DEVELOPING

GAS

INFRASTRUCTURES

CHALLENGES IN ARCHIPELAGIC COUNTRY

Sampe L. Purba

SKK Migas

Presented in EURASIAN Natural GAS INFRASTRUCTURE

Milan, Italy, May 2017

Agenda

2

Brief Introduction

Current Challenges

Lesson Learned From the Past

Way Forward

Concluding Remarks

Indonesia – In Brief

3

• Located in Equator• Consist of more than 13,000

islands • Size : East – West = 5,100 Km

North – South = 1,800 KmThree Time Zones

(Lisbon – Moskow = 5.134 km) Population = 250 millions ++ GDP (2016) = 940.95 Billion USD

Upstream Oil & Gas Condition

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Oil & gas still dominatenational primary energydemand

Indonesia has become net oilimporter since 2004.

Since 2002 gas is moredominant than oil (in terms ofBOEPD).

Rapid natural productiondecline, high water content,and aging facilities.

Domestic infrastructure toutilize non-export allocated gasproduction is still insufficient.

Democratization and regionalautonomy: more stakeholdersdemanding more involvement.

4

Agenda

5

Brief Introduction

Current Challenges

Lesson Learned From the Past

Way Forward

Concluding Remarks

6

EAST JAVAWEST

JAVA

SOUTH SUMATER

A

RIAU ISLANDS

MASELA

PAPUA

ACEH

CENTRAL SULAWESI

NORTH SUMATER

A EAST KALIMANTAN

SOUTH SULAWESI

1.23 1.30

1.32

11.99

11.36

48.28

3.52

2.49

12.34 2.85

6.57

12.79

8.12

2.162.09

0.40 0.40

7.74

14.52

6.05

Reserves (in TCF)

Demands for 2010 - 2025 (in TCF)

Legends :

World’s Reserves

Indonesia (19%)

Indonesia contributes 19% of total Asia Pacific gas reserves

(source: BP Statistical Review of World Energy 2011)

Distribution of Gas Reserves in Indonesia

(source: Indonesian Gas Balance 2011)

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Asia Pacific’s Reserves

8.6%

2.12

2.04

0.76

Nat

un

aD

-Alp

ha

CENTRAL SUMATERA

IDD

Tan

ggu

h T

rain

3

MA

SELA

Do

ngg

iSen

oro

Energy domestics demands focused in Java – inhabited by 70% population, while reserves spread elsewhere. Gas infrastructures link is a requirement.

In addition to the existing gas infrastructures, new gas pipelines and FSRUs are being constructed and planned to support the domestic

demand

Planned LNG Receiving Terminal

Existing Pipeline

Planned Pipeline

CNG Plant

LNG Plant

Existing

Project

Potential

Gas Supply: Gas Demand:

Contracted

Commited

Potential

FSRU Nusantara RegasCapacity: 3 MTPAOn stream Mid of 2012

FSRU LampungCapacity: 2 MTPAOn stream July 2014

Arun Regasification Capacity: 3 MTPAOn stream January 2015

Donggi Senoro LNG PlantCapacity: 2 MTPAOn stream May 2015

Source: SKK Migas

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8

Main Issues inManaging Indonesia

Gas and LNG

Issue:- Supply source

vs demands- Access to pipe

line- Bundling –

Unbundling

Issue: Credible and

stable absorption

Change of usage allocation

Real demand : Supply chain Buyer – trader –end user

Issue: Access to

infrastructures Regulated

margin, IRR , ability to pay

LNG vs domestic gas pipe

Issue:- Field economics price

vs ability to pay- Gas Price to End User- Gas Price for specific

non commercialallocation

Issue:- Volume, delivery periods dan

on- stream schedules- Reserves, Demand vs tenure

of PSC- Field economics and ability

to pay from different buyers

Agenda

9

Brief Introduction

Current Challenges

Lesson Learned From the Past

Way Forward

Concluding Remarks

Stranded Gas – Infrastructures – Exchange deal

10

JAMBI

BATAMSINGAPORE

MALAYSIA

Minas

RumbaiPekanbaru

Duri

Grissik Gas Plant(Corridor Block)

SUMATRA

• Decision Context (pre 1997)

• Gas reserve found in South Sumatra

• CPI burnt ca 70 MBOEPD to fuel

Steam Generators

• No nearby ready market to absorb

the gas

• “Fuel” is “own-use” under CPI PSC

• Focus is production of crude oil

• Decision Made (1997): Exhange Duri

Crude with Gas from Asamera

• Btu to Btu Exchange

• CPI releases the same amount of

“energy” as oil

• Such oil is recognized as “Fuel Own

Use”

• CPI PSC is kept no gain no loss

• Gas Reserves in South Sumatra monetized

• More oil released for export

• Corridor Block developed.

• Pipeline Gas Transportation initiated

• CPI uses environmentally “clean” fuel

• CPI kept whole financially

Gas To Oil Exchange Contract (1997 - 2021)

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CPI / Rokan PSCOperation

Corridor BlockGrissik Plant

Gas Transportation28”, 536 Km pipeline

2 Compressors Stations

PTEA = 250 BBtudGSEA = 185 BBtud

39 MBopd

Dumai

DSF

Steam Gen

Power

Generation

PTEAOil

PTEA = Petroleum Transfer & Exchange AgreementGSEA = Gas Supply and Exchange Agreement

PTEALifters

• More Gas Reserves in South Sumatra monetized

• More oil released for export

• Increased Pipeline Capacity

•CPI uses environmentally “clean” fuel and

eliminate fuel oil

GSEAOil

23 MBopd

GSEALifters

WNTS – Exporting Pipeline gas

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•First gas was delivered from the NatunaSea gas fields to Singapore via the 400-mile-long subsea West NatunaTransportation System (WNTS) as part of a22-year natural gas sales contract betweenPertamina and Singapore's SembCorp Gassigned in 1999.

• The WNTS is a joint venture betweenPertamina and three PSC's operated byConoco Indonesia, Premier Oil and GulfIndonesia Resources, respectively. Conocois operator of the WNTS

Agenda

13

Brief Introduction

Current Challenges

Lesson Learned From the Past

Way Forward

Concluding Remarks

Roadmap National Gas Infrastructures

14

Virtual Pipeline Cluster Concept

15

16

Cluster III Nusa Tenggara

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ASEAN GAS INFRASTRUCTURE OVERVIEW

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Source: Bureau of Energy Resources – U.S. Department of States

Indonesia LNG Moving Towards Dynamic Market

Traditional LNG Market:Japan, Korea, Taiwan and China Portofolio Player New Potential Market

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Agenda

20

Brief Introduction

Current Challenges

Lesson Learned From the Past

Way Forward

Concluding Remarks

Upstream PSCs

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Concluding Remarks

22

Indonesia as archipelagic country facing challengingconditions in developing gas infrastructures

Supply, Demand, Commercial, Infrastructures and Regulationsdo matters and needed to be formulated comprehensivelyand thoroughfully

Land based pipelines, Receiving Terminals, hub and clusteringsystem for virtual pipelines is one of the viable solutions

Regional and international markets also needs to bemaintained in order to pace with the interest of Contractorsand State

THANK YOU

Sampe L. Purbaslpurba@skkmigas.go.idsampepurba@gmail.com

Brief CV

• Sampe L. Purba, is a Professional who is and has been in oil and gas relatedmanagerial business around 15 years. He has been involved in almost all valuechain of Oil and Gas key managerial role namely Planning department, Legal,General Support, Finance, Audit and Commercial. Currently he serves as ExecutiveSenior Advisor SKKMIGAS.

• SKKMIGAS is a Government-special installed body to manage all upstream relatedactivities in Indonesia, dealing with Contractors, Government and Supporting ValueChain in the Country

• Mr. Purba entered some Universities both domestics and abroad. He holdsundergraduate and post graduate degrees in Economics, Commerce and Law. Heis also alumni of Prestigious Regular National Leadership Course in NationalResilience Institution – Republic of Indonesia

• Mr. Purba registered as active member of Professional Association such asAssociation of International Petroleum Negotiators (AIPN), Indonesian PetroleumSociety (IPA), Indonesian Accountant Association (IAI), Indonesia Bar Association,Associate of Certified Fraud Examiner, Indonesia Chamber of Commerce.

• As part of maintaining and updating his knowledge and sharing of experiences, Mr.Purba actively attends and gives workshop, conferences and seminar domestic andabroad.

• Mr. Purba also active communicating his ideas on many strategic and current issues,through newspapers, radio, TV, journals and book. Some of his thought can befollowed in http.//maspurba.wordpress.com

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