INDONESIA

GAS/LNG DEVELOPMENT POLICY

BY :
DIRECTORATE OF PROCESSING AND COMMERCE
DIRECTORATE GENERAL OF OIL AND GAS
REPUBLIC OF INDONESIA

APEC EGCFE WORKSHOP

TAIPEI, MARCH 21-23, 2005

Outline of Presentation
The Role of Natural Gas in Indonesia
Domestic
Export (LNG and Pipeline)

Indonesia Gas Reserves

Indonesia Gas Production and Utilization

Government Policy on Natural Gas
The Future Market Development of Indonesia LNG
Conclusion

THE ROLE OF GAS

FOR INDONESIAN DEVELOPMENT

INDONESIAN DEVELOPMENT

SOURCES OF
ENERGY FOR
DOMESTIC

SOURCES OF
GOVERNMENTS
INCOME

OIL

FEEDSTOCK
TO STRATEGIC
INDUSTRIES

GAS

ENERGY SECTOR

INDONESIA GAS RESERVES

( STATUS JANUARY 2003 )
NATUNA

ACEH
8.8

54.8

East
Kalimantan

North
Sumatera 0,73
Central
Sumatera
South
Sumatera

44.5

7.5

SULAWESI

PAPUA
19.3

4.1
26.6

5.9
West Java

Gas Reserve (TSCF)

P1+P2+P3

5.7
East Java

TOTAL INDONESIA = 178,1 TSCF

INDONESIA GAS RESERVES

(1984-2003)

PSC

YEAR 2003
0,93 BSCFD

PERTAMINA

INDONESIA GAS PRODUCTION AND

UTILIZATION

PROD.

7,49 BSCFD 8,42 BSCFD

DOMESTIC
42,4%

EXPORT
57.6%

6
GASUT2001/14-01-2002

INDONESIA
GAS PRODUCTION AND
UTILIZATION

INDONESIAS LNG PLANT

ARUN
Capacity : 12.85 mtpa
(6 Trains )

Bontang
Capacity : 21.64 mtpa
(8 Trains)
Start up 1977
Plant to be expanded : Train I

Start Up 1977

TANGGUH
GAS RESOURCES
Capacity : 7 mtpa
Status:Under Construction

LNG INDONESIA
EXISTING FACILITIES
ARUN
Train 1
Train 2
Train 3
Train 4
Train 5
Train 6

2.14 MMTon/yr
2.14 MMTon/yr
2.14 MMTon/yr
2.14 MMTon/yr
2.14 MMTon/yr
2.14 MMTon/yr

BONTANG
1978
1978
1978
1983
1984
1986

Train A
Train B
Train C
Train D
Train E
Train F
Train G
Train H

2.62
2.62
2.62
2.62
2.73
2.73
2.74
2.95

MMTon/yr
MMTon/yr
MMTon/yr
MMTon/yr
MMTon/yr
MMTon/yr
MMTon/yr
MMTon/yr

1978
1978
1978
1983
1984
1986
1986
1986

PLANT TO BE DEVELOPED
LNG Tangguh (2 x 3.5 MMTon/yr)
Bontang Train I (3 MMTon/yr)

INDONESIAN LNG EXPORT

(Million Tons)

'77 '78 '79 '80 '81 '82 '83 '84 '85 '86 '87 '88 '89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03
Taiw an

0,7 1,6 1,7 1,7 2,3 1,9 1,5 1,5 1,6 2,0 2,9 3,2 3,5 3,5

Korea

0,1 1,7 2,1 2,0 2,3 2,7 3,4 4,2 5,3 5,3 6,3 6,9 7,0 8,2 6,1 3,1 5,1 5,1

Japan

0,6 3,7 6,3 8,6 8,7 9,1 9,6 14,2 15,1 15,2 15,1 16,5 16,6 17,7 18,2 18,6 18,2 18,7 17,6 18,6 18,4 19,5 19,8 18,0 16,8 17,9 17,8

10

INDONESIA LNG CONTRACTS

11

INDONESIA LNG CONTRACT

CONTRACT

VOLUME
(MTPA)

MARKET

LNG
PLANT

TERM

EXISTING
ARUN II

3,51

JAPAN

ARUN

1/1984 12/2004

ARUN III

2,33

KOREA

BONTANG/ARUN

1986 2007

KOREA II

1,95

KOREA

BONTANG/ARUN

7/1994 6/2014

JAPAN 1981 (Ext)

3,47

JAPAN

BONTANG

8/1983 3/2003

BADAK III

1,76

TAIWAN

BONTANG

1/1990 12/2009

BADAK IV

2,30

JAPAN

BONTANG

1/1994 12/2013

JAPAN 1973 (Ext)

8,34

JAPAN

BONTANG

1/2000 12/2010

TAIWAN

1,90

TAIWAN

BONTANG

1/1998 12/2017

BADAK V

1,05

KOREA

BONTANG

1/1998 12/2017

MCGC

0,34

JAPAN

BONTANG

3/1996 12/2015

TOTAL

26,96

NEW / EXISTING
JAPAN 1981 (Ext)

3,47

JAPAN

BONTANG

4/2003 3/2011

ARUN (Ext)

1,00

JAPAN

BONTANG

1/2005 12/2009

FUJIAN

2,60

CHINA

TANGGUH

1/2007 12/2031

KOGAS

1,10

KOREA

TANGGUH

1/2005 12/2024

SEMPRA ENERGY

3,70

US WEST COAST

TANGGUH

6/2008 6/2028
12

TOTAL

11,87

INDONESIA GAS TRANSMISSION

MAP
THAILAND

LAOS

Manila

Bangko
CAMBODIA
kBan
Mabtapud

Eraw
an

Khan
on
Song
khla

South

Phnom VIETNAM
Penh
Ho Chi
Minh
City

500 MMSCFD
2. West Natuna P. Sakra : 28
x 656 Km,

China
Sea

325 MMSCFD
3. Hangtuah (Mogpu) Duyong :
28 x 96 Km,
250 MMSCFD

Jerneh
Gunto
ng

WEST Kert Duyon

gMogp
eh
MALAYSI
A
u

Kuala
Lumpur

Port
Klang
Port
Dickson
Dum
ai
Duri

West
Natun
a

SINGAPORE

Bata Binta
n
m

Bandara
Seri
Begawan
Bint

Kuchi
ng

450 MMSCFD

HALMAHER
A

U
M
A
T
R

Atta
Tun
ka
Beka
u
pai

Sorong

SULAWESI
Banjar
masin

Palemb
ang

Jakar
ta

BURU

IRIAN JAYA

SERAM

Ujung
Pandan
g

Ardjuna
Fields
Cireb Semar
on
ang

MADUR
Bangk
J A V A SurabAalan

INDONESIA
GAS TRANSMISSION SYSTEM

Samari
nda
Balikpapa
n

aya

FUTURE REGIONAL

Pacific Ocean

Ternate
Bontang LNG
Plant
&
Export
Terminal

Jamb
i

Existing Gas Pipelines

Planned Gas Pipeline

5. Pagerungan Grissik : 28 x
380 Km,
Manado

KALIMANTAN

Griss
ik

350 MMSCFD

EASTulu
MALAYSIA

S
Pada
ng

4. Grissik P. Sakra : 28 x 490

Km,

Kota
Kinibalu

BRUNEI

Alph
Natun
a
a

Singapor
e Gas
Trunkline

Pena
ng

Meda
n

1. Grissik Duri : 28 x 530 Km,

Philipines

Bangkot
Lawi
t

Banda
Aceh
Lhokseu
mawe

TRANSMISSION PIPELINE & FLOW

Indian Ocean

I N D O N E S I A
BALI

Pagerunga
n

SUMBAW
A

FLORES

LOMBOK

SUMBA

TIMOR

AUSTRALIA

13

L-9

GRAND STRATEGIES
TO GUARANTEE THE SUSTAINABILITY OF GAS SUPPLY
AND DEVELOPMENT OF ITS INFRASTRUCTURE
TO EXPAND CURRENT GAS PIPELINE TRANSMISSION
AND DISTRIBUTION NETWORKS IN A SCHEDULE STEP
WISE MANNER.
TO UTILIZE GAS RESERVE AT CERTAIN LOCATION
OPTIMALLY, BY TAKING INTO ACCOUNT FACTOR SUCH
AS THE SIZE, AVAILABILITY AND LOCATION OF THE
RESERVE, GAS DEMAND, REQUIRED INFRASTRUCTURE
AND TECHNICAL AND ECONOMICAL FEASIBILITY

14

OPTIMIZING
UTILIZATION OF NATURAL GAS
TO CREATE A CONDUCIVE INVESTMENT CLIMATE TO
GUARANTEE THE SUSTAINABILITY OF GAS SUPPLY AND
DEVELOPMENT OF ITS INFRASTRUCTURE. THIS HAS BEEN
REALIZED BY MINISTER OF ENERGY AND MINERAL
RESOURCES (MEMR) BY PROVIDING A MORE ATTRACTIVE
FISCAL INCENTIVES;
TO EXPAND TRANSMISSION PIPELINE SYSTEM AND
DISTRIBUTION
OF
NATURAL
GAS
THAT
THEIR
DEVELOPMENT ARE CONDUCTED GRADUALLY AND IN LINE
WITH SCHEDULE
TO OPTIMIZE THE UTILIZATION OF NATURAL GAS
RESERVE EXISTING IN A CERTAIN AREA BY CONSIDERING
THE AVAILABILITY/RESERVES (AMOUNT AND LOCATION),
DEMAND/MARKET (AMOUNT AND LOCATION), REQUIRED
GAS INFRASTRUCTURE AND TECHNICAL FEASIBILITY
(SPECIFICATION, DELIVERABILITY, ETC) AND ECONOMICS
(INVESTMENT, ETC)
15

GAS POLICYS PLATFORM

TO ROLL BACK PETROLEUM
FUEL SUBSIDY
TO INCREASE ROLE OF GAS IN
THE ENERGY MIX

FOR DOMESTIC

INCREASE ADDED VALUE OF GAS

NEW LNG CENTRES
TRANS ASEAN GAS PIPELINE
PROJECT IMPLEMENTATION

FOR EXPORT

STRATEGIC STEPS
GAS FOR VEHICLES CNG, LPG
GTL TECHNOLOGY (METHANOL, DME) FOR ENERGY
GAS FOR POWER GENERATION, CITY GAS AND PETROCHEMICAL INDUSTRY
INCENTIVES FOR GAS PRODUCER : INCREASE EXPLORATION AND
DEVELOPMENT OF FRONTIER AREA AND MARGINAL FIELDS

16

GOVERNMENT BASIC
POLICY
PREVIOUSLY LARGE GAS RESERVES ARE AIMED FOR
EXPORT OBJECTIVE AND SMALLER GAS RESERVES ARE
INTENDED FOR DOMESTIC USE. THIS PARADIGM HAS
CHANGED, THE GAS RESERVES EITHER HUGE OR SMALL
AMOUNT, CAN BE UTILIZED FOR DOMESTIC NEEDS
DEPENDING ON ITS ECONOMICS.
GAS INFRASTRUCTURE (ALIGNED WITH THE MASTER
PLAN OF THE ASEAN GAS GRID) IS DEVELOPED TO
CONNECT SUPPLY POINT WITH CONSUMER POINT.
THE UTILIZATION OF NATURAL GAS IS BASED ON THE
MOST ECONOMIC OPTIMIZATION OF THE NATIONAL
ENERGY SUPPLY.
17

KEY ISSUES
DOMESTIC VS EXPORT ISSUE
DEVELOPMENT OF LNG BUSINESS
ROLE OF GAS IN INDONESIAS ENERGY MIX
SHIFTING PARADIGM FOR LARGE GAS RESERVES
THE LOCATION OF GAS RESERVES FROM DEMAND
CENTER (GEOGRAPHICAL ISSUE)
PRICING MECHANISM AND POLICY
GAS INFRASTRUCTURE
INDONESIA INTEGRATED GAS PIPELINE SYSTEM
TRANS ASEAN GAS PIPELINE (TAGP)

18

THE MARKET DEVELOPMENT OF

INDONESIAS LNG
In early 2000, LNG market experienced a tight competition,
indicating over-supply situation, and lower price of LNG.
The expected growing LNG demand worldwide, particularly in
some countries has brought a new dynamics on LNG market.
The potential market for LNG is huge
For Indonesia, the world LNG market is the opportunity to
diversify Indonesian LNG to a new market that provides
challenging Terms and Conditions, including LNG pricing.

19

CONCLUSIONS
Future Indonesian LNG development will be focused on :
Expanding Capacity in the existing LNG plants and
developing new LNG Centers
Maintaining the existing LNG supply for traditional
market (Japan, South Korea, and Taiwan)
Entering new market, US west coast and China
Providing sufficient gas supply for domestic market

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THANK YOU

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