meeting the energy challenge in the world's largest archipelago

Meeting the energy challenge inthe world's largest archipelago

Ardhy N MokobombangVP Strategic Planning & Business DevelopmentPertamina Refinery Directorate

JCCP International Symposium presentationJanuary 31, 2013

CONFIDENTIAL AND PROPRIETARYAny use of this material without specific permission of Pertamina is strictly prohibited

PERTAMINA 1

Outline

▪ Potential of Indonesia

▪ Pertamina corporate vision 2025

▪ Pertamina refining vision 2025

▪ Challenges faced by Pertamina

▪ Pertamina refining strategy

– Upgrading of current refinery

– Building grass root refinery

PERTAMINA 2

Indonesia is the largest economy in Southeast Asia...

Share of GDP in ASEAN

Total GDP = USD 1848 billion; 2011

18%

14%

13%

6%

6%

SingaporeLaos

0%

VietnamPhillipines

Brunei1%

Indonesia

40%

2%

Myanmar

Thailand

1%Cambodia

Malaysia

SOURCE: McKinsey Global Institute

PERTAMINA 3

…with one of the fastest stable growth in the world

SOURCE: Conference Board Total Economy Database; IMF; World Bank; McKinsey Global Institute analysis

Real GDP growth 2000-10

1.7

3.1

3.1

3.4

3.5

3.6

3.7

3.8

3.9

4.0

4.2

4.9

4.9

5.2

7.7

China

India

Russia

Indonesia

Poland

Slovakia

Turkey

South korea

Estonia

11.5

Brazil

Average rest

Chile

Czech Republic

Israel

South Africa

Australia

Overview of OECD and BRIC plus South AfricaPercent

3.4

2.1

2.1

2.0

2.0

2.0

1.8

1.8

1.8

1.7

1.7

1.6

1.6

1.5

0.9

0.9

Portugal

Indonesia

Australia

Norway

France

New Zealand

Belgium

Switzerland

India

Canada

Poland

China

Netherlands

United States

Average rest

South Korea

GDP growth, standard deviation, annualised, 2000-10

PERTAMINA 4

In 2050 Indonesia’s GDP is projected to be higher than Germany andFrance

30,634China

23,376U.S.

13,716India

5,842Japan

5,308Russia

4,685Brazil

4,118Germany

3,662Mexico

3,499U.K.

3,427France

2,912Indonesia

2,760Turkey

2,629Italy

2,454Korea

2,327Spain

1,582Saudi Arabia

2,148Canada

1,535Australia

1,415Poland

1,407Argentia

1

2

3

4

5

6

7

9

10

11

8

12

16

14

17

15

13

19

20

18

15,094U.S.

11,347China

4,531India

4,381Japan

3,221Germany

3,031Russia

2,305Brazil

2,287U.K

1,979Italy

1,761Mexico

2,303France

1,512Spain

1,131Indonesia

1,398Canada

893Australia

1,243Turkey

1,504South Korea

720Argentia

686Saudi Arabia

813Poland

China

U.S.

India

Brazil

Japan

Russia

Mexico

Indonesia

Germany

France

U.K

Turkey

Nigeria

Italy

Spain

South Korea

Canada

Saudi Arabia

Vietnam

53,856

37,998

34,704

8,825

8,065

8,013

7,409

6,345

5,822

5,714

5,598

5,032

3,964

3,867

3,612

3,545

3,549

3,090

2,715

2,620Argentia

PPPrank

GDP at PPP, 2011,$ billionCountry

Projected GDP atPPP, 2011, $ billionCountry

Projected GDP atPPP, 2011, $ billionCountry

2011 2030 2050

SOURCE: World bank estimates for 2011, PWC estimates for 2030 and 2050

PERTAMINA 5

An estimated 90 million Indonesians could join theconsuming class by 2030

Million people

40 90Additional people inthe consuming class

Indonesia’s strong economic growth is expected to continue, driven by thedomestic consumer demand

SOURCE: McKinsey Consumer and Shopper Insight (CSI Indonesia 2011); 2010 Population Census;Indonesia’s Central Bureau of Statistics

45

195

180

145

13585

265

2010

280

2030

Belowconsumingclass

Consumingclass1

2020

240

1 Consuming class defined as individuals with an annual net income of above 3,000 at 2005 purchasing power parity2 Based on 5-6% GDP growth scenario

INDONESIA AND ITS POTENTIAL

PERTAMINA 6

Energy demand is expected to grow in line with the economic growth

53

64

33

30

1

Biofuels/biochemicals

8Geothermal

63

55

0

3

18

4Hydro

Other res1 51-2

Natural gas 9159

Coal 181152

Oil 127

1 Solar, wind, nuclear, fire wood, dung, biomass for power (rice residues, sugar, rubber, palm oil, agribusiness cogeneration).

SOURCE: IEA; FACTS; ASEAN; McKinsey Global Institute analysis

Growth 2010-30

2010

Indonesian primary energy demand 2030Million tons of oil equivalent, annually

3%

9%

5%

0%

13%

29%

7%

Annualgrowth

35%

16%

18%

29%

0%

0%

Share2010

1%

▪ Oil will continue tobe important energysource in Indonesiain 2030

▪ The value ofIndonesia’s energymarket couldincrease from about$80 billion today toaround $210 billionin 2030

27%

39%

20%

11%

2%

1%

Share2030

1%

PERTAMINA 77

Indonesia petrochemicals is also very attractive market with acceleratingdemand growth

1 Products include olefins, polyolefin derivatives, aromatics and butadiene derivatives

+2% p.a.

+5% p.a.

000 metric tons of major products1

Indonesian demand for petrochemical products is growing rapidly

SOURCE: CMAI/IHS

16,700

14,600

11,550

8,7507,9507,350

0

2,000

4,000

6,000

8,000

10,000

12,000

14,000

16,000

18,000

2015 2020 2024F2000 20102005

▪Growth in petro-chemical demandexpected to be evenhigher once domesticsupply enables newdownstream productmanufacturing

▪ Indonesia will likelyremain a net importerin near / mid term dueto insufficientdomestic productioncapacity

PERTAMINA 8

Pertamina is active in all segments of the value chain

▪ Largest company in Indonesia

▪ 2012 revenues of USD 80 bn

▪ 15,000 employees

Refiningand

Petchem

SOURCE: PERTAMINA

▪ 6 refinerieswith capacityin excess of 1millionbarrels/day

▪ ~5,000 retail fuel stations

▪ ~95% market share in Retail fuel

▪ ~75% market share in Industrial fuels

▪ ~60% market share in Lubricants

▪ ~10% market share in Petrochemicals

▪ 5 bn+ barrels of oil reserves

▪ ~450 MBOE/day of oil & gasproduction

Overview of PERTAMINA

▪ Pertamina is the solerefiner and majorretailer of petroleumproducts inIndonesia

▪ One of Pertamina’smission is to meetIndonesia’spetroleum anddemand

▪ Opportunity toexpand into petchemmarket

Develop-ment

Production

Transport-ation

StorageMarketing/

RetailExploration

PERTAMINA 9

Pertamina’s aspiration is to be a Fortune 100 “Asian Energy Champion”by 2025

▪ Be a Fortune 100 company

▪ Revenue of approx. USD 200billion

▪ EBITDA of ~USD 40 billion

▪ Integrated energy company(incl. CBM, geothermal, renewable)

▪ Leading domestic player as well asinternational footprint

2025aspirationBecome an

“Asian EnergyChampion” by

2025

SOURCE: Pertamina

PERTAMINA 10

Pertamina 2025 Asian Energy Championship aspiration

Leadership in existing core Growth in new businesses Increase efficiency in PSO

“Asian Energy Champion”‘Fortune 100’ position (Revenue ~$200b USD, EBITDA ~$40b USD)

Organization & Capability: Accountability and delivery; Employer of choice to attract and retain best talent

Project & Technology Center: Technology leader on CBM, Geothermal, EORand deepwater; Strong project executor with delivery on time and within budget

Midstream gasIntegrated gas champion withtrans-Sumatera and trans-Jawa gas infra-structure

RefiningEconomically competitiverefining capacity; Top quartileoperating performance

Industrial fuels & lubesMaintain position of strengthwith over 50% market share,while sustaining profitability

TradingOptimize supply chain andimprove profitability

E&PLeading Asian NOC: 2.2mmboepd production withdomestic leadership (50%)and int’l foot-print (~30% ofown prodn.)

PetChemLargest petchem player inIndonesia with 35% marketshare, high margins throughintegration

BiofuelsServing mandate of 20%blend; upstream presence toreduce losses and supply risk

PowerOne of the largest IndonesianIPP player with ~ 3-5 GWcapacity

CoalLeader in alternatetechnology (e.g. CBM, UCG)while maximizing coalproduction

Oil productsMaintain position of strengthwith 60% market share; newservice model through “Newpasti pas” and NFR

ShippingSupport own supply chainand also build third partyservice model

LPGOptimize supply chain andinfrastructure

SOURCE: Pertamina

PERTAMINA 11

Pertamina Refining vision is to become a World Class DownstreamBusiness by 2025

SOURCE: Pertamina

Businessstrategy

Functionalexcellence

▪ HSSEmanagement

▪ Reliability andmaintenancemanagement

▪ Businessdevelopment

▪ Projectmanagement

▪ Optimizationand planningmanagement

▪ Technologymanagement

▪ Budgetmanagement

Safety andreliability

Profitability Growth Sustainability

▪ Humanresourcesmanagement

Among the largest refining capacityin Asia Pacific

Vision 2025

Increase crude supply flexibility and increase Refining margin1

Build competitive Refinery and Integrated Petrochemical business2

Develop internal capability to support Refinery and Integrated Petrochemical business3

Pertamina Production System

Largest petrochemical business in Southeast Asia

Top quartile operating and business performance

World-classDownstream Business

PERTAMINA 12

Pertamina Refining strategic agenda

▪ Among the largestrefining capacity inAsia Pacific

▪ Largestpetrochemicalbusiness inSoutheast Asia

▪ Top quartile operatingand businessperformance

Pertamina is focusing on 2 elements in its strategic agenda

SOURCE: Pertamina

Vision 2025

Current challenges

▪ Rising energydemand

▪ More challengingcrude slate

A

B

Existingrefineries

Grass RootRefineries

▪ Upgrade existing refineries to allow higher sulfur andimported crude slate

▪ Upgrade from low-value to high-value products1

▪ Increase net profit margin through operational excellence

▪ Meet product quality requirements

▪ Build Grass Root Refineries

▪ Build Integrated Petrochemical plants

▪ Develop manufacturing and marketing partnerships

1 Including increasing product quality to capture economic and environmental benefits, bottom conversion units,

1

2

PERTAMINA 13






SOURCE: Pertamina

Vision 2025

Current challenges



A

B


Existingrefineries









1

2

PERTAMINA 14

Fuel demand in Indonesia is estimated to grow at a rate of ~4% perannum

MBCD of major products demand

Indonesian demand for fuel product will continue to grow

SOURCE: Pertamina

0

500

1,000

1,500

2,000

Gasoline

Gasoil

Jet fuel

LPG

20252020201520122011

+4 % p.a.

CAGRpercent

1.8

8.0

2.6

6.7

ARISING ENERGY DEMAND

PERTAMINA 15

Indonesia will remain a net importer of gasoline and LPG innear / mid term due to insufficient domestic production capacity

MBCD of gasoline

Indonesia remain short of ~450 MBCD ofgasoline by 2025

SOURCE: Pertamina

177177

976

459

0

100

200

300

400

500

600

700

800

900

1,000

159

187 193 193184

159

193

528

2015 2025

589

193184

2012

765

2020

528

2011

187

446

-448


MBCD of LPG

Indonesia remain short of ~35 MBCD ofLPG by 2025

1 2020 and 2025 data includes upgrading of existing refinery and 2 GRR

34 38 38 38

103

9587

83

0

10

20

30

40

50

60

70

80

90

100

110

55

13

13

2011

46

2012 2015

12

51

13 13

5

11

67

2025

67

13

11

5

2020

-35

Demand Current refineriesMasterplan Non refinery suppliersGRRs

PRELIMINARY

PERTAMINA 16

Indonesia will be slightly deficit in avtur and surplus in gasoilwith the upgrading of exisiting refineries and 2 GRR

MBCD of avtur

Indonesia be short of ~15 MBCD of Avtur by2025

SOURCE: Pertamina

74

151

6059

0

20

40

60

80

100

120

140

160

47

2011

47

46

46 45

45

2012

76

74

2015

108

-15

2025

136

45

17

2020

136

45

17


MBCD of gasoil

Indonesia be surplus in gasoil of ~270 MBCDby 2025

1 2020 and 2025 data includes upgrading of existing refinery and 2 GRR

257 257

588

480430

485

0

100

200

300

400

500

600

700

800

900

+268

2025

856

345

255

2020

856

345

255

533

2015

345

345

2012

345

345

2011

319

319

GRRs Current refineriesDemand Masterplan

PRELIMINARY

PERTAMINA 17

Domestic crude production is declining by ~8% between 2011and 2020

918

16

-8%826

202019

842

18

866

17

893

122011

891

13

878

14

902

15

948895

SOURCE: FACTS, Woodmac

TEAM VIEWBMORE CHALLENGING CRUDE SLATE

Domestic crude production forecast, MBDMBD

PERTAMINA 18SOURCE: Crude database; FACTS; WoodMac

In 2020, sour crudes will have greater availability than sweet crudes,necessitating shift towards more sour crude as base feedstock

2,069 2,113

9,831

13,417

2,720

1,5471,475

0

163

1,225 1,125

Above 2%

15,575

2,158

0

1.51-2%

9,831

0

0

1.01-1.5%

3,588

0

0.51-1%

1,566

441

0.21 - 0.5%

2,935

Up to 0.2%

4,886

97

Crude availability in 20201; categorized by sulfurMBD

Sweet crude Sour crude

Heavy (API<27)

Medium (27<API<37)

Light (API>37)

BMORE CHALLENGING CRUDE SLATE

1 Selected crudes potentially available to Pertamina

PERTAMINA 19






SOURCE: Pertamina

Vision 2025

Current challenges



A

B


Existingrefineries









1

2

PERTAMINA 20

Pertamina currently has 5 major refineries in Indonesia with totalcapacity in excess of 1000 MBSD

SOUTH CHINA SEA PACIFIC OCEAN

SUMATRA

JAVA

JAVA OCEAN

KALIMANTAN

SULAWESI

PAPUA

SINGAPORE

Arun P. Brandan

Medan

Pekan baru

Dumai

Plaju

Balikpapan

Bontang

Jakarta

BalonganCepu

CilacapBali

RU II: Dumai170 MBSDNCI: 7.50

RU III:Plaju118 MBSDNCI: 3.10

RU VI:Balongan125 MBSDNCI: 11.90

RU IV:Cilacap348 MBSDNCI: 3.98

RU IV:Cilacap348 MBSDNCI: 3.98

RU V:Balikpapan260 MBSDNCI: 3.27

RU V:Balikpapan260 MBSDNCI: 3.27

SOURCE: Pertamina

▪ Total capacity: 1031 MBSD

▪ Average NCI: 5.30

▪ One of the largest in theAsia Pacific

1UPGRADE EXISTING REFINERIES

PERTAMINA 21

Pertamina have multiple projects in the masterplan and willneed financial support for masterplan execution

SOURCE: Pertamina

SOUTH CHINA SEA PACIFIC OCEAN

SUMATRA

JAVA

JAVA OCEAN

KALIMANTAN

SULAWESI

PAPUA

SINGAPORE

P. Brandan

Medan

Pekan baru

Dumai

Plaju

Balikpapan

Bontang

JakartaBalongan

Cepu

Cilacap Bali

ArunBalikpapan▪ Upgrade material

to handle ~1.5%wt S in crude

▪ Build 150 MBSDHDS

▪ Build H2 plant▪ Revamp CDU IV

by 40 MBSD▪ Revamp HCU A/B

by 10 MBSD▪ Build 40 MBSD

RFCC+ 45 MBSDVRHDS

Cilacap▪ Upgrade material to

handle ~1 % wt S incrude

▪ Revamp PL-2 by 4MBSD

▪ Build 51 MBSD HCU▪ Build 47 MBSD VRHDS▪ Build 90 MBSD HDS▪ Build natural gas

infrastructure

Balongan▪ Upgrade material

to handle ~1% wtS in crude

▪ Revamp and buildHDS

▪ Revamp CDU by35 MBSD

Plaju▪ Upgrade material

to handle ~1% wtS in crude

▪ Build 93 MBSDHDS

▪ Build 180 MBSDCDU

▪ Build 40 MBSDRFCC

▪ Build 22 MBSDCCR

Dumai▪ Build logistic

infrastructure▪ Upgrade material to

handle ~1% wt S incrude

▪ Build 103 MBSDDHDT

▪ Revamp CDU by 44MBSD

▪ Revamp coker by 7MBSD

▪ Revamp PL-1 by 3MBSD

▪ Build natural gasinfrastructure

NOT EXHAUSTIVE

Sample potential projects

Total capexrequirement ofUSD 10 – 12billion to▪ Increase

flexibility▪ Increase

profitability▪ Meet Euro

IV productquality

UPGRADE EXISTING REFINERIES

1

PERTAMINA 22SOURCE: Beicip, Pertamina, Team analysis

757

1,883

+149%

3518 +91%

3.62.7+33%

Masterplaninitiatives

Average2009 - 2012

Pertamina production

LPGKTA

GasoilMil KL/yr

AvturMil KL/yr

PRELIMINARY

2011 +82%

GasolineMil KL/yr

UPGRADE EXISTING REFINERIES

1 Refining Masterplan upgrading projects will help reducingfuel demand deficit by increasing production of major and keyspecialties products

Major products

305

664

+118%

11294

Average2009 - 2012

+19%

Masterplaninitiatives

PPKTA

BenzeneKTA

297251 +18%Paraxylene

KTA

Specialties products

PERTAMINA 23






SOURCE: Pertamina

Vision 2025

Current challenges



A

B


Existingrefineries









1

2

PERTAMINA 24

Pertamina currently studying several options to build Grass RootRefineries

SUMATRA

JAVA

KALIMANTAN

SULAWESI

SINGAPORE

Jakarta

Tuban

Balongan

SOURCE: Pertamina

Plaju

Balongan II

▪ Planned capacity: 300kbd

▪ Status: BD

▪ Potential: Pertaminajointly with KPI & SKEnergy

Jatim (Tuban)

▪ Planned capacity:300 kbd

▪ Status: BD

▪ Potential:Pertamina jointlywith Saudi Aramco

Plaju (APBN)

▪ Planned capacity: 300kbd

▪ Status: BD

▪ Potential: Pertaminafunded by StateBudget

3 1 2

2BUILD GRASS ROOT REFINERIES

▪ Pertamina has 2 optionsto bridge demand andsupply gap

– Build refinery eitherwith crude partnersor with operatingpartner

– Get stake from otherrefineries in returnfor guaranteed longterm product offtake

PERTAMINA 25

Grass Root Refineries projects consist of partnerships andgovernment-funded projects

Equity & Partner Capacity Location Start up date

1.2.3.

Pertamina & Kuwait Petroleum International (KPI)Pertamina & Aramco AsiaPertamina (Pemerintah)

▪ 300 MBSD▪ 300 MBSD▪ 300 MBSD

▪ Balongan/Bontang/Banten▪ Tuban, Jawa Timur▪ Plaju, Sumsel

▪ November 2019▪ April 2020▪ December 2020

Context and Objectives Lokasi Proyek Kilang Baru

Context

Rapid increase of domestic Gasoline and Diesel demands driving deficitslarger and Corporate plan to develop Petrochemical business in order toincrease profitability

Objectives

1.2.3.

Reduce domestic deficits of Gasoline and DieselMeet domestic Petrochemicals demandAchieve net positive margin at each RU

Feedstock plan

Target:

Crude (MBSD)

1.2.3.

KPIAramco AsiaPertamina (Pemerintah)

Deg. API 29-35; Sulfur Cont: 1.0-2.7% wt

: 200 KEC + 100 UEA: 300 Arabian crude: 300 mixed crude oil

Type

Refinery complex – integrated with Petrochemicals

Rencana Produck

BBM Petrokimia Lain-Lain

▪ Euro IV Gasoline▪ Jet/Kerosene▪ Euro IV Diesel

▪ MEG▪ Polypropylene▪ LDPE/HDPE

▪ LPG▪ Lube oil

SOURCE: Pertamina

2BUILD GRASS ROOT REFINERIES

PERTAMINA 26

Executive summary

▪ Indonesia is a country with great potential– It is the largest economy in SEA with 40% of total SEA GDP– Has one of the fastest of the most stable growth in the world– Growth with continue with increase in domestic demand and expected to exceed Germany and France

by 2050

▪ This high economic growth also translates to the energy and petrochemical sector– Oil demand will double, coal will increase by 6 times, with natural gas demand tripling– 5% per-annum growth in petrochemical product demand

▪ This provides opportunity but also need for Pertamina who is present in all oil and gas value chain to growespecially in the petrochemical business

▪ However, there are two key challenges faced by Pertamina– Rising energy demand – deficit in gasoline and LPG will continue to increase– More challenging feedstock – Decrease in domestic crude production coupled with higher availability

of import sour crudes

▪ To overcome challenges and achieve Pertamina’s vision, Pertamina refining is focusing on 2 elements in itsstrategic agenda– Improve existing refineries through

▫ Increase flexibility to process higher sulfur and imported crude slate▫ Upgrading from low-value to high-value products through revamp and building new conversion units▫ Increasing net profit margin through operational excellence▫ Meeting product quality requirements

– Building grass root refinery with potential for integrated petrochemical plants and also developingmanufacturing and marketing partnerships – Currently 3 GRR (Jatim, Balongan & Sumatra) are in plan

▪ This will required conducive business climate, access to funds with 10-12 USD billion required forrefinery upgrades and 20-25 USD billion for 3 GRRs and support from all stakeholders

hank YouT

meeting the energy challenge in the world's largest archipelago

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