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Gas Gas Transmission and Distribution Transmission and Distribution Development in IndonesiaDevelopment in Indonesia
Uji Subroto SantosoUji Subroto SantosoPT PGN (Persero) Tbk.PT PGN (Persero) Tbk.
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Agenda2
• PGN’s Business Overview.
• Indonesia Gas Industry
• Natural Gas Development & Utilization
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3
PGN’s Business Overview
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Company Overview4
• PGN is an Indonesia state company in downstream natural gas business activities.
• PGN controls 87% market share of transmission business (743.14 MMScfd) and 93% of distribution (551.28 MMScfd), providing natural gas to its costumers on industrial, commercial and household sector.
• Listed on Indonesia Stock Exchange, and known as PGAS. The Republic of Indonesia currently retains a 55% of PGAS shares while the remaining is owned by the public.
Gas PurchaseGas Purchase
Upstream
Upstream
TransportationTransportation
PGNDistribution
SSWJ
PGNDistribution
SSWJ
• SSWJ (PGN)• Grissik – Duri (TGI)• Grissik – Singapore (TGI)
• SSWJ (PGN)• Grissik – Duri (TGI)• Grissik – Singapore (TGI)
• Retail & Industry
Customers
• IPP
• Retail & Industry
Customers
• IPP
PGNTransmission
PGNTransmission
• Chevron
• Singapore
• Chevron
• Singapore
Sales (GSA)Sales (GSA)
GTAGTA
GSPAGSPA
Gas Transmission Contract (GTA)
– Long-term contract
– Minimum ship-or-pay volumes
– Tariffs in US$
Gas Transmission Contract (GTA)
– Long-term contract
– Minimum ship-or-pay volumes
– Tariffs in US$
Gas Supply for Distribution Business Gas Supply for Distribution Business
Gas Sales & Purchase Agreement (GSPA)
–Long-term contract
–Take-or-pay volumes
–Fix price in US$
Gas Sales & Purchase Agreement (GSPA)
–Long-term contract
–Take-or-pay volumes
–Fix price in US$
Distribution – Sale of Gas to End UserDistribution – Sale of Gas to End User
Gas Sales Agreements (GSA)
– Minimum pay volumes
– Price in US$ & IDR
Gas Sales Agreements (GSA)
– Minimum pay volumes
– Price in US$ & IDR
Transmission–Transport Third Party’s Gas Transmission–Transport Third Party’s Gas
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H1 2008 Industrial & Power PlantCustomer Consumption
H1 2008 Sales Volume by Customer Type
Chemical 20%
Power Plant 22%
Textile 4%
Food 7%
Ceramic 15%
Fabric Metal 4%
Others 4%
Basic Metal 6%
Glass 8%
Paper 9%
Wood 1%
99
Strong Distribution Customer Base
• Three customer categories: Household, Commercial, and Industrial .
• Industrial customers continue to dominate PGN’s customer base and drive PGN’s distribution business growth. As of June 30, 2008, sales volume of industrial customers was 544 MMScfd or equal to 98.7% of PGN’s sales.
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Jakarta
Grissik
Pagardewa
Duri
Medan
KALIMANTAN
SUMATERA SULAWESI
JAWA
PAPUA
Grissik – Duri
Grissik – Singapore
Grissik – Pagardewa – Labuhan Maringgai – Muara Bekasi – Rawamaju (SSWJ II)
Pagardewa – Labuhan Maringgai – Cilegon (SSWJ I)
PLN – Medan
Transmission Pipeline Network
6
Completion of the SSWJ Gas Transmission Pipeline enables PGN and its 60%‐owned subsidiary, TGI, to operate transmission pipelines with a total length of 2109 km with capacity of 1,839 MMScfd. Of the capacity figure, 650 MMScfd is allocated for PGN internal use.
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• Extensive distribution network covering 9 major cities in Indonesia• The network and facilities are managed by three SBUs – Western Java
(SBU I), EasternJava (SBU II) and Northern Sumatra (SBU III)
Distribution Pipeline Network
PAPUA
Medan – SBU IIICapacity = 46 mmscfd
Cirebon – SBU ICapacity = 8 mmscfd
Surabaya & Surrounding – SBU II Capacity = 230 mmscfd
Pekanbaru – SBU IIICapacity = 65 mmscfd
Palembang – SBU ICapacity = 4 mmscfd
Batam – SBU IIICapacity = 75 mmscfd
Jakarta, Bogor, Banten,Bekasi & Kerawang – SBU I
Capacity = 577 mmscfd
KALIMANTAN
SULAWESI
SUMATERA
JAWA
SBU III
SBU ISBU II
1212
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8
Indonesia Gas Industry
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Indonesia Gas Reserves
24.06
INDONESIA NATURAL GAS RESERVES (STATUS : 1 JANUARY 2008)
GAS RESERVES (TSCF)
Source: Directorate General Oil & Gas
• Indonesia has the largest proven natural gas reserves in Asia Pacific. As of Jan 2008, total gas reserves was 170.07 TSCF with 112.47 TSCF proven and 57.60 TSCF potential.
• Majority of the gas reserves are located in Sumatra and Kalimantan which far away from industrial areas.
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Indonesia Gas Market Outlook
Contracted, Committed and Potential Gas Supply & Demand for Major Regions in Indonesia
55
J a k a r ta
G r is s ik
P a g a r d e w a
D u r i
D u m a i
M e d a n
K A L IM A N T A N
SUMATERA S U L A W E S I
J A W A
IR I A N J A Y A
S o u rc e : D irje n M ig a s
-1 1 8 .7-1 9 2 .2-1 8 3 .5B a la n c e
2 1 9 .72 1 9 .72 1 8 .5D e m a n d
1 0 12 7 .53 5S u p p ly
2 0 1 12 0 0 92 0 0 7Y e a r
R E G I I (N O R T H S U M A T E R A )
-1 1 8 .7-1 9 2 .2-1 8 3 .5B a la n c e
2 1 9 .72 1 9 .72 1 8 .5D e m a n d
1 0 12 7 .53 5S u p p ly
2 0 1 12 0 0 92 0 0 7Y e a r
R E G I I (N O R T H S U M A T E R A )
2-2 6-1 4 2 .3B a la n c e
1 9 31 9 5 .71 4 3D e m a n d
1 9 51 6 7 .90 .7S u p p ly
2 0 1 12 0 0 92 0 0 7Y e a r
R E G IV (C E N T R A L J A V A )
2-2 6-1 4 2 .3B a la n c e
1 9 31 9 5 .71 4 3D e m a n d
1 9 51 6 7 .90 .7S u p p ly
2 0 1 12 0 0 92 0 0 7Y e a r
R E G IV (C E N T R A L J A V A )
-7 9 1 .3-7 2 9 .7-5 6 7 .8B a la n c e
3 4 9 1 .83 4 9 1 .72 9 8 1 .6D e m a n d
2 7 0 0 .52 7 6 1 .92 4 1 3 .8S u p p ly
2 0 1 12 0 0 92 0 0 7Y e a r
R E G II I (C E N T R A L , S O U T H S U M A T E R A & W E S T J A V A )
-7 9 1 .3-7 2 9 .7-5 6 7 .8B a la n c e
3 4 9 1 .83 4 9 1 .72 9 8 1 .6D e m a n d
2 7 0 0 .52 7 6 1 .92 4 1 3 .8S u p p ly
2 0 1 12 0 0 92 0 0 7Y e a r
R E G II I (C E N T R A L , S O U T H S U M A T E R A & W E S T J A V A )
-1 4 1 .7-4 7 .6-1 4 5 .6B a la n c e
9 6 3 .77 4 7 .35 6 5 .4D e m a n d
8 2 1 .97 9 4 .84 1 9 .8S u p p ly
2 0 1 12 0 0 92 0 0 7Y e a r
R E G V (E A S T J A V A )
-1 4 1 .7-4 7 .6-1 4 5 .6B a la n c e
9 6 3 .77 4 7 .35 6 5 .4D e m a n d
8 2 1 .97 9 4 .84 1 9 .8S u p p ly
2 0 1 12 0 0 92 0 0 7Y e a r
R E G V (E A S T J A V A )
REG II (NORTH SUMATERA) (MMSCFD)
Year 2007 2009 2011
Supply 35 27.5 101
Demand 481.5 526.7 535.7
Balance -446.5 -499.2 -434.7
REG III (CENTRAL, SOUTH SUMATERA & WEST JAVA)
Year 2007 2009 2011
Supply 2,413.8 2,761.9 3,100.5
Demand 3,557.6 4,408.6 4,467.3
Balance -1,143.8 -1,646.7 -1,366.8
REG IV (CENTRAL JAVA)
Year 2007 2009 2011
Supply 0.7 167.9 195.0
Demand 198 256.3 259.9
Balance -197.3 -86.6 -64.9
REG V (EAST JAVA)
Year 2007 2009 2011
Supply 419.8 794.8 981.9
Demand 926.4 1,155.3 1,351.7
Balance -506.6 -360.4 -369.7
Source: Directorate General Oil & Gas
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11
RITJDGBN
Master Plan of Natural Gas Infrastructure
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12
Gas Production andUtilization in Indonesia
• Natural gas utilization (export and domestic) reached 2.805 TSCF in 2007 and expected to increase going forward.
• The GoI’s policy to promote domestic gas utilization by implementing Domestic Market Obligation to gas producers.
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13
Natural Gas Development & Utilization
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Main Factors for natural gas development and utilization
Natural Gas Development and Utilization
14
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15
Security of Supply from Gas Producers
Certified gas volume
Supply period
Attractive Gas Price scheme
(1) Gas Supply
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Gas Market Development
Opportunities & challenges•pricing dynamic promotes higher gas demand
•Gas price for industry•Environmental Issue•Limited gas infrastructures
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Pricing Dynamics Promotes Gas Demand
Source: Pertamina
5.5
6.5
11.8
10.7
13.9
14.8
17.5
15.0
15.8
17.3
17.3
0 5 10 15 20
Distributed Gas
Kerosene (subsidized)
LPG (subsidized)
MFO (non‐subsidized)
HSD (subsidized)
LPG (non‐subsidized)
Gasoline (subsidized)
Diesel (non‐subsidized)
HSD (non‐subsidized)
Kerosene (non‐subsidized)
Gasoline (non‐subsidized)
USD / MMBtu
Relative Energy Price (as of November 1, 2008)
US$/MMBtu
5.49
15.76
PGN Gas Price Vs HSD Price
11/1/2008
Note: based on crude oil price of USD 68/barrel88
• Energy consumption in Indonesia reached 12.3 BScfd in 2007.
• Oil contribution to total energy consumption is declining due to the surging oil price and reducing oil subsidies in Indonesia.
• Oil subsidy reduction generates a major shift from oil to gas consumption of domestic industries.
Indonesia’s Energy Consumption by Energy Type
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18
Optimization and Risk based infrastructure development
Gas pipelines categories as facilities for public interest by the law
Economic feasibility in transmission and distribution tender.
Other non‐pipe gas infrastructure development
Small scale LNG
CNG
Infrastructure Development
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Third Parties Access (1)
Third parties access according Oil & Gas Law
Regulation by BPH Migas (Downstream Regulatory Agency)
Purpose of Open Access
Principles in Open Access implementation
Excess capacity
Technically Possible
Enhance economics viability
19
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Third Parties Access (2)
1. Gas Transportation Agreement & Access Arrangement
– Operational philosophy
– Gas Management System
– Regulation related to technical aspect
– Regulation related to legal aspect
2. Transportation Fee
Based on project economics which is case by case bases
The fee proposed to the regulatory agency (BPH Migas)
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REMARKS21
Given its low penetration and infrastructure coverage, natural gas infrastructure development is a very attractive investment opportunity in Indonesia Natural gas market in Indonesia is very attractive due to relatively cheaper gas price compared to oil based productTo accelerate nantural gas market development, new natural gas fields development is required. In addition there is also possibility to utilize other gas sources like CBM, Coal Gasification, and Flared Gas.To ensure economics of the gas infrastructure projects, gas availability with sufficient volume and supply period become key factors. Small scale LNG and CNG could be utilized as natural gas transportation mode for remote areas
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22
PT Perusahaan Gas Negara (Persero) Tbk
Jl. K H Zainul Arifin No. 20, Jakarta 11140IndonesiaPh: 62 21 6334838 Fax: 62 21 6331632www.pgn.co.id
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