DIRECTORATE GENERAL OF OIL AND GAS

MINISTRY OF ENERGY AND MINERAL RESOURCES

REPUBLIC OF INDONESIA

POLICY, REGULATION AND OPPORTUNITIES ON UPSTREAM SECTOR

LONDON, 11 OCTOBER 2010

OUTLINE

POLICY AND REGULATION

CURRENT CONDITION

BUSINESS OPPORTUNITIES

CONCLUSION

POLICY AND REGULATION

Energy Elasticity < 1Energy Elasticity = 1,8

Primary Energy Mix 2006 Energy Mix 2025

NON FOSSIL ENERGY < 5% NON FOSSIL ENERGY/

New & Renewable Energy: 17 %

Gas

28.57%

Coal

15.34%

Oil51.66%

Geothermal 1.32%

Hydro Power 3.11%

Gas & CBM

30%

Coal 33%

Oil

20%

NRE,17%

Biofuel 5%

Geothermal

5%Biomass, Nuclear,

Hydro Power, Solar,

Wind Power 5%

Liquefaction Coal

2%

TARGET OF ENERGY MIX(Presidential Regulation No. 5 of 2006)

TARGETS FOR 2025

Maintain oil production level of 1 Million BOPD

50% national operatorship

Security of domestic Fuel Supply and Industrial Feedstock

91% local content (goods and services)

99% skilled national workforce

Achieving oil and gas safety, zero accidents, zero failure, and achievement of zero flares, and zero waste

PETROLEUM POLICY Oil and Gas Supply Security

Oil And Gas Utilization

Oil and Gas Pricing Policy

Unconventional Oil and Gas Business

Conservation Of Oil and Gas Production

Increasing National Capacity In Oil And Gas Industry

FUEL POLICY Fuel Supply Security

Fuel Categorization

Pricing Policy

Fuel Diversification

Fuel Standard and Quality

Fuel Efficiency

POLICY AND TARGETSOF INDONESIA OIL & GAS MANAGEMENT

REGULATION

• Oil and Gas Law Number 22 Year 2001

• Republic of Indonesia Government Regulation Number 35/2004 on Oil and Gas Upstream Business Activities as amended in Government Regulation Number 34/2005 and in Government Regulation Number 55/2009.

1. MEMR DECREE No. 01 Year 2008 concerning Guidance on OilMining Business Activities for Old Well

2. MEMR DECREE No. 03 Year 2008 concerning Guidance for IdleField to be Developed

3. MEMR DECREE No. 35 Year 2008 concerning Stipulation AndOffering Of Oil And Gas Working Acreages

4. MEMR DECREE No. 36 Year 2008 concerning CoalbedMethane Business Activities

5. MEMR DECREE No. 06 Year 2010 concerning Guidance toIncrease Oil & Natural Gas Production Policy

SOME REGULATIONSTO INCREASE OIL AND GAS

EXPLORATION AND PRODUCTION

FISCAL INCENTIVES

In order to increase oil and gas production, The Government OfIndonesia (GOI) provided fiscal incentives by issuing threeMinisterial Decrees, which are:

Regulation of the Minister of Finance Number 177/PMK.011/2007exemption of import duty on goods imported for the purpose ofupstream oil and gas and geothermal business activities.

Regulation of the Minister of Finance Number 179/PMK.011/2007tariff of import duty on imported drilling platforms or floating or sub-sea production facilities.

Regulation of the Minister of Finance Number 24/PMK.011/2010value added tax on imported goods for upstream oil and gas andgeothermal exploration activities, will be paid by the GOI in fiscal year2010.

CURRENT CONDITION

INDONESIA’S OIL AND GAS RESERVE(STATUS: JANUARY 1, 2009)

112.431.26

902.4217.74

570.663.68

346.4252.14

745.1121.78

89.6423.71

987.015.30

PAPUA

NATUNA

MOLUCCAS

43.11

51.952.68

121.015.55

NAD

NORTH SUMATRA

CENTRAL SUMATRA

SOUTH SUMATRA

EAST JAVA

WEST JAVACELEBES

BORNEO

4,026.6710.57

OIL RESERVE (MM Barrel)

PROVEN = 4,303.10 MM Barrel

POTENTIAL = 3,695.39 MM Barrel

TOTAL = 7,998.49 MM Barrel

113.341.27

NOTE:

OIL RESERVE

GAS RESERVE

GAS RESERVE (TSCF)

PROVEN = 107.34 TSCF

POTENTIAL = 52.29 TSCF

TOTAL = 129.63 TSCF

15.22

SELECTED LIST OF OIL AND GAS OPERATORS IN INDONESIA

1. AMERADA HESS (INDONESIA-PANGKAH) LTD.

2. APEX (BENGARA II) LTD.

3. B.G INTERNATIONAL LIMITED

4. BP INDONESIA

5. CHEVRON PACIFIC INDONESIA

6. CNOOC SOUTHEAST SUMATRA LTD.

7. CONOCOPHILLIPS

8. COSTA INTERNATIONAL GROUP LTD.

9. ENERGY EQUITY EPIC

10. ENI INDONESIA LTD.

11. EXXONMOBIL OIL INDONESIA, INC.

12. GOLDEN SPIKE SOUTH SUMATRA LTD.

13. IMR - PETRONUSA BUMIBAKTI

14. INDO-PACIFIC RESOURCES (JAVA) LTD

15. INPEX CORPORATION

16. KALREZ PETROLEUM SERAM LTD.

17. KODEKO ENERGY CO LTD.

18. KONDUR PETROLEUM S.A.

19. KOREA NATIONAL OIL CORPORATION (KNOC)

20. KUFPEC ( INDONESIA ) LTD.

21. LASMO (MALAGOT) LTD.

22. LUNDIN B.V

23. MATRIX OIL ( ASAHAN ) PTY. LTD.

24. MEDCO E&P INDONESIA

25. MOBIL LANGSA INC.

26. PERMINTRACER PETROLEUM LTD.

27. PETROCHINA INTERNATIONAL

28. PETRONAS CARIGALI BERHAD LTD.

29. PETROSELAT LTD.

30. PREMIER OIL NATUNA SEA, BV.

31. SANTOS

32. SELE RAYA MERANGIN DUA

33. SHELL COMPANIES IN INDONESIA

34. SINOPEC INTERNATIONAL PETROLEUM

35. STAR ENERGY (KAKAP) Ltd.

36. TALISMAN ASIA LTD.

37. TITAN RESOURCES (NATUNA) INDONESIA LTD

38. TOTAL E & P INDONESIE

39. VICO INDONESIA

40. YPF JAMBI MERANG

41. ZODAN N.V.

42. ZUDAVI N.V.

CBM BASIN IN INDONESIA

Total CBM Basin = 11

(Advance Resources International, Inc., 2003)

13

7 CBM Contracts signing in year 2008:

1) Sekayu 5) Barito Banjar I

2) Bentian Besar 6) Barito Banjar II

3) Indragiri Hulu 7) Sangatta I

4) Kutai

8) Ogan Komering

9) Sangatta II

10) Tabulako

3 CBM Contracts signing inMei 2009:

5 CBM Contracts signing in August 2009:

11) Tanjung Enim

12) Ogan Komering II

13) Pulang Pisau

14) Barito Tapin

15) Kotabu

INDONESIA COALBED METHANE CONTRACT AREAstatus: June 2010

5 CBM Contracts signing in November 2009:

16) Batangasin

17) Muara Enim

18) Rengat

19) Sanga-Sanga

20) Barito

ROAD MAP OF CBM DEVELOPMENT

Existing Oil & Gas acreage be prioritized

to develop CBM

Estimated Production

1.0 BcfD 2.0 BcfD

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20252005 2006 20072004

PP: CBM – 1Rambutan

(GOI Sponsor)

PP CBM: – 2,3(private investment)

Start of CBM era(1st CBM Contract)

Estimated CBMProduction ~

Estimated CBM Production

Increasing number of CBM Development ContractAverage production = 250 MSCFD/well

Government participation

Project evaluation

Start of Commercial Era

CBM production

PP : Pilot Project

Legend:

2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20252011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 20252005 2006 20072004

PP: CBM – 1Rambutan

(GOI Sponsor

PP CBM: – 2,3

Start of CBM era(1st CBM Contract)

Estimated CBM Production

Estimated CBMProduction ~

Estimated CBM Production

Increasing number of CBM Development ContractAverage production = 250 MSCFD/well

Government participation

Project evaluation

Start of Commercial Era

CBM production

PP : Pilot Project

Legend:

1.8 BcfD

Issuing of regulation to promote CBM (for Oil &

Gas and Coal Mining)

OPPORTUNITIES

16

INDONESIA PETROLEUM FIRST BIDDING ROUND YEAR 2010

1st Bidding Round Schedule

A. Direct Proposal (Closed)Access bid Document : 12 July 2010 – 24 August 2010

Clarification Form : 19 July 2010 – 20 August 2010

Submit Participating Document: 25 August 2010, 09.00 AM – 02.30 PM

B. Regular TenderAccess Document : 12 July 2010 – 5 November 2010

Clarification Form : 19 July 2010 – 1 November 2010

Submit Participating Document : 8 November 2010, 09.00 AM – 02.30 PM

Plan For CBM Working Acreage Bidding Round Year 2010

CONCLUSION

1. In order to increase the declining production and the inclining national oil and gas demand, the Government of Indonesia issued the policy to push the oil and gas production and exploration.

2. Based on the National Energy Policy, Indonesia has developed unconventional gas for national fuel demand.

3. The friend countries are expected to actively participate in developing the Indonesia’s oil and gas.

CONCLUSION

THANK YOU

www.migas.esdm.go.id