indonesia, 2025 3.3.1. Progress of Energy Mix Target (Primary) 2025 4. THE ROLE OF ENERGY AND MINERAL IN THE NATIONAL ECONOMY 4.1. Investment Needs for ESDM sector development 2010-2014 4.2. Energy and Mineral Contribution For Nation’s Revenue, 2008-2009 4.2.1. Development of Nation’s Revenue 2004-2009 4.2.2. Regional Yield Spread Fund 4.2.3. Comunity Development 4.2.4. ESDM Balance Sheet development 2004-2008 4.3. Realization of Energy Subsidy 20082009 4.3.1. Development of Energy Subsidy 2004-2009 4.4. Development of Investment in ESDM sector, 2004-2009 4.5. Production of Fossil Energy progress, 2004-2009 4.6. Progress status of non-fossil energy 2004 - 2009 4.7. Performance of biofuel development, 2004-2009 4.8. Development of National Electricity System, 2004-2009 4.8.1. Electricity Investment Needs, 2010-2014 4.8.2. Rural electricity progress 2006 – 2009 4.8.3. Man power absorption 2004 2009 5. RESOURCE AND EXPLOITATION OF NATIONAL OIL AND GAS 5.1. Development of Oil and Gas Reserve (Proven) 1993-2008 5.1.1. Oil and Gas Resource in Indonesia as of 2009 5.1.2. Development of Oil Reserve 1993-2008 5.1.3. Development of Natural Gas Reserve 1993-2008 5.2. Oil and Gas Upstream Activity in Indonesia 5.2.1. Exploitation of Oil and Gas Resource 5.2.2. Oil and Gas Exploration Area 5.2.3. Performance of upstream oil and gas 2008-2009 Contribution of Oil and Gas in Nation’s Revenue 2003-2009 Oil and Gas Yield Spread Fund Investment and Oil and Gas Work Area 2009 Winner & KKS WK Oil and Gas & GMB 2008/ 2009 Acceleration of Seismic 2D & 3D Survey realization 2003-2009 Exploration and new well finding 2003-2009 Drilling development 2005-2009 Cost Recovery and Production Cost 20022008 Recapitulation of WP&B Exploration 2009 Recapitulation of WP&B Exploitation/Production 2009

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3 Production of Well (New) 2008 and On Stream field 2009 of oil and gas production and Lifting 2008-2009 5.3. Profile of Oil and gas production in Indonesia 6. GAS RESERVE AND INFRASTRUCTURE IN INDONESIA 6.1. Development of Gas Reserve in Indonesia 1993-2009 6.1.1. Infrastructure of National Gas (As of 2009) 6.2. Gas Refinery in Indonesia (Existing) As of 2009 6.2.1. Gas Refinery according to Operator and type of process 6.3. Gas Pipeline in Indonesia 6.3.1. Grissik-Duri pipeline 6.3.2. Gas Transportation System Sumatera and Natuna Gas Transmission System of South Sumatera – West Java Gas Transmission System of East Java Gas Transmission System of Bontang – East Kalimantan 6.3.3. Gas Transmission System of Sulawesi 6.3.4. PGN Gas pipeline 6.3.5. Master Plan of Gas Transmission and Distribution in Indonesia 7. GAS PRODUCTION & UTILIZATION IN INDONESIA 7.1. Potency and Role of Gas in Indonesia 7.2. Price Ratio of Gas against Oil 7.3. General Description of Supply & Demand of Gas in Indonesia 2000-2008 7.4. Condition of Domestic Gas Allocation 7.4.1. Acceleration of Domestic PJBG 2003-2009 7.4.2. Domestic Gas fulfillment VS Gas Export 2002-2009 7.5. Realization of Natural Gas production 2009 7.5.1. Production & Utilization of Gas in Indonesia 2000-2009 Natural Gas Production according to Operator 2005- 2009 Gas Utilization according to Operator 2000- 2009 7.5.2. Additional Gas Production Potency 7.6. Progress of Gas Development in Indonesia (As of 2009) 7.6.1. Potency of Gas Additional Production 2009 GN & three LNG Receiving Terminal projects (status 2009)

8. LNG PERFORMANCE IN INDONESIA 8.1. LNG production in Indonesia 2006 – 2009 8.2. LNG market of Indonesia 8.3. LNG export price of Indonesia 8.4. LNG export 8.5. Progress of LNG contract extention finalization of RI – Japan 2011 – 2021 8.6. Trade offs Donggi Senoro development 8.7. Controversy and initial export of Tangguh project 8.7.1. Chaos of Tangguh price formula 8.7.2. Initial export 8.8. Masela development progress 9. NEEDS AND AVAILABILITY OF GAS DOMESTIC SUPPLY 9.1. Gas for Electricity 2009 – 2018 9.1.1. PLN and National Electricity System 9.1.2. Trends of primary energy for PLN power plant

Additional power capacity plan 2009 – 2018 9.1.6. Projection of primary energy needs for power plant 2008 – 2018 9.1.7. Projection of gas portion in PLN energy mix 2009 – 2018 9.2. Gas and revitalization of national fertilizer industry 9.2.1. Investment needs of fertilizer revitalization phase I and II 9.2.2. Revitalization schedule (tentative) phase I and II (2008 – 2024) 9.2.3. Fertilizer factories in Indonesia 9.2.4. Urea supply and demand in Indonesia 2008 – 2016 9.2.5. Production capacity revitalization of five fertilizer factories (Phase I) 9.2.6. Gas needs for fertilizer revitalization phase I and II 9.3. Domestic gas needs 9.3.1. Domestic gas industry 9.3.2. PGN, export, and domestic industry gas supply 9.3.3. PGN customer growth 2002 – 2008 9.3.4. PGN gas consumption and based on the industry segment 9.3.5. Projection of PGN gas needs 2009 – 2011 9.3.6. Projection of domestic gas needs until 2020 10. INDONESIAN FUEL 10.1. General condition of fuel utilization in Indonesia

9.1.3. The cost of primary energy for power plant 9.1.4. Natural gas consumption of PLN

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10.1.1. Energy mix and fuel consumption reducement target 2006 – 2010 10.1.2. Primary energy domestic supply Final energy consumption based on type Final energy consumption based on sector 10.2. Domestic fuel policy 10.2.1. Supplying and servicing PSO and non-PSO fuel (supply and demand of domestic fuel) 10.2.2. Procurement of certain type of fuel 10.2.3. Phase and realization of kerosene conversion to LPG 10.2.4. Specification and continuity of fuel supply 10.3. City gas policy for household 10.3.1. Legal protection for household city gas City gas network development scheme City gas Management uction was carried out through open tender 11. CITY GAS 9.1. General description of existing city gas 11.1.1. Existing distribution pipeline network 11.1.2. City gas growth based on sales volume and customer 1990 – 2007 11.2. Fuel Consumption of household in Indonesia 11.2.1. Natural gas consumption of household 2000 - 2007 11.2.2. Gas utilization for household 1998 – 2008

11.3. Parameter of Kerosene Convertion to Natural Gas (Java & Outside Java) 11.3.1. City gas and gas needs for household fuel conversion 11.3.2. Natural Gas Economy 11.3.3. Number of household served from the conversion to natural gas 11.3.4. Acceleration of city gas development for household Initial plan of gas network location development Potency of city gas supply 11.3.5. Road Map to gas infrastructure development for household 11.3.6. City gas study Investment estimation for gas infrastructure for 1,000 households Gas Selling Price and investment return (1,000 housholds) Ten Cities of Gas Development Opportunity 12. PROSPECT AND CONCLUSION 12.1. General description of resource and domestic oil and gas performance 12.1.1. Oil and gas policy 12.1.2. Natural oil business activity 12.1.3. Natural gas business activity 12.2. Government and oil and gas upstream and downstream business improvement effort 12.3. Opportunity and success ratio of oil and gas development in Indonesia. Attachment: UU N0. 21/ 2002 About Oil and Gas KKKS Production and Exploration 2009

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Study : PERFORMANCE AND BUSINESS OPPORTUNITY OF GAS IN INDONESIA, 2010 - 2014 (Equipped with Acceleration of City Gas) February, 2010
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