DISTRIBUTION OF LNG IN INDONESIA

M.I ZikrullahVice President for Oil and Gas Utilization Management

BPMIGAS

Maximizing the value of Indonesian gas in partnership with NorwayEnergy Seminar

5 October 2011, Hotel Borobudur, Jakarta

2011

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Agenda

• Indonesian LNG – Existing Condition

• Global and Indonesia LNG Market

• Future LNG Projects and Receiving Terminals

• Strategy for Gas Allocation

• Conclusions

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Indonesian LNG – Existing Condition

Arun LNG 12.3 MTPA

Bontang LNG 22.2 MTPA Tangguh LNG 

7.6 MTPA

Arun & BontangNo. Destination Country Volume (MTPA)

1. Japan 6.32

2. South Korea 2.04

3. Taiwan 1.84

TangguhNo. Destination Country Volume (MTPA)

1. South Korea 1.15

2. USA 3.7

3. China 2.6

4. Japan 0.36

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Bontang & Arun LNG

• Entering LNG business since 1977 from two LNG centers in Arun (Aceh) and Bontang (Kalimantan),

• The capacity  of Bontang and ArunLNG plants is 22.2 MTPA and 12.3 MTPA respectively,

• Production peak at 29 MTPA by 1999, and declining afterward

• Major markets: Japan, South Korea and Taiwan; and some sales contracts have been expired since 2007.

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Tangguh LNG :  3rd LNG Center

• Tangguh is located in the western part of Papua,  total capacity of 7.6 MTPA,

• Buyers: Fujian, POSCO, K‐Power, Japan and Sempra Energy,

• Some volume of Sempra Energy contract has possibility for diversion,

• Started Production at the end of 2009, and it is now reaching its capacity production of 7.6 MTPA

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Improving Global LNG Market• Post  global economic crisis, strong increase of global LNG 

demand : from 260 MTPA in 2010 to around 380 MTPA in 2015, and a further  rise to 530 MTPA in 2020.

• Such strong increase mainly takes place in European and AsiaPacific market, while  US LNG market might be stagnant due to the fast development of unconventional gas, particularly shale gas.

• On the supply side, until 2015, additional LNG capacity from new projects may not be sufficient. However, cargo diversion from US market may alleviate the tight balance of supply and demand.

• After 2015, global LNG supplies could meet the expected LNG demand if the planned additional  LNG capacity increase can be implemented accordingly. 

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Further LNG Expansion Development  in Indonesia

• Indonesia has numerous advantages tofurther develop the LNG business:– Significant volume of natural gas and CBMresources available to supply the existingand new LNG centers

– Strong domestic gas demand–Growing demand in Asia Pacific

• Floating LNG Receiving Terminals In Progress

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New LNG Projects

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Future LNG Receiving Terminals

Arun Regasification

Belawan FSRU

West Java FSRUCentral Java FSRU

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Efforts to Capture LNG Business Opportunities

• Substituting the declining gas supplies for the existing LNGcenters by developing new gas fields, including CBM.– South Mahakam, Deep‐water Makassar Strait, Sebuku andMuara Bakau gas fields for existing Bontang LNG Center.

• Developing new LNG centres.– Tangguh Train‐3 and Masela (Floating LNG).– Donggi‐Senoro (downstream).

• Optimizing the allocation of LNG production to fulfill domestic needs

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Overview of Domestic GasDemand and Supply

•Domestic gas demand would grow 5.1%– 2.9 BCFD in 2007 to 5.5 BCFD by 2020. 

•Driving factors for such strong growth: – oil subsidy phased‐out, electricity shortages and capacity expansion for industry and electricity plant.

•Declining existing supply requires fast execution of new gas development project, e.g :– On‐going project: Terang Sirasun, Cepu, Senoro‐Matindok,Abadi and others

– New projects: Natuna D‐Alpha, CBM and others.

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Gas Balance & GasSupply Scenarios

• Existing contractual gas supply both for export and domestic use will decline.

• Despite the decline, there might be additional volume for gas export under the following conditions:‐ Domestic demand sidemanagement by introducing energy conservation and optimization ofprimary energy supplies.

‐ Strong expansion of natural gasdevelopment, including CBM.

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Thirty nine (39) companieshave signed PSCs

CBM production target:2011: production start2015: 100 MMCFD2020: 500 MMCFD2023: 1.5 BCFD

CBM allocated for gaspipeline & LNG production

Resources close to existing LNG facility

CBM Prospect & Development

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STRATEGY FOR GAS ALLOCATION• Domestic market prioritized

primary energy supplies and feedstock for industry.Sustainable security of supply.

• Allocation for export purposes is possible under:Strong expansion of potential gas reserves such as: CBM,Natuna D‐Alpha and othersEffective gas demand management through conservationand optimizationThe situation when there is a need to increase fieldeconomics

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Conclusion

• Indonesia has opportunity to expand LNG business• The gas allocation approach to encourage domesticmarket satisfying economic requirement of the LNGdevelopment project

• Despite growing gas demand for domestic market,some LNG volume could be allocated for export

• Besides LNG, Indonesia has opportunity to extendgas trade through pipelines, particularly withneighbouring countries

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THANK YOU