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Global LNG Trend, GeoPolitics and GeoEconomics Strategy

Sampe L. Purba

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Agenda

GeoEconomics Pull vs GeoPolitics PressuresWorld LNG ProjectionIndonesia’s shaping its goal

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GeoEconomic Pulls vs GeoPolitics Pressure (1)

• High Politics

Containment and hedging strategyTrans Pacific Partnership vs ASEAN + 6US to shift 60% warship fleet to Asia – Pacific by 2020US – Russia – China role play (ref. Harvard – Baker study – geopolitics

on Energy 2012)

• Implemented Policy

FDI to China (Taiwan 80%, Japan, US, Australia trade 105 b =>2x as to US) US ($ 257B) to compete

China ($280B) in net inflow FDI

MNCs and State Owned MNCs Sponsors

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Why Energy Matters

Geoeconomics is the study of the spatial, temporal, and political aspects of economies and resources

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"Geopolitics => Dynamics interaction between Power and Space

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Geopolitics and GeoEconomics Concern : - Sea shield, strike and base- Energy supply and security- Psycological presence and

commitment- Secure sea-lanes, pipelines

and other economic interest- Law of maritime trade

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GeoEconomic Pulls vs GeoPolitics Pressure (2)

... energy• National Interest defined

US to manage interdependence

- aset-resource based

- technology, know-how, patent

- Supply Chain basedOver the Horizon ApproachForeign Affair Policy comprehensive-integrated approach

• Some examples

In 2005 US Congress to block CNOOC – Unocal bid, under National Security concern (Energy Policy

Act 2005, Protocol accession WTO)Preventing US to export Gas "North America Natural Gas Security and Consumer Protection Act“, no export terminal up to 2025 "Low natural gas prices are a competitive advantage for American businesses and a relief for American families, and exporting our natural gas would eliminate our economic edge and impose new costs on consumers," said Rep. Markey, who is the top Democrat on the Natural Resources Committee and a senior member of the Energy and Commerce Committee. "This is America's natural gas and it should stay here in America.“

US MNCs to own and build LNG export terminal around the world

(eg. Gorgon, Qatar, PNG, )

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... Some Worldwide LNG Project• Check it out :

• Who Own, Build, Operate, Finance, Offtaker

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Countries to chart what it needs

• Security, accessibility, commerciability: Re-export – arbitrage and Economic added value

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Agenda

GeoEconomics Pull vs GeoPolitics PressuresWorld LNG ProjectionIndonesia’s shaping its goal

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Analysis : HearSays in the market• FID :• Commercial

Deal : Price – Volume - Terms

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Oil Price as per EIA Energy outlook, 201311

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US prediction to be natural gas exporter may change the equation

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US Natural Gas Production as per EIA Energy outlook, 2013

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LNG as a long term Horison Project• Technical – Operational – Commercial – Bankability - Others

Location > Infrastructures, geology, topographyGas supply availabilitySponsors reputationEPCI ContractorsOperator of the ProjectShip Construction and/or operationTechnology involvementOfftake commitment strengthPurchasers Creditworthiness

• Others – some time not Others

Market - FID Existing and Forecasting

Alternative source of energy competitor

Economy (bullish – bearish)

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LNG as Long-term Project• Critical (or not) isues along the life time of the Project

Licensing/ PermitTechnical conceptChanges/ adjustments

(due to external – internal)Operational integrityReserve reasessmentsExtension of PSCFait accompli and point-of-no-return (?)

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LOGISTIC SHORE BASE SURF : FEED, Drilling, Flow line, Umbilical,

Mooring, Turret and Riser. FLNG FEED ,Gas Pre-Treatment &

Liquefaction Process, Living Quarter, Hull, Storage Tank, Utilities ( Power Generation, Compressor, Electrical etc ), Integration, Offloading and Mooring System.

FLNG is required complexity design Specifically following interfaces are

most essential : - Motion Condition ( Process performance & Fatigue ) - Class Society’s Requirement - Safety Studies (Engineering HSE) - Constructability (Module yard, Integration yard & Shipyard) - Offshore operatio MAINTENANCE & OPERATION

FEATURES OF FLNG FACILITY

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Power of Prediction and Negotiation

Supply SideUS Shale gas ->NIMBYNew Technology and

infrastructuresAlternative Energy

sourcesNew Project Sanction

Demand Side Japan, China, India

GrowthDomestic needs priorityEuropean dependence on

Russian Gas NetworkEtc.

• Think its Nature of inflexibility• Long – mid – spot

Uncommitted production capacity, Receiving terminals excess capacityUnseasonal demandVessel space uncommitted availability

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AgendaGeoEconomics Pull vs GeoPolitics PressuresWorld LNG ProjectionIndonesia’s shaping its goal

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0

2.000

4.000

6.000

8.000

10.000

12.000

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028

MM

SCFD

NERACA GAS BUMI INDONESIA 2013 - 2028

CONTRACTED DEMAND COMMITTED DEMAND POTENTIAL DEMAND EXISTING SUPPLY PROJECT SUPPLY POTENTIAL SUPPLY

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Indonesia Gas Balance2013-2028

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2.57

9.28

2.98

50.27

24.14

NATUNA7.08

NORTH SUMATRA

15.21

16.03

CENTRAL SUMATRA

ACEH (NAD)

SOUTH SUMATRA

WEST JAVA

5.26

EAST JAVA

EAST BORNEO

CELEBES

MOLUCCAS

PAPUA

(Advance Resources Interational, Inc., 2003 processed)

PROVEN = 103.35 TSCFPOTENTIAL = 47.35 TSCFTOTAL = 150.70 TSCF

CBM RESOURCES = 453.30 TCFGAS RESERVES

(As of January 1st 2012)

Total CBM Basin = 11(Advance Resources International, Inc., 2003)

Contract Signed up to 2012 : 54 CBM PSCs

SHALE GAS POTENTIAL

1.23

16.65

Gas Reservers, CBM Resources and Shale gas potential

Currently the Government conduct early study on shale gas potential

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When number talks

1. 28% of National Revenue (2012), contributed by MEMR sector

2. Fuel and electricity subsidy (expected to reduce gradually)

3. Condusive investment on the sector4. Indonesia have energy mix resources, currently heavy

on fossil based

5. Notice Energy Mix target by 2025

6. Gas domestic allocation 56 %, export 44 %

7. Infrastructure limit as a challenge8. Limited energy access, electrification ratio 73%

Oil49,7

%

Gas 20,1 % Coal

24,5 %

Renewable5,7 %

Oil20%

Gas30 %

Coal33%

Renewable17%

National Energy PolicyAt Present

Target 2025

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OIL PRODUCTION DOMINANT GAS PRODUCTION DOMINANT

Shifting from crude to gas dominant

Historical Oil and Gas Production Profile

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EKSPOR43,81%

PENINGKATAN PRODUKSI8,87%

PUPUK11,20%

LISTRIK19,09%

INDUSTRI16,87%

TRANSPORTASI0,07%

GAS RUMAH TANGGA0,09%

ALOKASI GAS BUMI 2013 (CONTRACTED)

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Gas allocation 2013 (CONTRACTED)

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PROSPECT OF STRATEGIC OIL AND GAS DEVELOPMENT PROJECT

Apr 7, 2023MASELACEPU

NATUNA D-ALPHA

TANGGUH TRAIN

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Gas Reserve: 46 TCF.Total Investment US$ 41 billionOn stream 10 yr after development

Gas Reserve 9,18 TCF.Total investtment US$ 4,99 billion

On stream 2018.

Gas Reserves 8,09 TCFinvestment train 3, US $ 12 Milyar

Train 1 & 2 on stream 2009 & Train 3 by end of 2018

Oil Reserve: 609 mil bblTotal Investment US$ 6,6 billionMax. Production165 MBOPD by 2014.

Gas Reserve 2,8 TCFTotal Investment US$ 1,7 billion (upstream)On stream 2015

DONGGI SENORO

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MP3EI : Staging, Continuing, Improving

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Consistency and change of paradigm

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Oil and Gas as a strategic Economic driven factor

Priority : Horizontal – vertical locomotive 25

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Concluding Remarks

Geoeconomics Pull and Geopolitics Pressure to play on the Global PolicyOutlook, Prediction and Projection subject to external and internal factorsIndonesia to look economic benefit beyond revenue per se

Thank You – HorasSampe L. Purbasampepurba@gmail.com

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Brief CVSampe L. Purba, Lead Specialist Business Support Management, SKKMIGASSampe L. Purba, currently holds function as Lead specialist Business Support Management in SKKMIGAS used to be known as BPMIGAS - a state legal-owned institution supervising and managing all Production Sharing Contracts operating in Indonesia. His job mainly dealing with the assistance to related Function across the Organization with respect to all legal related matters, regulations and compliance reviewing of contracts and procurement, management assessment of program, commercial and financial aspects of oil and gas business, evaluating of Project Finance with international financial institution, LNG Project, Taxation and Risk management matters. He joined BPMIGAS since the first year of its establishment in 2002. Prior to it, Mr. Purba was a Government Auditor dealing with many aspects of governance in Public institution, Industry and Services Corporation.Mr. Purba entered some Universities both domestics and abroad, to secure his degrees in Economics, Banking, Law and Business administration. He is just completing Regular Management National Leadership Course in National Resilience InstitutionAs part of maintaining and updating his knowledge and sharing of experiences, Mr. Purba actively attends and gives workshop, conferences and seminar domestic and abroad.Mr. Purba registered as member of Professional association such as Association of International Petroleum Negotiators (AIPN), Indonesian Petroleum Society, and Indonesian Accountant Association

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