PRIVATE AND CONFIDENTIAL

KEMENTERIAN ENERGI DAN SUMBER DAYA MINERAL

SATUAN KERJA KHUSUS

PELAKSANA KEGIATAN USAHA HULU MINYAK DAN GAS BUMI

(SKK Migas)

CHALLENGES IN GAS DEVELOPMENT

The 7th International Indonesia Gas Conference & Exhibition Jakarta

January 28th, 2015

PRIVATE AND CONFIDENTIAL 2

OIL RESERVES (MMSTB) GAS RESERVES (TSCF)

10

23

15 1,702

539

7

48 99

17

PETA CADANGAN

STATUS 1.1.2014 (BUBBLE MAP PER AREA – SCALED BUBBLE MAP)

311 4,652

PROVEN (P1) = 3,624

POTENTIAL (P2+P3) = 3,751

TOTAL (3P) = 7,375

PROVEN (P1) = 100

POTENTIAL (P2+P3) = 49

TOTAL (3P) = 149

34

51

13 4

PRIVATE AND CONFIDENTIAL

OIL AND GAS RESERVES RRR Oil @ 2013 = 44.5 % and Gas 90 %

Reserves per 01 01 2013 (P1)

Oil (MMBO) 3692

Gas (Tscf) 101.5

Estimate Proven Reserves in early 2014

Oil (MMBO) 3525

Gas (Tscf) 101.2

Additional Reserves from POD/POFD/POP 2013

Proven (P1*)

Oil (MMBO) 134

Gas (Tscf) 2.7

2013 Production

Oil (MMBO) 301

Gas (Tscf) 3

(+) (-)

* Estimated Risked Reserves 2P from 34 POD Approved in 2013

4

-

200

400

600

800

1000

1200

1400

1600

18001

96

5

19

67

19

69

19

71

19

73

19

75

19

77

19

79

19

81

19

83

19

85

19

87

19

89

19

91

19

93

19

95

19

97

19

99

20

01

20

03

20

05

20

07

20

09

20

11

20

13

Tho

usa

nd

of

Bar

rel /

day

Consumption Production

Oil Production vs Consumption

Data are from SKKMigas and BP Statistical Review

5

76.479.99

0

33.24

191.53

0

15.8515.2410.91

03.18

17.09

0 1.91

-5

15

35

55

75

95

115

135

155

175

195

2016 2017 2018 2019 2020 2021 2022

Oil & Condensate

Gas

Blok A

Jangkrik Jambaran TBR

IDD Gendalo Abadi

IDD Gehem

Tangguh Train 3

Ande-Ande Lumut

OO - OX - OC

YY

Matindok

Lapangan FSB

South Sebuku

Madura BD

IDD Bangka

Subang

Peciko 8A

MDA & MBH

JataGas

Tegal Pacing & Cikarang

MBO

EPD

Major Upstream Projects

5

6

6

Oil and Gas Production Profile and Outlook Th

ou

san

ds

BO

EPD

7 PRIVATE AND CONFIDENTIAL

Domestic average increase of 9% p.a. since 2003, exceeding export in 2012

The use of Natural Gas, domestic consumption vs export

4,397 4,416 4,202

4,008 3,820 3,775

3,681

4,336

4,078

3,631

3,402 3,227

2,836

1,480 1,466 1,513

2,341 2,527

2,913

3,323 3,379 3,267

3,550

3,774 3,812

4,403

-

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014* 2015

BB

TUD

Ekspor

Domestik

Catatan: *) Outlook berdasarkan data realisasi per 10 Desember 2014

50%

53%

61%

54%

8 PRIVATE AND CONFIDENTIAL

Domestic Gas 2014: allocation vs realization

Kelistrikan 14.00%

Pupuk 8.76%

Industri + CO2 19.16%

Lifting Minyak 4.55% City Gas

0.02% BBG Transportasi

0.05%

Ekspor Gas Pipa 13.64%

LNG Ekspor 32.90%

LNG Domestik 3.20%

LPG Domestik 3.72%

Indonesia Gas 2014

993.87

621.35

1,359.65

322.84

1,259.95

680.26

1,557.50

366.24

-

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Kelistrikan Pupuk Industri + CO2 Lifting Minyak

BB

TUD

Domestic Pipe Gas 2014

Realisasi (BBTUD) Kontrak

Catatan: *) Outlook berdasarkan data realisasi per 10 Desember 2014

9 PRIVATE AND CONFIDENTIAL

0.1

2.7 4.1 4.2

5.2 5.9 6.2

10.1 10.2 10.3 10.5 10.8 11.2

1.2

2.3

3.2 4.4

5.3 5.8

6.3

6.9 7.0 7.6 7.7 7.7 8.0

1.1

1.2

1.8

1.9

2.8

2.8 2.9

3.1 3.3 3.6 3.9 4.2

4.3

2.4

6.2

9.0

10.6

13.3

14.6 15.3

20.1 20.5 21.6

22.2 22.7

23.4

0

5

10

15

20

25

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 * 2015

Trill

ion

Cu

bic

Fe

et (

TCF)

Industri (TCF) Kelistrikan (TCF) Pupuk (TCF)

Domestic Gas allocation are mainly for Industry, Electricity and Fertilizers

Domestic Gas Increase

*) Based on 2014 data

10

CHALLENGES

Technical Challenges

- Moving to eastern part of Indonesia / remote area

- More complex geological setting - Going to deepwater - Lack of infrastructure - etc

Social Challenges

- Decentralization of government control

- National vs regional interests - etc

Regulatory Challenges

- New Oil and Gas Law - Tax Treaty - Import VAT - Migas land and building tax - Facilty Sharing Agreement - Environment Permit regarding

aerial layout - Waste processing - etc

Others Challenges

- Availability of national expertise - Competitive labor market outside

Indonesia - Human resource out flow - etc

Economic Challenges

- The price of crude oil - Attractiveness of PSC outside

Indonesia - Access to capital for national

companies - Less attractive domestic gas price - etc

OPPORTUNITIES

Challenges In the development of the gas projects

11 PRIVATE AND CONFIDENTIAL

85** Types of Permits

341 Permits Process

> 5.000 Permits Annually

>600.000 Sheets of required documentations

17 Different entities

PERMITS ON UPSTREAM OIL AND GAS PROJECTS “REGULATORY CHALLENGES”

* Including approval, certification, recommendation, etc ** Base on current data at SKKMigas

12

Mitigating the Challenges

• Intense coordination and collaboration with other stake holders

Comprehensive discussion with other stake holders such as local governments and other government institutions to reach an agreement based on mutual benefit.

One door policy on permitting through BKPM.

• Leaning towards macro management Need to find common understanding with state auditors on the issue of responsibility

of upstream oil and gas projects supervision

• More empowerment to the operators (PSC) SKKMigas is currently studying the possibility to increase the cost limit of procurement

projects that has to be approved by SKKMigas

KEMENTERIAN ENERGI DAN SUMBER DAYA MINERAL

SATUAN KERJA KHUSUS

PELAKSANA KEGIATAN USAHA HULU MINYAK DAN GAS BUMI

(SKK Migas)

KANTOR PUSAT Wisma Mulia Lantai LG, 21, 22, 23, 27, 28, 29, 30, 31, 33, 35, 36, 37, 38, 39, 40 Jalan Jenderal Gatot Subroto Kav. 42, Jakarta 12710, INDONESIA

PO BOX 4775 Telepon : +62 21 2924 1607

Faksimile : +62 21 2924 9999