PERTAMINA’s Fuel Supply Strategy:

Supply/Demand Outlook, Fuel Specifications, and Biofuels

Widhyawan Prawiraatmadja
Head of Corporate Planning and Business Development

A Presentation to
JARI Indonesia Roundtable, February 2008
Outline

• Supply/Demand outlook 2015

• Fuel Environment standards
– Current standards
– Development of PERTAMINA’s fuel quality
• Long term fuel supply strategy
– Conventional fuel
– Biofuels

Page 2 Perusahaan Minyak & Gas Nasional

ASIA SUPPLY & DEMAND OUTLOOK (2008-2015)
Asia-Pacific shortages in LPG, Naphtha & Fuel Oil will increase. ME could bridge the gaps in LPG & Naphtha.
Even if South East Asia will be short in Gasoline, Kero & Gasoil, AP is balanced or long in the same products.
2,000 Japan
All figures are in KBD
1,000
China
1,000
0
0
2,000 North East Asia -1,000
Middle East -1,000
4,000 1,000 -2,000
3,000 -2,000 '06 '10 '15
2,000 0
-3,000
1,000 -1,000
'06 '10 '15
0
-1,000 South Asia -2,000
1,000
-2,000 '06 '10 '15
'06 '10 '15 0 Singapore
South East Asia 1,000
-1,000 1,000
0
-2,000 0
Asia-Pacific exc. ME
'06 '10 '15 -1,000
1,500 -1,000
-2,000
-2,000
-500 '06 '10 '15
'06 '10 '15
1,000 Australia
-2,500 LPG
Naphtha
Long 0 Gasoline
-4,500
Kero/jet
'06 '10 '15 Gasoil
Short -1,000 Fuel Oil
'06 '10 '15 Other

Source: Facts AP Data book 1 edition of April 2007 & ME Data book of April 2007 Page 3 Perusahaan Minyak & Gas Nasional
Indonesia at a glance – Oil Products Supply & Demand Balance (2006-2015)
•Slightly increased domestic refining outputs won’t compensate the
•Driven by LPG, Gasoline & Diesel, total demand will increase
increasing demand.
of 340 KBD in 9 years time.
•Therefore shortages on LPG, Gasoline & Diesel will strongly increase

Demand Projections (kbd) Balance (kbd)

1,500 200
LPG
0
Naphtha
1,000
Gasoline
-200
Jet
Kero -400
500
Diesel
-600
Fuel Oil

0 -800
2006 2008 2010 2012 2015 2006 2008 2010 2012 2015
Domestic Refining Output Projections (kbd) Product shortage
1,000 ¾Conversion program will boost LPG shortage to 82KBD by
2015.
LPG
¾Strong development of transportation sector will result in a
gasoline shortage of 263KBD by 2015
Naphtha
¾Diesel will be short of 339KBD by 2015
500 Gasoline
Refinery Outputs
Jet
¾Outputs will slightly increase (e.g. LPG, Naphtha & Kero)
Kero
¾Alternatives are likely to bridge the gaps on strong shortages
Diesel in LPG, Gasoline and Diesel.
Fuel Oil ¾Import terminals projects could be arising by 2015.
0
2006 2008 2010 2012 2015 ¾Kero surplus by 2015

Source: Facts 2007, Pertamina Analysis Page 4 Perusahaan Minyak & Gas Nasional
 U92/U95 gasoline demand is expected to increase due to new cars & motorcycles
using Euro II compliant technology.

Jakarta Gasoline Vehicle Parc

20000 100%
18000
16000

No. of vehices ('000 units)

75%
14000

% Euro II vehicles in Parc

12000
10000 50%
8000
6000
25%
4000
2000
0 0%
2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015
Cars Non EuroII M/C Non EuroII
Cars EuroII M/C EuroII
%EuroII in parc

• The vehicle parc (vehicle population) in Jakarta is growing strongly with a CAGR of over 10%
between 2005 to 2015
• A large percentage of this is growth in motorcycles (M/C) which generally have a lower average
fuel consumption than passenger cars
• The U92/U95 gasoline demand growth shown in these percentages is based on the vehicle parc
data and assumes that the % will increase 1.5 times by 2010 and double by 2015 relative to the
2005 figure

Source: US Bureau of Transport Statistics,

Article ‘Air quality improvement analysis by new emission standards of vehicles’
Page 5 Perusahaan Minyak & Gas Nasional
Outline

• Supply/Demand outlook 2015

• Fuel Environment standards
– Current standards
– Development of PERTAMINA’s fuel quality
• Long term fuel supply strategy
– Conventional fuel
– Biofuels

Page 6 Perusahaan Minyak & Gas Nasional

INDONESIA’s FUEL SPECIFICATION STANDARDS DEVELOPMENT
Indonesia lags behind regional standards for both Gasoline and Diesel. Government sets the standards, future
road map fuel specification must be developed and applied consistently

Euro I Euro II Euro III IV/(V*)

ADO (Sulphur) 1996 2000 2004 2006 2008 2010 2012 2014 2016
Japa n 500 500 50 10
Hong Kong 500 500 50 10
Austra lia 500 50 10
Singa pore 5000 500 50 10
South Kore a 5000 500 50 10
Thaila nd 2500 500 350 50
China 5000 2000 2000 500 350 50
Ma la ysia 5000 3000 500 50
India 2500 500 350 50
Indone sia 5000 3500 500

Gasoline (S / Bz) 1996 2000 2004 2006 2008 2010 2012 2014 2016
Japa n 500/5 500/2 150/1 50/1 10/1
Hong Kong 500/5 500/2 150/1 50/1 10/1
South Kore a 500/5 500/2 150/1 50/1 10/ <1
Austra lia 500/5 150/1 50/1 10/1
Thaila nd 1000/5 500/2 50/1 10/1
Singa pore 1000/5 500/3.5 150/3.5 50/3.5 50/1
Ma la ysia 1000/5 500/5 150/1 50/1
China 800/5 500/2.5 150/1 50/1
India 1000/5 500/2.5 150/1 50/1
Indone sia 5000/5 2000/5 500/5

Source: Pertamina Navigator Analysis, 2007 Page 7 Perusahaan Minyak & Gas Nasional
 AS A RESULT OF REFINERY INVESTMENTS COMPLEXITY WILL INCREASE
Complexity comparison

2006 2012
Nelson complexity Key upgrade projects
index* (Commission date)

UP4 Cilacap 4.4 5.7

• Low sulfur gasoil (2011), RFCC (2012)

UP5 Balikpapan 3.5 6.2

• Reconfiguration under progress (2013)

UP2 Dumai 6.0 5.6 • Lube Base Oil (2008), N. Paraffinic (2011),
CDU revamp (2011)
UP3 Plaju 3.2 3.6 • FFCU Refurbishment ( 2012)

UP6 Balongan 10.9 10.9

• Ph-II revamp (2010), RCC off gas (2011)

UP7 Kasim 1.0

• None
1.0

UP1 Pangkalan 1.0 1.0

• None

• None
Cepu 1.0 1.0

Pertamina average 5.0 6.1

* Does not reflect margins; other issues such as logistical challenges may affect final profits
Source: Pertamina; FACTS; US Embassy Petroleum Report 2005; McKinsey analysis 8
Outline

• Supply/Demand outlook 2015

• Fuel Environment standards
– Current standards
– Development of PERTAMINA’s fuel quality
• Long term fuel supply strategy
– Conventional fuel
– Biofuels

Page 9 Perusahaan Minyak & Gas Nasional

PERTAMINA fuel supply strategy

• PERTAMINA will meet majority of future demands using

conventional hydrocarbon based fuels. It will comply with the
ever stringent fuel specifications. As such, investment in
refineries will also address specification requirements.
• PERTAMINA currently markets BioDiesel and BioEthanol but
on a limited volume, if the economics and regulations are
attractive in the future, PERTAMINA will significantly build its
BioFuel business.
• Gas to liquid, Coal to Liquid alternatives are also considered.
• To enhance its competitiveness, Pertamina requires significant
investment in the whole value chain: refineries, terminals,
depots, vessels, pipeline, and fuel pump stations.

Page 10 Perusahaan Minyak & Gas Nasional

PERTAMINA’s BioFuels marketing – current status

PRODUCT Place/City LAUNCHING Gas VOLUME

Station (KL)
Bio Solar Jabotabek 20 Mei 2006 202 +/- 617.000
Surabaya 12 Agustus 2006 11 +/- 23.000
Bali 13 November 2007 10
Bio Malang 13 Agustus 2006 1 +/- 4.500
Premium (Soft Launching)
Bio Jakarta 11 Desember 2006 14 +/- 4.000
Pertamax Surabaya 11 Juni 2007 6 +/- 1.300
Malang 11 Juni 2007 4
Denpasar 13 November 2007 10
Source: Internal Pertamina data Page 11 Perusahaan Minyak & Gas Nasional
Long Term Supply – GTL and CTL as Alternatives

• Sustained high crude oil prices, alternative technologies such

as gas to liquid and coal to liquid become feasible.
PERTAMINA will follow closely these alternatives
developments.
• GTL may already be feasible at the current level of crude
prices, especially for stranded gas. Reduce emissions
significantly.
• Coal To Liquid can also be pursued but coal prices are also
increasing following oil’s; Indonesia coal reserves are
significant. Clean coal technology reduces emissions.

Page 12 Perusahaan Minyak & Gas Nasional

 GTL Products : EURO III diesel compliant, very low level of
Sulphur

Source: F/T Diesel technical paper Page 13 Perusahaan Minyak & Gas Nasional
TERIMA KASIH

Page 14 Perusahaan Minyak & Gas Nasional