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PORT INITIATION & PLANNING ASIA INDONESIA CASE STUDY

February | 2012

Port Initiation & Planning Asia | 2012 Page | 2

I. OUR COMPANY

II. THE POTENTIAL OF INDONESIA

III. REGULATORY CHALLENGES

IV. SITE SELECTION

V. PT OILTANKING MERAK

VI. PT OILTANKING KARIMUN

VII. CLOSING

OVERVIEW


MARQUARD & BAHLS

I. OUR COMPANY

MARQUARD & BAHLS GROUP

More than 60 years in the international

and energy business

Key services encompassing oil trading,

tank terminal storage, aviation fuelling

and renewable energies

Headquartered in Hamburg and strategic

business presence in many parts of

Europe, The Americas, Africa & Asia


MARQUARD & BAHLS

Marquard & Bahls Group

Marquard & Bahls AG

Tank Storage

Retail Services

Aviation Service

Oil Trading

Quality

Management

Bunker Service

Biogas Solutions

Shareholdings


MARQUARD & BAHLS

Turnover (excluding petroleum tax) 12.6 billion EURO

Oil Trading Sales 21 million MT

Tank Capacity 17.2 million CBM

Tank Terminal Throughput 147 million MT

Employees 4,076*

Key Figures FY 2010

* 4,076 total no. of consolidated employees; Marquard & Bahls has an approximate total of

7,000 employees worldwide (unconsolidated).


I. OUR COMPANY

OILTANKING GROUP

An independent logistic service provider to

the oil and chemical industry

Specialized in tank storage and related

services

OILTANKING GROUP


OILTANKING GROUP

Our business includes:

Storing and handling bulk liquids

Building and operating single and multi-users tank terminals

Managing logistic infrastructure

Providing uncommon customer service along with high

operational integrity

I. OUR COMPANY

OILTANKING GROUP


Tank Terminal & Port Network: Asia Pacific

Singapore (Chemical) Storage: 388,184 cbm

TANK TERMINAL NETWORK

Oil Terminal

Chemical Terminal

National Terminal Network

Representative Office

New project

Singapore (Petroleum) Storage: 1,367,072 cbm

Daya Bay, China Storage: 79,550 cbm

Nanjing, China Storage: 87, 454 cbm

Merak, Java Indonesia Storage: 288,625 cbm


THE INDONESIAN MARKET


Population – 238 million

(as of May 1, 2011)

GDP (2010) – US$707b

GDP Growth

2007 : 6.3%

2008 : 6.0%

2009 : 4.6%

2010 : 6.1%

2011: 6.5%

Per Capita (2010) – US$2946

Unemployment Rate

2007 : 12.5%

2008 : 9.1%

2009 : 8.4%

2010 : 7.7%

Refining Industry

10 Refineries/1,122kbpd

6%



THE INDONESIAN MARKET

Indonesia offers:

Young and growing population

Growing economy and wealth

Increase in energy consumption

Market entry for foreign companies to sell petroleum fuels


FUEL CONSUMPTION FORECAST

Max Domestic

Production:

40 million kl

(w/o future refineries)

60m 64m

76m

92m

107m

127m

+43.3%

FUEL CONSUMPTION

Source: Ministry of Energy & Mineral Resources


DOMESTIC AUTO MARKET SALES (5-YEAR TREND)

Source: Gaikindo / 2011 Figures (Jan – Nov)

433,341

483,548

764,710

813,856

603,774

AUTO MARKET


REFINING CAPACITIES


Refining Capacities:

Now, Indonesia has 10 refineries

(ranging from 3.8 kbpd to 339 kbpd)

Designed capacity of 1.122m bpd but

actual processing only 675k bpd

Pertamina runs 5 of the largest refineries

Shell, Total and Petronas are developing

retail stations network

Clean Petroleum Product import terminals

mostly controlled by Pertamina

Shortage of Clean Petroleum Product

import terminals and ports,

particularly in Sumatra, Kalimantan

and East Java


LAWS & REGULATIONS


Petroleum Market

BPH Migas / Downstream Regulatory Body of Oil & Gas

Unique BPH Migas tariff regulation of upfront fee payment based

on trade estimates (IMPEX)

Deregulation of the downstream industry (Y2004 - …….)

Cutting of fuel subsidies

Free market access

Fair level playing field

Without deregulation

Fuel supply risk likely to increase

Potential bottlenecks in future expected (demand > supply)

Heavy burden on state budget remains


BUSINESS ENTITY


Business License for Tank Terminalling

To rightly select business license which determines the type of

business allowed

Thus, the issue is selecting suitable business line for warehousing

liquid

Oil & Gas supporting services vs downstream Oil & Gas activities

Different views by different ministries

Urgent need for clarification by leading ministries (BKPM &

Directorate General of Oil & Gas)

Role of BKPM should be in line or integrated with other

departments such as Migas, BPH Migas, Customs and National

Trade


SEA COMMUNICATION


Sea & Port

Adpel vs Local Transport Department

Common interest and goal to attract new port players should be encouraged

Investors prefer a ‘one-stop-shop’ solution

Closer corporation is recommended

New local port supporting companies (BUP’s)

New regulation requires BUP to handle loading & unloading of cargo

Expertise for handling dangerous cargoes ?

BUP license cannot be obtained by terminal operators

BUPs have to work together with PELINDO as they have expertise and equipment

International Maritime Organization (IMO) only acknowledges PELINDO


SEA COMMUNICATION


Sea & Port

Cabotage rules

Only Indonesian vessels can load cargo from domestic port and

discharge at another domestic port

Permits NO LONGER given to foreign fleet oil tankers for domestic

trade

Hence, owners and charterers need to employ only Indonesian

vessels

Issues:

Less flexibility for cargo owners

Availability of vessels

Competitive pricing

Attraction of investors likely to suffer


SEA COMMUNICATION


Sea & Port

Jetty permit (TUKS) for construction cum

operation

Investors to consider long permit

processing time into project scheduling

Adds uncertainty into a project

schedule/business case

TUKS versus appointed port in Free Trade

Zone

Suitability of government appointed ports

to be reviewed



Operations

Bonded warehouse limitations

Segregation of import & export tanks required in order to enjoy duty exemption

Not flexible and attractive for customers

Not in line with international bonded warehouse practices

Local permits

National guidelines/regulations very broad

Permit duplication to suit both local and national level.

Eg. 1 - For fuel trade where BPH Migas collects a fee as well as local government (Pemda)

Eg. 2 - Storage license from Migas as well as depo permit from local level required

TERMINAL & PORT OPERATIONS



Operations

Ever changing permit requirements

Adds uncertainty into business planning

Discomforts shareholders

Makes investments in Indonesia less attractive

TERMINAL & PORT OPERATIONS


IN SUMMARY


In Summary

Implementation and integration of regulations lacking

Inter-departmental corporation should be encouraged and further

improved

Strive for STRONGER TOGETHER by closer corporation between

national and local level as well as investors


IV. SITE SELECTION

LOCATION

Criteria

Right location

Feasibility of bonded warehouse / FTZ benefits

Land price

Deep-water access suitable for business case

Geotechnical conditions

Plot accessibility and sufficiency of public road infrastructure

Power and utility availability

Security on & offshore


IV. SITE SELECTION

LOCATION

Marine Environmental Factors

Wind and waves

Seismic and tsunami risks

Tides and currents

Fishing grounds

Feasibility of dredging

Sedimentation tendency and trend

Underwater pipelines and cables


-20mCD

150m

proposed terminal

Oiltanking Merak – Deepwater Access

WATERFRONT


VESSELS

Tanker Size

Definition

Deadweight

Tonnage

(dwt)

Length

Overall

(L)

Beam

(B)

Fully Laden

Draft

(D)

Design Depth

Required

(1.1D)

Small 15,000 150 22 9.0 9.9

Handymax 45,000 223 30 11.2 12.3

Panamax 75,000 250 36 13.6 15.0

Aframax 120,000 290 43 15.6 17.2

Suezmax 135,000 300 45 16.3 17.9

Suezmax 160,000 320 46 17.0 18.7

VLCC 200,00 325 50 18.0 19.8

VLCC 320,000 335 52 20.0 22.0

Typical Petroleum Tanker Dimensions



PORT OF MERAK

Banten Province


PORT OF MERAK


Banten Province

1st independent bulk storage terminal for

petroleum products in Indonesia

In operations since Sep 2009


Jetty dwt Depth

Alongside LOA Max. Displacement

1 110,000 16.0m 280m 133,000 mt

2 15,000 15.0m 163m 20,000 mt


Port Features - Highlights

Uncongested waters with open access to Sunda Straits

Deepwater access of min. -15mCD within 80m range off shoreline

Established port services

Offers superior shipping economics

OT Merak Jetty Capacity

PORT OF MERAK


Phase 1 jetty “as-built”

-15mCD

PORT OF MERAK


port conversion

before …

PORT OF MERAK


PORT OF MERAK

port conversion

after…


PORT OF MERAK


Services

Bonded storage

Break bulk capabilities

Redelivery to vessels/barges

Ship-to-ship transfer

Truck loading

Tank-to-tank transfer

Blending to specifications

Circulation

Injection of additives



Tank Capacities

5 x 22,400 cbm

3 x 20,200 cbm

4 x 12,600 cbm

7 x 7,400 cbm

2 x 7,000 cbm

Total : 288,800 cbm

The terminal is built in accordance with the latest environmental and

safety standards and is amongst the most modern terminals in

Indonesia. The terminal operates according to the corporate HSSE

standards.

PORT OF MERAK


PORT OF KARIMUN


Riau Province



Riau Province

PORT OF KARIMUN



Port Features – Highlights

Close proximity to Singapore oil hub

Located along the Malacca Straits, the major oil route from west to

east

Post dredging water depth of -21mCD (VLCC access)

Port services available

However, there is no established shipping channel yet to connect

from the Malacca Straits to our proposed jetty infrastructure…

PORT OF KARIMUN


Route 1

PORT OF KARIMUN

Route Distance

(KM)

Distance (Nautical

Miles)

1 29 15.7

2 15 8.1

Route 2


Proposed

Design Basis for Route 1

DWT = 320,000

LOA = 333m

Breadth = 60m

Max allowable draft of vessel = Water depth available minus 10% UKC


Parameter Formulae Remark

Design depth 1.1 x D UKC = 10%D

Width for 1-way traffic 5 x B Minimum

Width for 2-way traffic 10 x B Minimum

Diameter of turning basin 2 x L Minimum

Requirement on the channel navigational design based on recommendation

from PIANC:

D = Draft of vessel in metres

B = Beam of vessel in metres

UKC = Under Keel Clearance

PIANC = Permanent International Association of Navigation Congresses

PORT OF KARIMUN


PORT OF KARIMUN


Straits of Malacca

Straits junction and pilot boarding ground



Issues encountered

Regulation No. PM 68 of Y2011 regarding ship channels states clearly

that government is supposed to provide and maintain shipping

channels but reality is that investors have to take action and provide

funding for:

AMDAL and dredging permit

Initial dredging scope

Annual channel depth survey

Any maintenance dredging required thereafter

Provision, installation and maintenance of navigational aids

Consequence Competitive Disadvantage

PORT OF KARIMUN


PORT OF KARIMUN


Proposed Jetty Capacities

Jetty Dwt LOA Design Depth

Required Water Depth

Available

1 60,000 240m -14mCD -18mCD

2 320,000 320m -25mCD -22mCD

3 15,000 150m -10mCD -16mCD

4 120,000 290m -17mCD -20mCD

5 15,000 150m -10mCD -16mCD


VLCC

Aframax

Panamax

15,000 dwt

PORT OF KARIMUN

PHASE 1

PHASE 2

option land


PORT OF KARIMUN


Terminal Characteristics

Functions:

Import and Export by ship only

Regional break bulk services

Break bulk services for Indonesia at large

International cargo trading terminal

Products:

Crude Oil

Fuel Oil

Gasoil

Naphtha

Gasoil (Diesel)

Jet Fuel & Others


PORT OF KARIMUN


Terminal Characteristics

Services

Storage in Free Trade Zone area

Break bulk Capabilities

Redelivery to vessels/barges

Ship-to-ship transfer

Tank-to-tank transfer

Blending to specification

Circulation

Heating of products (if required)


PORT OF KARIMUN


Tank Capacities

More than 40 units of bulk storage tanks

Size range from 5,000cbm to 60,000cbm

Total capacity of 1,200,00 cbm



Performance Enhancements

VLCC capabilities in addition to Singapore port

Feasibility of crude oil handling

Creating economies of scale

Higher discharge and loading flow rates

Faster ship turn-around

Better utilization of onshore assets as

well as port

Dedicated pipeline concept

Lower risk of product contamination

Less downtime and resulting in higher

availability of infrastructure

PORT OF KARIMUN


VII. CLOSING

Take away…

Deregulation of the Oil & Gas downstream industry still pending

Permitting and licensing to be simplified

Increase in fuel consumption expected

Increase in product imports required

Shortage of bulk storage facilities

Demand for petroleum storage terminals

Demand for port facilities to feed terminals


Uncommonly well

Doing the Common

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