UPSTREAM DEVELOPMENT FOR INDONESIA GAS SUPPLY

John Anis
General Manager – PT Pertamina Hulu Mahakam

The 9th Indogas 2019 – 20 February 2019

CONFIDENTIAL AND PROPRIETARY

Any use of this material without specific permission of PT PERTAMINA (Persero) is strictly prohibited
MAHAKAM DIMENSION

6 AREA 55% to Domestic Gas Market

PROCESSING, OVER

5 Gas Field, 1.700 13 Domestic Sales Contracts

2 Oil Field km
PIPELINE
44 GAS
TURBINES
7 POD approved
2.3 BUSD investment
>300
Logistic
Support
Vessels 118 Wells in 2019
>500 5 Drilling Rigs in 2019
Active
wells

103 GTS, Cluster & 90 Work over in 2019

30 Offshore Platform 6423 Well Services in 2019
3.569 SNP terminal with
EMPLOYEE* storage capacity of
2.6 Million 35.9 Million Man Hour in 2019
*DATA PER 31 DECEMBER 2018

Barrel

PHM is committed to continue the development of Mahakam Block

INDONESIA WILL LIKELY IN SURPLUS GAS
(AT LEAST UP TO 2025)
11,000
MMSCFD Indonesia Gas Supply Demand
9,000 • Annual growth rate for
domestic (5%) and
7,000 Export LNG commitment
5,000
(-4%).
• Indonesia is likely in
3,000 surplus gas (2019-2025)
~1– 2.1 BCFD p.a. after
1,000
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 fulfillment domestic
Domestic - Base
Uncommitted
Export/LNG Commitment
Supply
Add Domestic/Surplus
demand and LNG
MMSCFD % Contribution commitment.
10000
• Gas supply really
8000 depends on the
6000 continuation of existing
4000 Production areas &
86%
2000
76%
62% timely new projects
53% 37%
0
execution
2018 2019 2020 2021 2022 2023 2024 2025 2026 2027
Existing Supply Project + Potensial Supply % Existing
Source: Neraca Gas Bumi Indonesia 2018-2027

Indonesia Gas Supply will still rely on the continuation

development of the existing producing areas
MAHAKAM: CHALLENGES IN DEVELOPMENT OF
EXISTING AREA
MMscfd Baseline Intervention New Well New Project Pre-IB18 RKAP18 Original
2,200
WP&B2018
• Declining Rate
1,772 1,711 1,350 905 of Baseline >
1,800 MMscfd MMscfd MMscfd MMscfd 50%
1,400 • Massive infill
drilling and
1,000 Baseline Work over,
Decline which requires
600 53% 51% 57% 59% 62%
102 wells 59 wells 8 wells 62 wells 118 wells
huge
200 investment to
2015 2016 2017 2018 2019 compensate the
3 Tunu Main Zone Bcf/Well Perforation Portfolio (km) production
15.7
decline.
1.9
7.9
• Lower stake
1 increases higher
3.5
1.7 unit cost and
consequently
2008 2010 2018+ 2016 2017 2018 2019
higher Price

Continuation of Existing Supply requires Higher Economic to

sustain Massive Investment in Marginal Wells 4
REQUIRED SUPPORT FOR FUTURE
UPSTREAM DEVELOPMENT
Mahakam Cost Efficiency in 2018 (M$)
To unlock the remaining 502 168 50%
334
marginal reserve and
973
resources, Upstream 1,338 462 29%
Industry requires : 2867 3140 148
245
1517 567 60%
1. Cost Efficiency for 950

Upstream
WP&B 2018 Approved Actual 2018
2. Attractive fiscal GoI Share Indirect Tax (PBB + PPN + Sewa Asset)
including Indirect Cost Recovery (Incl Indirect Tax) Net Contractor Share

Taxes $/mmbtu $/bbl

3. Optimum Sales 10
Gas/LNG Prices vs. Economic Price 80
Price:
• Portfolio 8 60
Domestic Pipe,
LNG Domestic & 6 40

LT Export
4 20
• Kept whole
principle (PP 2 0
40/2016) 2015 2016 2017 2018
Brent Domestic Pipe LNG Domestic LT Export Future Economics Requirement

Cost efficiency and strong government support in fiscal as well as policy for
domestic price are required to unlock the remaining marginal reserves
CONCLUDING REMARKS

1. Indonesia Gas Supply will still rely on the continuation

development of the existing producing areas

2. Continuation of Existing Supply requires higher economic to

sustain massive investment in marginal wells

3. To unlock the remaining marginal reserve and resources,

Upstream Industry requires :
• Cost Efficiency for Upstream
• Attractive fiscal
• Optimum Sales Price through (i) Portfolio Domestic Pipe,
LNG Domestic & LT Export and (ii) Kept whole principle (PP
40/2016)