OSEA DELEGATES MARKET BRIEFINGTuesday, 29th November 2016
Oil And Gas Sector In Indonesia“OPPORTUNITIES IN A CHALLENGING ENVIRONMENT”
David Braithwaite, MBEPresident Director PT Q Energy South East Asia
Founding Chairman of Britcham Energy Focus Group
UPSTREAM OIL AND GAS
Conventional oil and gas reserves are spread across the country, oil is dominant in West and Gas is more dominant in East
Source: IPA/SKK MIGAS
National Oil and Gas Reserves
Exploration in Indonesia has Underperformed; The Outlook for Future Activity is Challenging
Reserves are declining (especially oil) and less than half of production has been replaced; limited new licensing activity
Source: IPA/Wood Mackenzie
Source: Various sources (PwC Investor Survey of Indonesian Oil and Gas Industry, May 2016)
Declining Reserves
Indonesia Oil & Gas Production Profile – 1985 to 2025
Oil production is past its peak and is in decline and gas production will start to decline post 2020
Source: IPA/SKK MIGAS
Unconventional Oil and Gas Resources (CBM and Shale Hydrocarbons)
Resource estimate in basins: 453 Tcf
22 WK = 43.601 Tcf
32 WK = 94.362 Tcf
Resource estimate in existing Working Areas:112 Tcf
Coal Bed Methane (Coal Seam Gas) Shale HydrocarbonResource estimate in basins: 574 Tcf
Resource estimate in existing Working Areas:
Gas: 71.7 TcfOil: 4.29 Bbo
Significant resources of CBM and Shale Gas but still at an early stage of definition and development
Source: IPA/SKK MIGAS-August 2015
6,000Mboe/d
2025
5,000
4,000
3,000
2,000
1,000
0Producing
Under Development
Undeveloped
20202015201020052000
Mid-case
Low-Case
High-case
Projected Indonesian oil and gas supply vs. demand (2000–2030)
3.9 Mboe/d
Supply-demand gap likely to grow – Indonesia needs to mobilise all energy resources
How to close a gap that could exceed 3Mboe/d by 2030?
Source: IPA/Boston Consulting Group
Growing Shortfall of Domestic Oil and Gas Supply versus Demand
This is generating concerns about future energy security
Changes in Oil and Gas Production over Next 10 Years
Production forecast shows it is moving from oil to gas, from west to east, and from onshore to offshore. New infrastructure is needed to bring gas to markets
Production today
Deeper
East
Sources
Infrastructure to be extended and developed
Production in 2025
Source: IPA/Rystad Energy BCG
Opportunities
New exploration incentives: Exempt from:
o Import VATo Import dutyo Domestic VAT
DMO Holidays
Exemption from land and building tax at exploration stage
Special treatment for deepwater remote and marginal areas (expected): Longer exploration period Tax and DMO holidays More favourable production split
Upstream Oil and Gas Regulatory Issues
Source: Q Energy
Challenges
PSC extensions: Regulation issued in 2015 but still uncertainty
Fiscal uncertainty (assume and discharge): Prior to 2010 PSContractors did not pay additional taxes and fees
Draft revision of Oil and Gas Law: Pertamina likely to have first right of refusal on new acreage
Regulatory Issues
Source: Q Energy
DOWNSTREAM OIL
Imports of oil increasing rapidly
Supply & Demand Forecast: Oil Fuels + Crude Oil (No New Refineries)
2025relative to 2013
Oil Fuels / BiofuelsDemand
Increase = 100%
Oil Fuels ImportsIncrease = 185%
Oil Fuels + Crude Oil imports supply
83% of total Oil Fuels demand
Source: DEN, ESDM, BPH MIGAS, Pertamina, Synergy DSS/Q Energy
Need to Increase Operational Oil Product Reserves
Source: Synergy DSS/Q Energy
All existing Oil Fuels storage will be 100% occupied by year 2017+100%
Existing Crude Oil storage is 100% occupied+100%
Existing LPG storage is 100% occupied - CRITICAL SHORTAGE !+260%
Additional OPR Requirements to Year 2025
Source: Synergy DSS/ Q Energy
(1) Reserves can be either Crude Oil or Oil Fuels products or a combination of both.
Need to Establish Energy Buffer Reserves: Phase 1 - 30 Days
Source: Synergy DSS/ Q Energy
Storage, Reserves and Costs up to 2025
Indonesia: Oil Refining Capacity
Current status: Big shortfall of oil refining capacity- Last new refinery built >20 years ago- Current capacity: 830,000 bpd = requires 52% of domestic needs to be imported- Forecast demand by 2025: 2,280,000 bpd = requires 64% to be imported
Source: Q Energy/Ministry of Energy and Mineral Resources, Directorate General Oil and Gas
Indonesia: Oil Refining Capacity
Steps being taken to reduce oil product imports
Pertamina upgrading refineries
- Cilacap (Central Java) (Saudi Aramco)- Balikpapan (East Kalimantan)- Dumai (Sumatra) (Saudi Aramco??)- Balongan (West Java) (Saudi Aramco??)
Pertamina to build new refineries
- Bontang (East Kalimantan)- Tuban (East Java) (Rosneft)
But progress has been very slow …..
Source: Q Energy
Indonesia: Oil Refining Capacity
New opportunity for Private Sector (Ministerial Regulation No. 35 of 2016 signed 10 November 2016)
- Fiscal and non-fiscal incentives- Crude oil can be sourced from domestic or import- Output prioritized for domestic market- No obligation to partner with Pertamina- No obligation to sell to Pertamina
Source: Q Energy
Opportunities
Refineries open to private investors
Big investment in oil storage needed (for operational and strategic reserves)
Challenges
Draft revision of Oil and Gas Law: New Oil Aggregator may restrict private sector opportunities
Pertamina dominance: Major market share in all oil sectors
Downstream Oil Regulatory Issues
Source: Q Energy
MIDSTREAM/DOWNSTREAM GAS
LegendExisting Transmission Pipeline Existing Distribution PipelineExisting Dedicated Upstream Pipeline
KategoriPeriod I Period II Period III
2014 2015 2016 2017 2018 2019 2020 2021 - 2025 2026 - 2030
Open Access 3.665 4.165 4.556 4.832 5.032 6.735 6.735 9,315 12,580
Existing Infrastructure – Pipeline (2014)
Source: Ministry of Energy and Mineral Resources, Directorate General Oil and Gas, Infrastructure Roadmap 2015 - 2025
Roadmap – Pipeline (2025)
KategoriPeriod I Period II Period III
2014 2015 2016 2017 2018 2019 2020 2021 - 2025 2026 - 2030
Open Access 3.665 4.165 4.556 4.832 5.032 6.735 6.735 9,315 12,580
LegendExisting Transmission Pipeline Existing Distribution PipelineExisting Dedicated Upstream Pipeline
Trans-Sumatera Pipeline
Trans-Jawa Pipeline
Source: Ministry of Energy and Mineral Resources, Directorate General Oil and Gas, Infrastructure Roadmap 2015 - 2025
Regasification (Land Based) 2014 - 2030
Land based: 61 Units
Kriteria penentuan lokasi land based: • Kota pantai yang masih mengunakan
PLTD• Pelabuhan-pelabuhan
(SPBG/Landbased)
Source: Ministry of Energy and Mineral Resources, Directorate General Oil and Gas, Infrastructure Roadmap 2015 - 2025
Regasification (FSRU) 2014 - 2030
Source: Ministry of Energy and Mineral Resources, Directorate General Oil and Gas, Infrastructure Roadmap 2015 - 2025
Source: Ministry of Energy and Mineral Resources, Directorate General Oil and Gas, Infrastructure Roadmap 2015 - 2025
Virtual Pipeline for Gas Power Plant in Central Part of Indonesia
HUB
PLTMG Alor 10 MW
MPP Flores 20 MW
MPP NTT (Kupang) 30 MW PLTMG Kupang Peaker 40 MW
MPP Waingapu 10 MW
PLTMG Bima 50 MWPLTMG Sumbawa 50 MW
PLTGU Lombok Peaker 150 MW
MPP Lombok 50 MWPLTMG Maumere Peaker 40 MW
1.377 NM140 MMSCFD
MPP Kolaka Utara 5 MW
MPP Sultra (Kendari) 50 MW
MPP Sulsel (Tello) 50 MWPLTGU Makassar Peaker 450 MW
PLTGU Sulsel Peaker 450 MW
PLTMG Selayar 10 MW
MPP Bombana 10 MW
MPP Wangi-Wangi 5 MWPLTMG Bau-Bau 30 MW
990 NM217.61 MMSCFD
HUB PLTMG Tahuna 10 MW
PLTG/MG Minahasa Peaker 150 MW
MPP Sulbagut (Amurang) 100 MW
PLTG/MG Gorontalo Peaker 100 MW
MPP Tobelo 10 MWPLTMG Malifut Peaker 5 MW
MPP Malut (Ternate) 30 MWMPP Sofifi 10 MW
978 NM46 MMSCFD
MMSCFD
I. DEMANDA. CONTRACTED DEMAND DOMESTIC Lifting and Own Used 571 512 486 437 451 418 389 167 167 157 174 170 173 169 141 110 Fertilizer and Petrochemical 916 887 799 575 369 287 169 105 58 58 49 29 14 5 1 0 Electricity 1,687 1,255 1,228 1,113 859 657 553 553 398 391 357 175 172 172 130 126 Industry 1,616 1,461 1,383 1,134 1,149 1,043 983 931 849 417 417 410 410 120 20 20 Transportation 30 25 20 12 2 0 0 0 0 0 0 0 0 0 0 0 City Gas 6 4 2 1 0 0 0 0 0 0 0 0 0 0 0 0 EXPORT 2,786 2,561 2,464 2,010 2,041 1,975 1,606 1,614 1,311 1,006 948 857 786 777 562 562TOTAL 7,612 6,705 6,382 5,282 4,871 4,380 3,700 3,370 2,783 2,029 1,945 1,641 1,555 1,243 854 818
B. COMMITTED DEMAND DOMESTIC Lifting and Own Used 11 75 83 113 124 144 171 391 391 388 388 388 388 388 389 390 Fertilizer 8 30 283 508 623 887 1,004 1,069 1,116 1,116 1,125 1,145 1,159 1,169 1,157 1,158 Electricity 641 930 1,024 1,038 1,385 1,485 1,581 1,577 1,714 1,698 1,724 1,899 1,904 1,879 1,922 1,902 Industry 431 787 843 1,168 1,269 1,356 1,454 1,481 1,563 1,994 1,994 2,001 1,995 1,988 2,021 2,019 Transportation 12 37 51 59 68 70 72 75 78 80 83 86 89 92 96 99 City Gas 4 4 7 8 9 9 10 10 10 10 10 10 10 10 11 13TOTAL 1,107 1,863 2,291 2,894 3,478 3,951 4,292 4,603 4,872 5,286 5,324 5,529 5,545 5,526 5,596 5,581
C. POTENTIAL DEMAND Electricity Potential for 35,000 MW 52 307 497 859 902 1,053 1,049 1,049 1,057 1,058 1,060 1,063 1,063 1,063 1,063 1,063 Industry Potential Demand 150 242 286 348 393 691 726 829 914 1,003 1,094 1,156 1,261 1,371 1,501 1,616TOTAL 202 549 783 1,207 1,295 1,744 1,775 1,878 1,971 2,061 2,154 2,219 2,324 2,434 2,564 2,679
TOTAL A + B 8,719 8,568 8,673 8,176 8,349 8,331 7,992 7,973 7,655 7,315 7,269 7,170 7,100 6,769 6,450 6,399TOTAL A + B + C 8,921 9,117 9,456 9,383 9,644 10,075 9,767 9,851 9,626 9,376 9,423 9,389 9,424 9,203 9,014 9,078
II. SUPPLYA. EXISTING SUPPLY 6,578 6,705 6,227 5,529 5,026 4,500 4,222 3,914 3,584 2,920 2,268 2,035 2,030 1,719 1,548 1,167B. TOTAL PROJECT SUPPLY 327 933 1,769 2,211 2,446 2,864 3,092 3,412 3,333 3,108 4,099 3,889 3,319 3,025 2,753 2,407C. POTENTIAL SUPPLY 2 17 47 44 237 247 264 250 261 318 313 137 1,103 1,079 1,057 1,042
TOTAL A + B 6,905 7,638 7,996 7,740 7,472 7,364 7,314 7,326 6,917 6,028 6,367 5,924 5,349 4,744 4,301 3,574TOTAL A + B + C 6,907 7,655 8,043 7,784 7,709 7,611 7,578 7,576 7,178 6,346 6,680 6,061 6,452 5,823 5,358 4,616
D. IMPORT 0 0 0 0 1,777 2,263 2,226 1,902 1,920 2,374 2,304 2,988 2,363 2,601 2,610 3,267
2030DESCRIPTION 2020 2021 2022 2023 2024 2025 2026 2027 2028 20292015 201820172016 2019
Source: Ministry of Energy and Mineral Resources, Indonesia Gas Balance 2015 - 2030
Indonesia Gas Balance 2015 - 2030
Opportunities
Small scale LNG for distributed power
Big expansion in gas infrastructure needed (to connect remote fields to markets)
Gas seen as being a transition fuel from high carbon-emitting fuels (coal and oil) to renewable energy
Midstream/Downstream Gas Regulatory/Policy Issues
Source: Q Energy
Challenges
Draft revision of Oil and Gas Law: New Gas Aggregator may limit private sector opportunities
LNG import uncertainty: No licences issued yet and process not defined
Gas pricing: Current pricing highly regulated and unpredictable
Midstream/Downstream Gas Regulatory/Policy Issues
Source: Q Energy
SUMMARY: CHALLENGES
Source: Q Energy
Oil and Gas Upstream
- PSC extensions
- Fiscal uncertainty
- Oil and Gas Lawrevision
Oil Downstream
- Pertaminadominance
- Oil and Gas Lawrevision
Gas Midstream/Downstream
- LNG imports
- Pricing
- Oil and Gas Lawrevision
SUMMARY: OPPORTUNITIES
Source: Q Energy
Oil and Gas Upstream
- New Incentives:- Exploration- Deepwater- Remote- Marginal
- CBM, Shale
Oil Downstream
- New Refineries
- Oil Storage
Gas Midstream/Downstream
- Small scale LNG
- Gas infrastructure
- “Transition fuel”
For further information(to explore the opportunities or assess the challenges)
Please contact:
David BraithwaitePresident DirectorPT. Q Energy South East AsiaUOB Plaza, 30th Floor, Unit 02Jl. M. H. Thamrin Kav. 8 – 10, Jakarta 10230IndonesiaP: +62 21 3000 7814F: +62 21 3000 7813E: [email protected] / [email protected]: www.qenergy.org
