Jakarta, 6 February, 2012

MINISTRY OF ENERGY AND MINERAL RESOURCESDIRECTORATE GENERAL OF OIL & GAS

by:Evita H Legowo

DIRECTOR GENERAL OF OIL AND GAS

Policy Goals for Unconventional Gasand Investment Needs

Presented at:2nd United States-Indonesia Energy Investment Roundtable: “Unconventional Gas”

Under the auspices of theUnited States-Indonesia Energy Policy Dialogue

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MINISTRY OFMINISTRY OF

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AGENDASHIFTING PARADIGM WITHIN OIL AND GAS INDUSTRY

POTENTIAL OF GAS DEVELOPMENT IN INDONESIA

DEVELOPMENT OF GAS INFRASTRUCTURE IN INDONESIA

UNCONVENTIONAL OIL AND GAS IN INDONESIA

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MINISTRY OFMINISTRY OF

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SHIFTING PARADIGM WITHIN OIL AND GAS INDUSTRY

SHIFTING PARADIGM WITHIN OIL AND GAS INDUSTRY

3

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MINISTRY OFMINISTRY OF

E&MRE&MR FROM OIL TFROM OIL TOO GAS GAS

4

bare

l oil

equi

vale

nt

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MINISTRY OFMINISTRY OF

E&MRE&MR FROM WEST TO EAST

5

More reserves found and exploration activities occureed in the eastern part of Indonesia mainly deepwater projectdeepwater project

Deep Water Area

Western part Eastern part

Mostly TertieryDiscoveries in Jurrasic Plays 1998-2008

2 23

0 0

9 9

5

0

2

4

6

8

10

2003 2004 2005 2006 2007 2008 2009 2010

EASTERN INDONESIA CONTRACT SIGNED

EASTERN INDONESIA CONTRACT SIGNED

Most of bidding acreage located in eastern side of Indonesia

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POTENTIAL OF GAS DEVELOPMENT IN INDONESIA

POTENTIAL OF GAS DEVELOPMENT IN INDONESIA

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MINISTRY OFMINISTRY OF

E&MRE&MR

GAS RESOURCES = 334.5 TSCF

4.23

8.56

3.70

51.46

24.32

NATUNA5.74

NORTH SUMATRA

15.22

17.90

CENTRAL SUMATRA

ACEH (NAD)

SOUTH SUMATRA

WEST JAVA

6.40

EAST JAVA

EAST BORNEO

CELEBES

MOLUCCAS

PAPUA

(Advance Resources Interational, Inc., 2003  processed)

PROVEN =     104.71  TSCFPOTENTIAL =       48.18 TSCFTOTAL =     152.89  TSCF

CBM RESOURCES = 453.30 TCFGAS RESERVES 

NATURAL GAS RESOURCES – RESERVES& CBM RESOURCES, SHALE GAS POTENTIAL

(As of January 1st 2011)

(As of December 31st 2010)Total CBM Basin = 11(Advance Resources Interational, Inc., 2003)

Signed Contracts up to Desember 2011 : 42 CBM PSCs

SHALE GAS POTENTIAL

1.28

18.33

Currently, the Government has beendoing initial study shale gas potential in Indonesia

Some rock samples have been taken from several regions for laboratorium analysis 7

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E&MRE&MR FUTURE GAS DEVELOPMENT

CEPU

MA

SE

LA

IDD

D‐ALPH

A

UTM-111 ; WGS- 84

JAMBARAN

S UKOW AT I

CENDANAKEDUNG TUBAN

BANYU URIP

KEDUNG KE RIS

AL AS T UA

ALAS TUA E.

GIANTI

P ILANG

NAMPAK

RANDU BL ATUNG

KALIS ARI

3-D Seismic Area

UTM-111 ; WGS- 84

JAMBARAN

S UKOW AT IS UKOW AT I

CENDANAKEDUNG TUBANKEDUNG TUBAN

BANYU URIPBANYU URIP

KEDUNG KE RISKEDUNG KE RIS

AL AS T UAAL AS T UA

ALAS TUA E.ALAS TUA E.

GIANTI

P ILANGP ILANG

NAMPAKNAMPAK

RANDU BL ATUNG

KALIS ARIKALIS ARI

3-D Seismic Area

Gresik

Cepu Block Pasurua

n

146 km

60 km 110

km140 km

Tang

guh

Trai

n 3M

uara Bakau

AMPANA

PELENG

Tiaka-3Tiaka-1

Tiaka-4

Tiaka-2

SULAWESI

LUWUK

MINAHAKI

U

SUKAMAJU

MALEO RAJA

RANGKONG A-1

MALEO BESAR-1

MALEO-1

MATINDOK

Dry exploration well

Onshore field for LNG

DONGGI

Onshore field for IPPMA

TIN

DO

KJ

8

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E&MRE&MR

‐

2,000 

4,000 

6,000 

8,000 

10,000 

2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

MMSCFD

Supply: Potential (FSRU) Supply: Potential (CBM)

Supply: (Existing, Project, & Potential) Demand

High conventional oil & gas demandRising oil prices and other energy commodity pricesConsideration to develop unconventional oil & gasSurplus in 2016 (FSRU on stream, new gas field development)Shortage in 2022 (alternative supply from unconventional gas)

Shortage, altenative supply from

unconventional gas

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INDONESIA GAS BALANCE (2011-2025)

FSRU onstream, new gas field development

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DEVELOPMENT OF GAS INFRASTRUCTURE IN INDONESIA

DEVELOPMENT OF GAS INFRASTRUCTURE IN INDONESIA

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E&MRE&MR INCREASED OF DOMESTIC GAS ALLOCATIONBASED ON CONTRACTS/ GSA

EXPORT6,11 TCF

24%

DOMESTIC19,52 TCF

76%

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Comparison of Accumulation Volume ContractDomestic vs. Exports During 2001 – Nov 2011

‐

5 

10 

15 

20 

25 

30 

2003 2004 2005 2006 2007 2008 2009 2010 2011

TCF

domestik ekspor

Comparison of Accumulation Volume Contract Domestic vs. Exports

status Nov 2011

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National Gas Pipeline (transmision & distribution)

Gas for Transportation:Buses in the City (short distance) CNGTaxi / Private Car LGVInter-Provincial Buses (long distance) LNG

City Gas (Gas for Household)Households that close to the gas sources or gas transmissions pipelineGoI began a preliminary study of city gas in 2008 and builds Gas DistributionNetworks for Household:

2009: Surabaya & Palembang2010: Tarakan, Depok, Bekasi, & Sidoarjo2011: Bontang, Sengkang, flats in Jabodetabek, Sidoarjo II, and Bekasi II2012: Prabumulih, Kab. Bogor, Jambi, Sidoarjo III, and Cirebon

Floating Storage Regassification Unit (FRSU)LNG Receiving Terminal will be built in 3 location: West Java, North Sumatra, and Central/Eastern Java

Small scale LNG receiving terminalDevelopment mini LNG Plant 1st stage: Samarinda, Balikpapan, Bali & Southeast Sulawesi

DEVELOPMENT OF GAS INFRASTRUCTURE IN INDONESIA

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UNCONVENTIONAL OIL AND GASIN INDONESIA

UNCONVENTIONAL OIL AND GASIN INDONESIA

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Developing unconventional oil & gas in Indonesia

Coal Bed Methane (C B M)Pilot Project was done by Lemigas at Rambutan Field in 2004Since 2008 until 2011, have signed 42 CBM PSC’s all around Sumatera and KalimantanCBM for electricity in surrounding CBM areas started in 2011

Shale GasIdentification of potential shale gas in indonesia: Sumatra: 3 basins (baong shale, telisa shale, & gumai shale); Java: 2 basins; Borneo: 2 basins; Papua (klasafet formation)

Oil Sand, Tight Gas, Biogenic GasR&D studies is ongoing

Coal Development for Oil & Gas substitute

COAL

Liquid

Gas

Ethanol

Dimethyl Ether (D M E)

Diesel Oil

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UNCONVENTIONAL OIL & GAS

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Demand for conventional oil and gas is progressively increase;

Abundance of unconventional oil & gas resources associated with conventional oil and gas;

To meet the high demand of gas both domestically;

Massive potential resources of CBM (453 TCF) and high-ranked indications of shale gas (Baong Shale, Telisa Shale, Gumai Shale and Klasafet Formation)

WHY DEVELOP UNCONVENTIONAL OIL & GASIN INDONESIA

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E&MRE&MR INDONESIA COALBED METHANE CONTRACT AREAstatus: January 2012

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CONTRACTOR ECONOMICAL IMPROVINGWITH MORE ATTRACTIVE TERMS & CONDITIONS

CONTRACTOR ECONOMICAL IMPROVINGWITH MORE ATTRACTIVE TERMS & CONDITIONS

Remarks

Depend on field condition

90% (ceiling cost)

Not to be sold

30 Years

Remarks

Depend on field condition

100% (no cost ceiling)

Can be sold, with the distribution of results according to the split in the Contract but the cost can not be recovered

30 Years

BEFORE REVISED(2008 – 2009)

AFTER REVISED(2009 – Now)

Remarks

Depend on field condition

100% (no cost ceiling)

Can be sold, with the distribution of results according to the split in the Contract but the cost can not be recovered

Given legal certainty for investment returns that are tailored to the ability of field (may > 30 years)

EXPECTED CONDITION

Terms & Conditions

Split

Cost Recovery

Handling Production before Commerciality

Contract Duration

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www.migas.esdm.go.id18