downstream perspective on challenges to sustainable gas...

Downstream Perspective on

Challenges to Sustainable Gas Challenges to Sustainable Gas

Development in Indonesia

Jakarta - January 28, 2015

Ministry of Industry

Jl. Gatot Subroto Kav. 52-53 Jakarta Selatan

Overview

Economy Outlook

Gas Demand on Industry Sector

Supply for IndustrySupply for Industry

Infrastructure

Gas Price

Energy

INDONESIA ECONOMY AND INDUSTRY GROWTH

3rd Trimester 2014 (percent)

INDUSTRY GDP GROWTH

2005 2006 2007 2008 2009 2010 2011 2012 2013Tw I-Tw III

2014

5,86 5,27 5,15 4,05 2,56 5,12 6,74 6,42 6,10 5,30

ECONOMY GDP GROWTH

2005 2006 2007 2008 2009 2010 2011 2012 2013Tw I-Tw III

2014

5,69 5,50 6,35 6,01 4,63 6,22 6,49 6,26 5,78 5,11

Source : BPS

3

INDUSTRIAL TARGET OF THE YEAR

No Indicator Unit 2015 2016 2017 2018 2019

1 Non-Oil&Gas Industrial Growth % 6.93 7.34 7.76 8.17 8.59

2 Labour million 15.83 16.39 16.96 17.56 18.17

INDUSTRIAL GROWTH TARGET 2015-2019

Indonesian Gas Reserves (status, 1st January 2013)

(TSCF)

Source : Kementerian ESDM

Indonesian Production: Oil & Gas

Sumber : Kementerian ESDM

Note : 2013* : per 27 Jan 2013

Next years, upstream oil and gas projects will be dominated by gas project on the off share area.

Oil & Gas Projects DevelopmentOutlook onstream Oil and Gas Projects

40

60

80

100

120

MB

OE

PD

5241

78

32

78

97

2014 2015 2016 2017 2018 2019

Gas Minyak & Kondensat

Jangkrik NE

Jangkrik

IDD - Bangka

MDA-MBH

0

20

40 30 28

2 3

32

18

3

Ul

Banyu Urip

Peciko-7C

Handil Ph-4

Kepodang

Area MTD

Senoro

Musi Timur

GG

Blok A

South MHK

Ande-ande

Lumut

YY

Bukit Tua

IDD-Gendelo

Bukit Tua

IDD-Galem

Jam TBR

Source : SKK Migas

Tangguh Train 3

Indonesia Gas Balance


Gas Supply in 2014


Gas Demand on Industry

SectorSector

Gas Demand for Industry

No. DEMAND 2014 2015 2020 2030

INDUSTRY 2.200,76 2.280,93 2.993,23 3.018,15

A Raw Material 1.068,22 1.086,22 1.736,22 1.739,32

1 Fertilizer 773,22 791,22 1.028,22 1.028,22

2 Petrochemical 295,00 295,00 708,00 711,10

B Energy 1.132,54 1.194,71 1.257,01 1.278,83

(MMSCFD)

B Energy 1.132,54 1.194,71 1.257,01 1.278,83

a. Process include 336,03 337,18 379,17 379,41

1 Ceramic 133,82 133,95 134,68 134,68

2 Glass 81,19 81,19 81,19 81,19

3 Glassware 28,38 28,38 28,60 28,83

4 Cement 8,00 8,00 10,00 10,00

5 Steel 80,00 80,00 120,00 120,00

6 Rubber Glove 4,65 4,67 4,70 4,70

Source : FIPGB

No. DEMAND 2014 2015 2020 2030

b. Fuel 796,51 857,53 877,84 899,42

1 Food and Drink 57,72 62,96 68,25 75,81

2 Steel 148,88 148,98 134,34 134,63

3 Textile & Products 36,01 36,16 36,98 37,89

Gas Demand for Industry

(MMSCFD)

4 Petrochemical 157,96 169,96 170.86 170,86

5 Paper 270,32 301,92 307,92 319,92

6 Wheel 51,57 53,30 55,45 55,45

7 Vehicles 4,89 4,89 4,89 4,89

8 Other 69,16 79,36 99,15 99,98

Source : FIPGB (data update : 20 Maret 2014)

Banda Aceh

Industri : 5 prsh

Kebutuhan : 130 mmcfd

Gas Industry User 2014

Sumatera Utara

Industri : 28 prsh

Kebutuhan : 45,32 mmcfd

Kalimantan Timur

Industri : 7 prsh


Riau

Industri : 6 prsh

Kebutuhan : 60.65 mmcfd

Kebutuhan :

2014 : 2.200,76 MMSCFD

2030 : 3.018,15 MMSCFD

Papua

Industri : 2 prsh

Kebutuhan : 0 mmcfd

Sulawesi Tengah

Industri : 1 prsh


Jawa Bagian Timur

Industri : 133 prsh

Kebutuhan : 253,80 mmscfd

Jawa Bagian Barat

Industri : 321 prsh

Keb. : 839,17 mmcfd

Jawa Bagian Tengah

Industri : 9 prsh

Keb. : 21,01 mmscfd

Source : FIPGB

Sumatera Selatan

Industri : 11 prsh

Kebutuhan : 257.46mmcfd

Maluku

Industri : 2 prsh

Kebutuhan : 0 mmcfd


Sulawesi Selatan

Industri : 4 prsh


Supply for Industry

PGN Supply

2015

• Western Java (Palembang, Cilegon, Tangerang, Jakarta, Bogor,

Bekasi, Karawang) supplies high of 680 MMSCFD of gas and 600

for the lowest tinggkat. Supply comes from Philip PHE Chonoco

Pager Dewa. And in 2015 will get a supply of Lampung FSRU for

the first phase supply of 100 MMSCFD.

• Jawa Timur (Gresik, Sidoarjo/Mojokerto, Pasuruan/Probolinggo),

supply good enough.

• Central Java, will be supplied through the program MINI CNG

transported by truck from Gresik.

• Medan, will increase supply through LNG MICRO program for 5-

10 MMSCFD to be transported from Batam.

� Medan, will be supplied from the Tangguh LNG cargo at 28 or

23.96 million metric tonnes, while the gas to be supplied from

the rest of the Exxon gas before Arun LNG receiving terminal

ready.

� Jawa Barat, supply ammount250 (PLN and Industry).

Pertagas Niaga Supply

(2015)

� Jawa Barat, supply ammount250 (PLN and Industry).

� Jawa Tengah, CNG gas will be supplied through the tubes

reparing pipeline from Gresik to Semarang.

� Jawa Timur, will get an extra addition of 30-40 Hesky MMSCFD

and in 2019 there will be a supply of Tiung Blue at 100

MMSCFD.

Infrastructure Infrastructure

Gas Pipeline

• Transport system by pipeline is very important and

relatively inexpensive, these costs include the cost of

survey and mapping, pipeline route liberation, network

communications, facilities maintenance, measurement communications, facilities maintenance, measurement

stations, protection against rust, compressors, valves

and safety equipment appropriate to be consumed,

simulation Kalija pipeline transportation costs only

25% of the price of gas 1 BBTUD.

Infrastruktur Pipa

Sumber : ESDM

FSRU (Floating Storage Regasification)


Transmission Pipeline Network

Transmission pipeline network with a total length SSWJ 2,157 miles.

Duri

Medan

KALIMANTAN

SULAWESI

Panaran Station, Batam

PLN - Medan

Jakarta

Grissik

Pagardewa

SULAWESI

JAWA

PAPUA

Labuhan Maringgai

Muara Bekasi

Terbanggi Besar St.Pagardewa Station Labuhan Maringgai St Muara Bekasi Station

Grissik Receiving Station

Pagardewa Compressor St.

Keterangan:

South Sumatera – West Java Transmission

Pipeline (SSWJ):

Grissik – Duri transmission pipeline

Grissik – Singapore transmission pipeline

Distribution Pipeline Network

• Pipa Dist.: 587 km

• Pipa Trans.: 33 km

• (Future LNG RT)

70 % Pipa PE (Industri, komersial, UMKM & RT)

SUMUT

Pipa Dist.: 56 km

19 % Pipa PE (Industri, komersial, UMKM & RT)

BATAM

Pipa Dist.: 135 km

PALEMBANG

Total panjang jaringan

distribusi: ±±±± 3.900 km untuk

melayani 88.134 pelanggan

(industri, komersial, UMKMdan rumah tangga).

PGN Pipeline = 44,4% from total downstream gas pipeline in Indonesia*

* Source: Kepmen ESDM 0225/ tahun 2010

Pipa Dist.: 135 km

99,8% Pipa PE (Industri, komersial, UMKM & RT)

Pipa Dist.: 709 km

30% Pipa PE (Industri, komersial, UMKM & RT)

JATIM

Pipa Dist.: 2.400 km

50% Pipa PE (Industri, komersial, UMKM & RT)

JABAR

Pipa Dist.: 11 km

PEKANBARU

Gas Pipeline Development on Trans Java & FSRU

Gas pipeline system by Pertamina & ONWJ (West Java)

Infrastructure Development Plan in West Java

PGN

• Will develop distribution pipeline network to Sukabumi

• Will develop distribution pipeline network to Subang

Infrastructure Development Plan in Central Java

1. PGN,

• Will build the terminal Tambak Aji, gas supplied from Gresik by truck in

2. Pertagas

• Will connect the pipe Gresik - Semarang, for while the distribution of gas

(CNG) is done with tubes.

• Will build the terminal Tambak Aji, gas supplied from Gresik by truck in

miniature CNG with gas prices of USD 14.8 per MMBTU.

• Will develop pipeline network from Cirebon to Semarang.

• Will develop pipeline network from Kepodang to Tambak Lorok.

Gas Pipeline System by Pertamina (Central Java)

1. PGN, will develop on area Tuban and Lamongan

2. Pertagas, transmission pipeline connecting from Kangean to Gresik.

East Java Infrastructure Development

Gas pipeline system by Pertamina (Jawa Timur)

Infrastructure Development Plan Infrastructure Development Plan in North Sumaterain North Sumatera

1.1. PGNPGN

– PGN, is preparing a program of micro LNG is transported

from Batam by 5-10 MMSCFD to port in Belawan, Medan

at a price of USD 17 per mmbtu.

2. 2. PertaminaPertamina Gas (Gas (PertagasPertagas))

– Pertagas, the construction of the pipeline installation

Arum - Belawan already connected and LNG supply to

industry and PLN planned to start early 2015.

– For a while, the gas flows are the rest of the Exxon gas

production before Arun LNG receiving terminal ready.

– Further development in 2015 will connect Belawan

Pertagas-KIM (Medan Industrial Estate) and KIM -

Tanjung Morawa.

Pertamina Gas Pipeline System – North Sumatera

GAS PRICE

Gas Price

Tariff USD per mmbtu Adm Fee per m3

SBU Wilayah I Jawa Bagian Barat

K1 7.90 770

K2 7.90 750

SBU Wilayah II Jawa Bagian Timur

K1 6.43 770 K1 6.43 770

K2 6.43 750

SBU Wilayah III Sumatera Bagian Utara

K1 7.25 690

K2 7.25 660

• Singapura since June-July 2013 (Sing $) : 4,08; 4,09; 4,12; 4,74; 5,16; 5,04

• Malaysia June 2012-July 2012 (Ringgit Malaysia) : 10,20; 1012; 11,81; 12,72; 12,19; 12,06

Malaysia sale to electricity company RM 13,7 or USD 4,47

• Data Platts : gas delivery Asia on pegged USD 14,49

Gas Price in Several Countries

• Data Platts : gas delivery Asia on pegged USD 14,49

• Philipine : USD 5,43

• Vietnam : USD 7,50 (for electricity : USD 6, fertilizer : USD 8,50)

• India : USD 5,42, April 2014 will increase USD 8,4

• China : USD 4,55, will increase 15%

Although China and India will raise the price of gas in the country but will not exceed delivery to Asia, USD 14,49.

ENERGY

Recent Energy Supply (1)

• Provision of energy is still dominated by fossil fuels (oil, natural gas and

coal) are not renewable, so not reflect the principles of sustainable

energy.

One-third of the fuel consumption is imported so not reflect the

principle of independence.

• Renewable energy potential is quite large, even not used and • Renewable energy potential is quite large, even not used and

underused (only about 5%), because it was perceived expensive.

• There is a sort of 'inequality' in access to supply (grid) energy. Area

GDP is high and as a foreign exchange earner, even relatively low

electrification ratio, so do not reflect the principles of fairness.

• Excessive use of fossil energy resulting in increased GHG emissions

resulting global warming and climate change.

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

1. Electricity Subsidies3,93 4,30 4,10 3,36 3,31 10,65 33,90 37,48 78,58 53,72

2. Electricity Fossil

Subsidies *)3.30 3.55 3.49 2.92 2.86 9.20 29.75 32.63 68.16 46.14

3. Fuel Oil Subsidies55.64 63.26 31.75 30.04 59.18 103.35 64.21 83.79 139.03 45.04

Total Fossil Subsidies58.94 66.81 35.24 32.96 62.04 112.55 93.96 116.42 207.19 91.18

Recent Energy Supply (2)

• Electricity subsidies in 2015 is estimated to reach Rp. 72.4 trillion by the quality of

the supply continues to decline.

• Fuel subsidies, is expected to rise 7.6% compared to the state budget APBN-P in

2014 amounted to Rp 246.5 trillion. 249 trillion.

58.94 66.81 35.24 32.96 62.04 112.55 93.96 116.42 207.19 91.18

Sumber : Kementerian ESDM

NO RENEWABLE ENERGYRESOUCES

(R)CAPACITY(C)

RATIO C/R(%)

1 2 3 4 5 = 4/3

1 Water 75,670 MW 5,705.29 MW 7.54

2 Geothermal 28,543 MW 1,189 MW 4.17

3 Mini/Micro Hydro 769.69 MW 217.89 MW 28.31

4 Biomass 49,810 MW 1,618.40 MW 3.25

5 Solar Cell 4.80 kWh/m2/day 13.5 MW -

6 Wind 3 – 6 m/s 1.87 MW -

7 Uranium3.000 MW

30 MW 1.00

Energy Reserves and Production

7 Uranium(e.q. 24,112 ton) for 11 years*)

30 MW 1.00

*) Only in Kalan – Kalimantan Barat

No UNRENEWABLE ENERGYRESOURCES

(R)

RESERVES

(RS)

RATIO R/RS

(%)

PRODUCTION

(PROD)

RASIO RS/PROD(YEAR)*)

1 2 3 4 5 = 4/3 6 7 = 4/6

1 Oil (billion barel) 56.6 7.99 **) 14 0.346 23

2 Gas (TSCF) 334.5 159.64 51 2.9 55

3 Coals (billion ton) 104.8 20.98 18 0.254 83

4 Coal Bed Methane/CBM (TSCF) 453 - - - -

*) No new reserve assumption

**) Include Blok Cepu Source : Kementerian ESDM

Expected Energy Management (1)

• Relatively clean gas, is used as a "bridge" towards the provision of

renewable energy in the long term.

• The existence of 'energy sovereignty' in the sense that Indonesia

has the freedom / "independence" to utilize its own energy

source.

• Bureaucracy and energy governance 'is not complicated "but"

powerful "and respected.

• Energy supply is no longer a sufficient supply, but also to be self-

sufficient, sustainable and equitable for the people of many

(Vision Energy +).

• First streamline the supply and use of energy.

• Efficient use of energy.

Expected Energy Management(2)

• Minimize the use of fossil fuels (oil and coal), while natural gas is

used as an interim step.

• Maximize the use of renewable energy, fossil energy balance.

• The results of the energy sources are prioritized to (returned to)

the provision of energy, state revenues derived from taxes.the provision of energy, state revenues derived from taxes.

• Presents' role of the state "when the economic principle unmet”.

• The change from "Energy Subsidies" to "Investment Subsidies"

for Energy Infrastructure and Consumer Subsidy Focus.

GAS DEMAND FOR PETROCHEMICAL INDUSTRY DEVELOPMENT IN WEST PAPUA

ProductCapacity

(Ton Per Year)

Gas Volume Demand

MMSCFD

Urea 2,300,000 180

Methanol (intermediate)

• DME

• Polypropylene

1,310,000

160,000

321,000

140

The next continues development 458

The next continues development

(Methanol and Polypropylene)458

TOTAL 778

• Total gas demand as raw material Petrochemical industry for 25 years with the production

efficiency of 330 days per year;

• Required for gas for 25 years in accordance with the economical factory;

• Based on the meeting with Kem. EMR and BP Migas on August 29, 2012, the allocation of

gas to the fertilizer industry in West Papua by 180 MMSCFD can be met with regard to the

economic field.

• While for industrial methanol, BP Migas convey available gas reserves in Papua (not

necessarily from Tangguh) that can be produced with regard to the economic development

of the field.

GAS DEMAND FOR FERTILIZER INDUSTRY REVITALIZATION

PlantsCapacity

(Ton)

Gas

Demand

(mmscfd)

Operating

Timeline

Kaltim-5 1,155,000 80 2014

Pusri IIB 907.500 62 2016

Pusri IIIB 1.150.000 70 2017

Ammonia Urea II 570,000 85 2015

FERTILIZER INDUSTRY

REVITALIZATION

• Presidential Instruction No. 2 Year

2010 on Fertilizer Industry Revitalization Ammonia Urea II

PT. PKG

570,000 85 2015

Kujang IC 907,500 86 2017

Total 4,690,000 383

2010 on Fertilizer Industry Revitalization

•Fertilizer industry revitalization

program includes replacement of

four (4) old age urea plant (Pusri II,

Pusri III, Kaltim-1, and Kujang IA)

and the construction of one (1)

new urea plant Ammonia Urea II

PT.PKGThe gas supply to fertilizer industry revitalization newly acquired

for Kaltim-5 and Pusri IIB

Not to obtaining gas allocation caused a shift in plant operations

plan that can affect the supply of fertilizers to support food

security

Upstream

• Exploration and exploitation in oil and gas fields

• LNG receiving terminal

• LNG processing plants (LNG Plant)

• Development of Unconventional Gas (CBM, Shale Gas, Tight Gas, & Biogenic Gas).

ACCELERATION OF GAS INFRASTRUCTURE DEVELOPMENT

RECENT CONDITIONRECENT CONDITIONRECENT CONDITIONRECENT CONDITION

“Accelerated development of gas infrastructure is required in order to

support an increase in the allocation of gas for domestic purposes”

Downstream

• Refineries

• LNG Storage & Receiving Terminal

• Gas pipelines (transmission & distribution)

• Development of Coal Conversion to Fuel (Liquid or gas)

“Accelerated development of the gas infrastructure is not only

the responsibility of the Government, but the need to involve

the private sector role”

Reserves and activitiesoil and gas exploration are in

Eastern Indonesiamainly deep water projects,

while gas consumersthe largest centered in Java

� The industrial sector has a strategic role as an engine of national

economic growth that needs to be supported by the availability

of raw materials and energy.

� Necessary assurance of gas allocation for the industry to operate

optimally and facilitate future development plan industrial sector.

CONCLUSIONCONCLUSION

� Domestic gas demand to continue to rise, so it is necessary to

accelerate infrastructure development in addition to the

development of gas from unconventional gas potential.

� Discussion and policy on natural gas prices is required in

accordance with the economic field to attract investors by

considering the benefits and added value that can be obtained,

as well as employment.

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