Indonesia Policy on Energy Security Plan IGN Wiratmaja Director General of Oil & Gas, Ministry of Energy and Mineral Resources British Embassy Workshop: Policy Dialogue Grand Sahid Jaya Hotel Jakarta, April 26th 2016

D R E A M + 4,600 km + 5,000 km

1 2 3 FROM TO Energy as the Driver for Economic Growth Energy as Commodity 2 Energy follows the People People follow the Energy 3 Pollution Green Energy

Indonesia is both a producer & consumer. 2015 CRUDE OIL LPG GAS Production 830,000 BOPD 2.27 million MTonnes 8,113 MMSCFD Import 770,000 BOPD 4.3 million MTonnes Export 3,048 MMSCFD Consumption 1.6 million BOPD 6.57 million MTonnes 3,703 MMSCFD Annual Consumption Growth 3% 13% 2% Gas export & consumption as of October 2015 15

ENERGY BUFFER RESERVES & SUPPLY CHAIN

OUTLINE I. Legal basis II. The condition of today’s fuel supply III. Roadmap concept

CLUSTERING OF NATIONAL ENERGY RESERVES Energy Buffer Reserves (Crude oil, Fuel oil, LPG) Strategic Reserves (Proven reserves: O&G, coal, etc.) Operational reserves (Crude, Fuel oil, LPG) National Energy Reserves Enterprises obligation Regulated by govt Regulated and managed by govt Petroleum Strategic Reserves Govt obligation Regulated by DEN

FUEL OIL OPERATIONAL RESERVES DEFINITION (GOVERNMENT REGULATION 36/2004) 1. Menteri Minister set policy regarding the number and type of national fuel reserves . 2. National fuel oil reserves is a certain amount of fuel oil to support the supply of domestic fuel oil 3. National fuel reserves of each of the entities regulated and determined by the governing agency (badan pengatur) DEFINITION (GOVERNMENT REGULATION 79/2014) The operational reserve is a reserve provided by enterprises and industrial energy providers to ensure the continuity of energy supply TODAY’S CONDITION 1. No mandatory for the business enterprises 2. Fuel oil wholesaler current operational stock/commercial stock varies between 0 – 21 days

Oil & GAS BUFFER RESERVES DEFINITION (GOVERNMENT REGULATION 79/2014) 1. Buffer reserves is the availability of energy sources and stored energy nationally, required to meet national energy needs at a certain time . 2. Buffer reserves are reserves outside the operatinal reserves provided by the enterprises and energy industry . 3. Buffer reserves provided by the government and used to overcome the energy crisis and emergency conditions. 4. National Energy Council regulates the types, number, time, and location of buffer reserves of energy. TODAY’S CONDITION NO BUFFER RESERVE

LEGAL BASIS Saya akan mulai dengan informasi umum

REGULATION REFERENCE OF DOWNSTREAM O&G RESERVE ENERGY BUFFER RESERVES (CADANGAN PENYANGGA ENERGI) PETROLEUM STRATEGIC RESERVES (CADANGAN STRATEGIS MINYAK BUMI) STRATEGIC RESERVES (CADANGAN STRATEGIS) LEGAL BASIS Law 30/2007 (Energy) Gov Reg 79/2014 (National Energy Policy) Law 22/2001 (Oil & Gas) Gov Reg 36/2004 (Downstream Business) DEFINITION The availability of energy sources and stored energy nationally, required to meet national energy needs at a certain time (article 1 Law 30/2007) A certain amount of petroleum set by the government that should be available at all times for the domestic oil refinery intake to support the availability and distribution of domestic fuel oil. (art 1, Gov Reg 36/2004) Strategic reserves are reserves of energy for the future. (art 1 Law 30/2007) USAGE To ensure national energy security(article 5 paragraph 1, Law 30/2007) To overcome the energy crisis and emergency conditions. (art 15 par (2) Gov Reg 79/2014) To support the supply of domestic fuel oil. (art 8 par1, Law 22/2001) At the time of the disruption of fuel oil supply to support the supply of domestic fuel. (art 57, Gov Reg 36/2004) Strategic reserves can only be cultivated according a predetermined time or at any time necessary to the national interests. (art 14 par 2 Gov reg 79/2014) REGULATION Provisions concerning the types, number, time, and location of buffer reserves of energy be regulated by National Energy Council (Dewan Energi Nasional). (Art 5 par 2, Law 30/2007) Minister set up and establish strategic reserves of petroleum relating to the number, type, and location of storage, and the use of strategic reserves of petroleum (Art 56 par 3, Gov Reg 36/2004) Strategic reserves is managed and allocated by the government to ensure the long-term energy security. (art 14 par 1 Gov reg 79/2014) PROVISION The government is obliged to provide the energy buffer reserves (Art 5 par 1, Law 30/2007) The government is responsible for providing the strategic reserves of petroleum. (art 8 par 1, Law 22/2001) Strategic reserves of petroleum are provided by the government. (art 56 par 1, Gov Reg 36/2004) Government can assign entities to provide the strategic reserves of petroleum. (art 56 par2, Gov Reg 36/2004) Further provisions on the management of strategic reserves set up by presidential decree. (Art 14 par 3 Gov reg 79/2014) DOMAIN DEN c.q. Setjen DEN MEMR c.q. Ditjen Migas MEMR c.q. Ditjen Migas & SKK Migas

REGULATION REFERENCE OF NATIONAL FUEL OIL RESERVES ENERGY BUFFER RESERVES (CADANGAN PENYANGGA ENERGI) NATIONAL FUEL RESERVES (CADANGAN BBM NASIONAL) OPERATIONAL RESERVES (CADANGAN OPERASIONAL) LEGAL BASIS Law 30/2007 (Energy) Gov Reg 79/2014 (National Energy Policy) Law 22/2001 (Oil & Gas) Gov Reg 36/2004 (Downstream Business) DEFINITION The availability of energy sources and stored energy nationally, required to meet national energy needs at a certain time (article 1 Law 30/2007) A certain amount of fuel oil to support the supply of domestic fuel oil (art 1, Gov reg 36/2004) - USAGE To ensure national energy security(article 5 paragraph 1, Law 30/2007) To overcome the energy crisis and emergency conditions. (art 15 par (2) Gov Reg 79/2014) Used during fuel oil shortages (art 60 par 1, Gov reg 36/2004) REGULATION Provisions concerning the types, number, time, and location of buffer reserves of energy be regulated by National Energy Council (Dewan Energi Nasional). (Art 5 par 2, Law 30/2007) Energy buffer reserves are reserves outside the operatinal reserves provided by the enterprises and energy industry (art 15 par 2 a Gov reg 79/2014) Minister set policy regarding the number and type of national fuel reserves (art 59 par 1, Gov reg 36/2004) National fuel reserves of each of the entities regulated and determined by the governing agency (badan pengatur). (art 59 par 4, Gov reg 36/2004) In case of a business entity does not provide national fuel reserves when needed, the minister can impose administrative sanctions and/or penalties to entities in accordance with the recommendation of the governing agency. (art 61 par 2, Gov Reg 36/2004) Further provisions regarding the provision of operational reserves regulated by the government (art 16 par 2, Gov reg 79/2014) PROVISION The government is obliged to provide the energy buffer reserves (Art 5 par 1, Law 30/2007) Minister may appoint business entities . (Ps 59 ayat 3, PP 36/2004) Enterprises and industrial energy providers are required to provide operational reserve to ensure the continuity of energy supply (art 16 par 1, Gov reg 79/2014) DOMAIN DEN c.q. Setjen DEN MEMR c.q. Ditjen Migas + Badan Pengatur MEMR c.q. Ditjen Migas =

THE CONDITIONS OF TODAY’S FUEL SUPPLY Saya akan mulai dengan informasi umum

National Fuel Storage Capacity 2015 Region Scope of Region Capacity (kL) Region I Aceh, Sumut, Riau, Riau Kepulauan, & Sumbar 1.247.796 Region II Jambi, Sumsel, Bengkulu, Lampung, Bangka-Belitung 230.665 Region III Banten, DKI Jakarta, Jawa Barat 2.563.130 Region IV Jawa Tengah, DI Jogjakarta 597.849 Region V Jawa Timur, Bali, NTB, NTT 1.288.748 Region VI Kalimantan 632.669 Region VII Sulawesi 383.431 Region VIII Maluku dan Papua 320.193 Total 7.265.481

ROADMAP CONCEPT OF DOWNSTREAM O&G SECURITY Saya akan mulai dengan informasi umum

Fuel Oil Operational Reserves Roadmap Identifying Existing Condition: Feb – April 2016 Regulatory Concept Study: April – May 2016 Minister regulation drafting: May – Dec Process Flow Identifying Existing Condition: 1. Average sales volumeannual, quarterly) 2. Existing stock condition (number of days) 3. Storage capacity availability and utilization Regulatory Concept Study: 1. Type of fuel oil that is mandated 2. Operational reserves Calculation methods 3.Phasing adequacy of operational reserves Minister regulation drafting: 1. Initial draft 2.Internal discussion 3. Draft improvement 4.Discussion with stakeholders 5.Draft finalization 6. Regulation publishing Minister EMR Regulation: Fuel Oil Operational Reserve Roadmap

PHASING PLAN NATIONAL O&G BUFFER RESERVES Utilization of Idle Tank Storage Cost of Commodity = USD 211,6 Million Rental Cost of Tank = USD 43,1 milion/year Capacity of idle crude tank : 1,4 Million Barrels Capacity of Idle fue oill tank : 3,1 Million Barrels Utilization of New Tank Storage Cost of Commodity = USD 387,7 million Rental Cost of Tank = USD 79,7 Million/year Capacity of crude tank: 3 million Barrels Capacity of fuel oil tank: 5,3 million Barrels Construction of New Tank Storage Cost of Commodity = USD 1.169,6 Million Cost of construction tank = USD 1.698,6 million Cost of Operational Tank = USD 81,3 juta/tahun Capacity of crude tank : 17,6 million Barrels Capacity of fuel oil tank: 9,3 Million Barrels 3,58 Days 6,56 Days 19,86 Days Asumption: Crude consumption per day= 1,5million barrel Fuel Oil comsumption per day = 1,2 million barrels Notes : Waiting for determination of type, volume, time and location of Buffer Stock from National Energy Board 30 Days

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Oil Tank & LPG Terminal Construction Plan (State Funded) TAHUNA TOBELO BITUNG TOLI - TOLI HALMAHERA TERNATE MOUTONG GORONTALO PARIGI BIAK LUWUK LABUHA DONGGALA POSO RU VII. KASIM SORONG AMPANA SANANA KOLONDALE MANOKWARI SERUI PARE - PARE KOLAKA BANGGAI JAYAPURA WAYAME BULA KENDARI NABIRE NAMLEA FAK - FAK PALOPO MASOHI KAIMANA RAHA TIMIKA BAU -BAU TUAL MAKASSAR DOBO BIMA KALABAHI MANGGIS BADAS MAUMERE L. TUKA REO DILI SAUMLAKI MERAUKE AMPENAN ENDE WAINGAPU ATAPUPU KUPANG Oiil Tank OIL TANK: 14 locations (Capacity: 69.500 KL) LPG Terminal LPG TERMINAL: 3 locations (Capacity: 5.000 MT)menterian ESDM Republik Indonesia 35

Dasar Hukum UU No 30 Tahun 2007 PP No 79 Tahun 2014

“ “ Arahan Presiden 29 Februari 2016 20 hingga 30 tahun mendatang dunia akan dihadapkan pada persaingan sumber daya energi dan pangan. Karena itu, harus disusun suatu strategi untuk memperkuat ketahanan energi. Salah satu caranya adalah ketika harga murah seperti sekarang ini, pemerintah harus meningkatkan cadangan strategis BBM yang tersimpan di dalam maupun di luar negeri. Agar saat harga diatas 100 BBM kita sudah punya stok…. “ - Pernyataan pada Penandatanganan Kontrak di Plaza KESDM, 29 Februari 2016

Biaya Pembelian komoditas Kebutuhan Dana Asumsi 1 USD = Rp. 13.200,-   Jenis Konsumsi 15 hari (Juta bbl) Biaya Pembelian komoditas (Juta USD) (Triliun Rupiah) 1 Crude Oil 22,0 880,2 11,6 2 BBM 17,7 888,7 11,7 TOTAL 39,7 1.768,9 23,3

Usulan Inisiasi Pemupukan Cadangan Strategis Pemerintah segera melakukan komunikasi dengan produsen minyak (crude & product); Pemerintah perlu mengalokasikan dana dalam 2 sampai 3 tahun ke depan; Memanfaatkan idle capacity dalam jangka pendek (diperlukan rekondisi storage); Membangun tangki-tangki penyimpanan baru; Sambil menunggu penyelesaian tangki-tangki baru tersebut, kita menyepakati term & condition dengan produsen: Menitipkan crude/product di storage mereka untuk sewaktu- waktu dapat kita gunakan; Menyepakati tata cara pembayaran yang fleksibel.

Indonesia Oil & Gas Reserves Upstream Oil & Gas in Indonesia Indonesia Oil & Gas Reserves PAPUA As of January 2015 113.00 166.22 3103.45 1145.77 304.18 606.33 1182.47 528.04 46.94 12.64 95.98 7.38 0.96 6.61 13.84 50.01 4.28 6.37 13.83 2.56 19.28 26.21 OIL (MMSTB) NAD NORTH SUMATERA GAS (TSCF) NATUNA MID SUMATERA KALIMANTAN SULAWESI SOUTH SUMATERA MALUKU WEST JAVA EAST JAVA OIL OIL RESERVES Production: 830,000 BPD GAS Proven : 97.99 TSCF Potential : 53.34 TSCF Total : 151.33 TSCF GAS RESERVES Production: 8,113 MMSCFD WORKING ACREAGE : 320 PSC Proven : 3,602.53 MMSTB Potential : 3,702.49 MMSTB Total : 7,305.02 MMSTB Exploration : 240 PSCs Exploitation : 80 PSCs

RDMP: Balikpapan, Balongan, Cilacap, Dumai Oil Refinery: Existing & Planning EXISTING Location Capacity (MBCD) Dumai 177 Plaju 127.3 Balongan 125 Cilacap 348 Cepu 3.8 18 Tuban 100 Balikpapan 260 Sorong 10 Total 1,169.1 PLANNING Location Capacity (MBCD) Medan 6 Bontang 300 Tuban RDMP: Balikpapan, Balongan, Cilacap, Dumai 388 Total 2,163

Production from Downstream Production from Upstream Condensate Production ( 2010 – 2015 ) Tahun Production (Barrels) Production from Downstream Production from Upstream Barrrels/Year % Downstream Barrels/Year % Upstream 2010 44.771.818 807.098 1,80% 43.964.720 98,80% 2011 40.189.259 838.912 2,10% 39.350.347 97,90% 2012 36.242.796 989.031 2,70% 35.253.765 97,30% 2013 37.127.065 1.682.973 4,50% 35.444.092 95,50% 2014 35.188.268 1.801.278 5,50% 33.386.990 94,50% 2015 37.044.016 2.108.491 5,70% 34.935.525 94,30%