1. OIL AND GAS INVESTMENT IN INDONESIA DIRECTORATE GENERAL OF OIL AND GAS
DEPARTMENT OF ENERGY AND MINERAL RESOURCES
Distinguished Guest, Ladies and Gentlemen,
First I would like to convey my appreciation that It is an honour for us, delegation from Directorate General of Oil and Gas to be welcomed here.
It is great pleasure for me to speak to you representing Government of Indonesia at this very important moment to give a presentation of “OIL AND GAS INVESTMENT IN INDONESIA”.

2. INDONESIA ARCHIPELAGO
PAPUA
NATUNA
JAVA
SUMATRA
KALIMANTAN
SULAWESI
MALUKU
NUSA TENGGARA
Finally, I hope we can share and discuss all aspects on energy investment and policies in Indonesia that probably might interesting for you.
If you have any question to ask, we will be pleased to answer. Thank you.
Archipelago : 17,508 islands
Inhabited : 6,000 islands
Total Area : 751,095 sq mi
Water : 705,188 sq mi
Land : 45,907 sq mi
TOTAL POPULATIONS : 220 Million Peoples

3. INDONESIA TERTIARY SEDIMENTARY BASINS MAP
-10
100
105
110
115
120
125
130
135
140 5 -5
Drilled basin, no discovery yet (15)
Undrilled basin (22)
Producing Basin
Drilled and proven discovery, but not producing yet (23)

4. SEDIMENTARY BASINS IN INDONESIA (60)
Undrilled (22)
Drilled (38)
Discovery (23)
No Discovery Yet (15)
Producing (15)
No Producing Yet (8)

5. Total oil & condensate (MMSTB)
INDONESIA OIL RESERVES
(Status 1ST January 2004)
NAD
Natuna
123,2
377,2
130,0
North Sumatera
Maluku
East Kalimantan
100,1
7.47
854,0
Papua
4.564,1
Central Sumatera
109,1
65,7
South Kalimantan
66,1
South Sumatera
883.1
West Java
East Java
15,3
741,6
South Sulawesi
583,5
PROVEN = 4.300,7 MMSTB
POTENTIAL = 4.312,3 MMSTB
TOTAL = 8.613,0 MMSTB
Total oil & condensate (MMSTB)

6. TOTAL GAS RESERVES (TSCF)
INDONESIA GAS RESERVES
(Status 1ST January 2004)
NAD
Natuna
8,60
54,.21
0,85
North Sumatera
East Kalimantan
47,39
Papua
8,20
Central Sumatera
24,13
3,71
Central Sulawesi
South Sumatera
24,49
West Java
East Java
0,44
6,02
10,30
South Sulawesi
PROVEN = 97,77 TSCF
POTENTIAL = 90,57 TSCF
TOTAL = 188,34 TSCF
TOTAL GAS RESERVES (TSCF)

7. GAS RESERVES, CONTINUE TO INCREASE
TCF
Indicating high potential areas yet to be exploited
Proven
Potential 40 80
120
160
200
1981
1983
1985
1987
1989
1991
1993
1995
1997
1999
2001
2003

8. 2D SEISMIC ACTIVITIES (Thousands Kms)

9. 3D SEISMIC ACTIVITIES
Thousands Kms2

10. EXPLORATION DRILLING ACTIVITIES
*) January – September 2004

11. NEW OIL AND GAS DISCOVERY LOCATION MAP

12. NEW OIL AND GAS DISCOVERY

13. Oil and Gas Fields > 50 MMBOE
from Indonesia Basin
Gas
Oil

14. CONTRACT SIGNED

15. REALIZATION AND BUDGET EXPENDITURE (INVESTMENT) PRODUCTION SHARING CONTRACTOR
(Million US $)

16. INDONESIA OIL AND CONDENSATE PRODUCTION
1999 – 2004

17. INDONESIA GAS PRODUCTION AND UTILIZATION
(MM SCFD)

18. INDONESIA LNG CONTRACT
VOLUME (MTPA)
MARKET
LNG PLANT
TERM
EXISTING
ARUN II
3,51
JAPAN
ARUN
1/1984 – 12/2004
ARUN III
2,33
KOREA
BONTANG/ARUN
1986 – 2007
KOREA II
1,95
7/1994 – 6/2014
JAPAN 1981 (Ext)
3,47
BONTANG
8/1983 – 3/2003
BADAK III
1,76
TAIWAN
1/1990 – 12/2009
BADAK IV
2,30
1/1994 – 12/2013
JAPAN 1973 (Ext)
8,34
1/2000 – 12/2010
1,90
1/1998 – 12/2017
BADAK V
1,05
MCGC
0,34
3/1996 – 12/2015
TOTAL
26,96
NEW / EXISTING
JAPAN 1981 (Ext)
3,47
JAPAN
BONTANG
4/2003 – 3/2011
ARUN (Ext)
1,00
1/2005 – 12/2009
FUJIAN
2,60
CHINA
TANGGUH
1/2007 – 12/2031
KOGAS
1,10
KOREA
1/2005 – 12/2024
SEMPRA ENERGY
3,70
US WEST COAST
6/2008 – 6/2028
TOTAL
11,87

19. INDONESIA INTEGRATED GAS TRANSMISSION PIPELINES

20. OIL AND GAS NEW POLICY REGULATOR PLAYER 1970 - 2001
PREVIOUS
REGULATOR
REGULATOR
PLAYER
PLAYER
SUPERVISOR
RECENT (LAW NO. 22/2001)

21. BACKGROUND To promote national welfare
Strategic resources play an importance role in the national economy
an important role in giving an actual added value to increased and sustainable national economic growth
The previous oil and gas law is no longer suitable for development oil and gas business activities

22. SECTOR REFORM Enactment of a new oil and gas law
Ending Pertamina’s monopoly and the opening up of all aspects in the petroleum sector to create greater competition while preserving Pertamina as an important company.
Greater pricing mechanism transparency
Establishment of new institution for upstream and downstream petroleum regulation
Introduction of efficiency improvements in hydrocarbon exploration and production

23. THE INTENTION OF THE IMPLEMENTATION
To assure that the effective management of Exploration and Exploitation business activities is useful, productive, highly competitive and sustainable with respect to the State’s Oil and Natural Gas which are strategic and non-renewable natural resources through open and transparent mechanism;
To assure that the effective management of the business of Processing, Transportation, Storage and Trading is accountable through the mechanism of appropriate, fair and transparent business competition;
To guarantee the efficiency and effectiveness of the availability of Oil and Natural Gas, either as energy resources or as raw material for domestic need.
To improve national capability towards competitive environment at the national, regional, and international levels;
To increase revenue thus giving maximum contribution to the national economy, and to develop and strengthen the position of Indonesian industry and trade;
To create job opportunities, increase the just and even distribution of the people’s welfare and prosperity and maintain the preservation of the natural environment.

24. THE PRINCIPLE OF OIL AND GAS LAW
Oil and natural gas within territory of Indonesia are a national asset, controlled by the Government.
Government as the mining right holder establish an Implementing Body which controls the operational management.
Upstream business activities shall be conducted through the cooperative contracts.
Downstream business activities shall be conducted through the mechanism of appropriate, fair, and transparent business competition.

25. GOAL OF THE NEW STATE OWNED LIMITED LIABILITY (PERTAMINA)
Preparing a limited liability company oil and gas business activities from Upstream - Downstream - Commerce internally and Internationally (no longer regulator)
Profit oriented
Preparing public service obligation in Oil-Based fuel supply for domestic if required

26. GOVERNMENT DECREE Oil and Gas Industries Upstream Downstream HSE
Regulatory
Body
Implementing Body
State-owned Limited Liability Co

27. DIT. GEN. OIL AND GAS/IMPLEMENTING BODY
MANAGEMENT OF OIL AND GAS ACTIVITIES
DIT. GEN. OIL & GAS
PERTAMINA
PAST CONDITION
(BEFORE UU 22/2001)
Pertamina
According to
LAW No.8 of 1971
DIT. GEN. OIL AND GAS
FUNDAMENTAL
DUTIES & FUNCTION
According to
Pres. Decree No. 165 of 2000
and others related
Regulation
Upstream
Function
Downstream
Function
LAW 22/2001 CONCERNING OIL & GAS
CURRENT CONDITION
(AFTER UU 22/2001)
PT. PERTAMINA
(PERSERO
DIT. GEN. OIL AND GAS
FUNDAMENTAL
DUTIES & FUNCTION
According to
Pres. Decree No. 165 of 2000
and others related
Regulation
Imp. Body
Reg. Body
Gov. Upstream Function
Gov. Do.stream Function
Pre Contract, Contract
and Post Contract
Gov. Downstream
Fuction
PRE CONTRACT
CONTRACT
POST CONTRACT
DIT. GEN. OIL AND GAS
DIT. GEN. OIL AND GAS/IMPLEMENTING BODY
DIT. GEN. OIL AND GAS

28. OIL AND GAS BUSINESS ACTIVITY IN INDONESIA
UPSTREAM
EXPLORATION
EXPLOITATION
DOWNSTREAM
PROCESSING
TRANSPORTATION
STORAGE
TRADING
CONDUCTED BY BUSINESS ENTITY
BASED ON BUSINESS LICENSE
CONDUCTED BY BUSINESS ENTITY OR PERMANENT ESTABLISHMENT
BASED ON COOPERATION CONTRACT

29. FLOW OF THOUGHTS
LEGISLATION AND REGULATION IN ENERGY AND MINERAL SECTOR
LEGISLATION
POLICY AND REGULATION
IMPLEMENTATION
UUD 1945
“THE CONSTITUTION”
THE POLITICAL PLATFORMS OF
THE ELECTED PRESIDENT
A SET OF MINING AND
ENERGY LAWS
PROGRAM OF THE CABINET
(ENERGY AND MINERAL SECTOR)
ENERGY AND MINERAL
POLICY OF THE MINISTRY
Proposal Amendments,
If necessary
A SET OF GOVERNMENT REGULATION
GOOD GOVERNANCE IN IMPLEMENTATION

30. WHO IS DOING WHAT IN OIL AND GAS INDUSTRY
UPSTREAM INDUSTRY
BPMIGAS
MICRO MANAGEMENT OF PSC
PSC
Exploration
Exploitation
Business Entities or Permanent Establishments
DOWNSTREAM INDUSTRY
PROCESS
TRANSPORTATION
STORAGE
TRADING
TRANSPORTATION 3)
TRADING 4)
Business Entities
BPH MIGAS 1)
Business
Regulation
Article 46 of
Law 22/2001
MEMR
Cq. DGOG
Policies
Technical
Businessl
OIL AND GAS
AUTHORITY
1) Only for supply and distribution of petroleum product (BBM) and pipelined-gas

31. ENERGY AND MINERAL RESOURCES (EMR) INDUSTRY
REGULATORY FRAME WORK
ENERGY AND MINERAL RESOURCES (EMR) INDUSTRY
POLICY MAKING
EMR REGULATION *)
IMPLEMENTATION (Non-Regulatory)
BUSINESS REGULATION *)
TECHNICAL REGULATION
SAFETY
TECHNOLOGY INFRASTRUCTURE
WORKER
PUBLIC
ENVIRONMENT
INSTALATION
Subtance
Provisions on i.e :
General Plan
DMO
Technologu Utilization
Service Area
Transitional period
Provisions on i.e.:
License
Business Area
Price and Tariff
Income (cost and margin)
Standarization
Standard Implementation
HS (refer to Provisions of Ministry of manpower)
Standard Enforcement
Installation Requirements
Standaraization
AMDAL
Operational Safety Area (KKO)
Vital Object Security (Obvit)
Accreditation
Certification
Calibration
Metrology
General Service Body, or
Legal Entity representing the government ownership
Macro / Institution
Minister cq. Director General
Minister cq. Director General **)
Independent Regulatory Bodies *)
(BPH Migas, BAPEPTAL)
Minister cq. Agency of geological survey/services
Minister cq. R & D Agency
Minister cq. Education & Training Agency
Micro / Corporate
State-Owned Enterprises and Privately-Owned Enterprises
Acreditation Body
Certification Body for products/Personells
BPMIGAS
DOMAIN
ASPECT
Remark :
License issued only by government institution
Accreditation board, by law consist of :
National Accreditation Body (KAN) for M.S.T.Q. field
LPJK for Construction Services and Development of Construction Services
Department of ESDM cq. Director General Migas for Non Construction Service
Certificate issued by the accredited certification body
Legalization of meter (for business transaction) is under the authority of Ministry of Industry and Trade
Establishment of Indonesian Standard (SNI) by BSN, and yhe implementation by the Minister of ESDM cq. Director General

32. LAW NUMBER 22/2001 ON OIL AND GAS
REGULATORY TREE
LAW NUMBER 22/2001 ON OIL AND GAS

33. IMPLEMENTATION OF UPSTREAM OIL AND GAS BUSINESS ACTIVITIES

34. DEVELOPMENT AND SUPERVISION OF UPSTREAM OIL AND GAS ACTIVITIES
ARTICLE 4 (1)
OIL AND GAS
STATE CONTROL
ARTICLE 4 (2)
GOVERNMENT
MANAGEMENT
SUPERVISION
DEVELOPMENT
(DIT. GEN. OIL AND GAS)
ARTICLE 39 (1)
GOVERNMENT AFFAIRS OF UPSTREAM OIL & GAS ACTIVITIES
DETERMINATION OF POLICIES/ REGULATION ON UPSTREAM OIL & GAS ACTIVITIES
COMPLIANCE WITH PREVAILING
LAW AND REGULATION
MINISTRY OF ENERGY & MINERAL
RESOURCES/DIT GEN OIL & GAS AND
OTHER RELATED MINISTRIES
BASED ON THE COOPERATION
CONTRACT
IMPLEMENTING BODY
TASK AND FUNCTION
IMPLEMENTING BODY
FOR MINISTRY OF ENERGY & MINERAL RESOURCES/ DIT. GEN. OIL & GAS
GOV. REGULATION 42/2002
TASK AND FUNCTION
DIT. GEN. OIL AND GAS
UPSTREAM OIL & GAS ACTIVITIES

35. DEVELOPMENT AND SUPERVISION OF UPSTREAM
OIL AND GAS ACTIVITIES
PRE CONTRACT
CONTRACT
POST CONTRACT
DIT. GEN. OIL AND GAS
DEVELOPMENT AND SUPERVISION
IMPLEMENTING BODY
SUPERVISION

36. IMPLEMENTING BODY
Management of implementing of the Cooperation Contract
Submit management report of the Cooperation Contract to Minister Energy and Mineral Resorces
Designate the seller of state’s portion of Oil and/or Natural Gas from the Cooperation Contract
Control the management of operations
State owned legal entity

37. POLICY OFFERING OF NEW BLOCK
The Department of Energy and Mineral Resources through the Directorate General of Oil and Gas (MIGAS) has the authority to administer the awarding of blocks to parties applying for oil and gas exploration and exploitation

38. WHO ELIGIBLELY CONDUCT THE BUSINESS
STATE OWNED COMPANY
LOCAL GOVERNMENT COMPANY
COOPERATIVES / SMALL ENTERPRISE
PRIVATE COMPANY (INCLUDING PERMANENT ESTABLISHMENT)

39. THE BASIC PRINCIPLE OF ACQUIRING BLOCKS
No membership or being listed in a mailing list is required
There will be no negotiations in the offering
Firm commitment on exploration activities for the first 3-years period is mandatory

40. THE COOPERATIVE AGREEMENT BASIC TERMS
Cooperative Agreements are setup in line with the Law and the Government Regulation of Oil and Gas.
The Cooperative Agreements shall be signed by BPMIGAS and Contractor.
Contractor provides all fund, technologies, necessities ability and risk.
If commercial oil and natural gas is found, the maximum contract period could be as long as thirty (30) years.
The exploration period is six (6) years and may be extended for another final four (4) years.
Contractor is obliged and required to relinquish the contract area (block) in stage.
The Cooperative Agreements in exploration and exploitation will be a PSC arrangement

41. (BPMIGAS & Contractor)
BLOCK OFFERING SYSTEM
ACQUIRED THROUGH REGULER TENDER
Blocks prepared and designated by Migas and offered through tender.
1. Announcement
Special announcement of the new offered working acreage. 1 1
Bid Invitation
Announcement
2. Bid Invitation
Invitation will be disseminated to all companies through our home page at 2 2
Bid Invitation
Bid Invitation
3. Bid Information 3 3
Bid Information
Bid Information
It contains the information of the tender process including instructions to the tender participant. The tender participant must purchase the Bid Information at MIGAS 4 4
Data & Information
4. Data & Information
It is mandatory that any tender participant will have to purchase an official Government a data package through and set by MDM prior to submitting the tender document. 5 5
Clarification Forum
Participation
5. Clarification Forum
6. Bid Participation 6 6
Bid Evaluation
Bid Participation
The tender participant should submit the entire tender document before or on the closing date of the tender 7
Determination of the 7
Bid Evaluation
Winning Bidder
7. Bid evaluation
The tender Team evaluates the Submitted document based on the technical analysis, financial outlay and commitment ( such as signature bonus ), and especially the firm commitment of the Work Program as proposed by Bidder
Determination of the 8 8
Successful Bidder
8. Determination of the Winning Bidder
Based on The Tender Team Recommendation, The Director General of Oil and Gas appoints the successful Bidder
Contract Signing 8 9
(BPMIGAS & Contractor)
9. Contract Signing
BPMIGAS and the successful Bidder will sign The Cooperation Contract

42. C. PROPOSED BY INTERESTED COMPANY
B. AVAILABLE BLOCKS
Remaining and available blocks (unsold blocks) from previous tenders. The terms for the blocks remain the same as set at the time of the previous tender.
C. PROPOSED BY INTERESTED COMPANY
Blocks are prepared and proposed by interested company. Migas will evaluate the proposal and prepare the terms & condition.
D. JOINT STUDY BY INTERESTED COMPANY
Blocks are prepared and designed based on the result of joint study between Migas and Interested Company
AVAILABLE BLOCKS
(UNSOLD BLOCKS)
PROPOSALS BY INTERESTED COMPANY
Announcement
Evaluation of Proposals
Awards
Contract Signing
BID INFORMATION
DATA PACKAGE
JOINT STUDY BY
INTERESTED COMPANY

43. FLOW OF REVENUE OF INDONESIA PSC (NEW)
GROSS PRODUCTION
FTP
Max. 10%
(-)
(-)
Investment
Credit
(+)
(+)
(-)
Max. Cost
Recovery : 100%
(+)
EQUITY TO BE SPLIT
INDONESIA
SHARE
CONTRACTOR
SHARE
(+)
(-)
DMO Max.25%
(-)
(+)
DMO Fee
Taxable Income
(+)
(-)
Tax 44%
INDONESIA TAKE
CONTRACTOR TAKE

44. INDONESIA 17 PRODUCTION SHARING CONTRACT SIGNED 2004

45. INDONESIA 1ST BIDDING ROUND 2005
(14 Blocks)

46. FISCAL TERM AND CONDITION FIRST ROUND REGULAR TENDER YEAR 2005
(1) NO
BLOCK
LOCATION
SIZE
(Sq Km)
GOVERNMENT TAKE (%)
CONTRACTOR TAKE (%)
INVESTMENT CREDIT
AFTER TAX
FIRST TRANCHE PETROLEUM
OIL
GAS 1 2 3 4 5 6 7 8 9 10
CAKALANG
OFF. NATUNA
4,495.35 75 60 25 40 -
KERAPU
5,640.00
BARONANG
5,137.86
EAST BAWEAN I
OFF. JATIM
4,199.00 80 65 20 35
EAST BAWEAN II
4,254.59
LAMPUNG I
OFF. LAMPUNG
4,238.75 70 30
LAMPUNG II
4,139.70
BUTON I
ON/OFF. BUTON
6,257.00
BUTON II
6,231.19
DAMPLAS
MAKASSAR STRAIT
6,391.70

47. FISCAL TERM AND CONDITION FIRST ROUND REGULAR TENDER YEAR 2005
(2) NO
BLOCK
LOCATION
SIZE
(Sq Km)
GOVERNMENT TAKE (%)
CONTRACTOR TAKE (%)
INVESTMENT CREDIT
AFTER TAX
FIRST TRANCHE PETROLEUM
OIL
GAS 1 2 3 4 5 6 7 8 9 10 11
BALEISANG
MAKASSAR STRAIT
5,461.00 65 60 35 40 80 12
PASANGKAYU
4,707.63 13
SURUMANA
5,339.63 14
KAMRAU
ON/OFF. WEAST PAPUA
5,256.66
15 *) -
*) First Tranche Petroleum (FTP) 15 % is shared between the parties in accordance with the sharing split

48. AVAILABLE BLOCKS 2001 – 2004
STATUS JUNE 2005

49. PETROLEUM INCENTIVE PACKAGE
ELEMENT
FIRST INCENTIVE PACKAGE (AUGUST, 1988)
SECOND INCENTIVE PACKAGE (FEBRUARY, 1989)
THIRD INCENTIVE PACKAGE (AUGUST, 1992)
FOURTH INCENTIVE PACKAGE (DECEMBER 1993)
INVESTMENT CREDIT
INVESTMENT CREDIT AMOUNTING 17% OF THE CAPITAL INVESTMENT COST
FOR DEEP SEA AREAS OVER 600 FT :
110% (OIL)
55% (GAS)
DEVELOPMENT AREAS :
PRE-TERTIARY RESERVOIR ROCKS = 110% FOR OIL AND GAS
WATER DEPTH M = 110% FOR OIL AND GAS
WATER DEPTH BELOW 1500 M = 125% FOR OIL AND GAS
NO LONGER APPLIED
COMMERCIALITY
CONDITION THAT GOVERNMENT HAS TO OBTAIN AS MINIMUM OF 49% OF THE GROSS REVENUE NOT VALID ANYMORE.
THE MINIMUM GUARANTEE IS 25% OF THE GROSS REVENUE FOR THE GOVERNMENT
ABOLISHED
DMO PRICE
10% OF THE EXPORT PRICE AFTER THE FIRST YEAR
NO CHANGE
15% EXPORT PRICE AFTER THE FIRST FIVE YEARS
25% EXPORT PRICE AFTER THE FIRST FIVE YEARS
FIRST TRANCHE PETROLEUM
20% OF PRODUCTION TAKEN BEFORE DEDUCTION OF COST RECOVERY AND WILL BE SPLIT BETWEEN GOVERNMENT AND CONTRACTOR
15% OF PRODUCTION TAKEN BEFORE DEDUCTION OF COST RECOVERY AND WILL BE SPLIT BETWEEN GOVERNMENT AND CONTRACTOR
SPLIT
FOR OIL
FRONTIER PRODUCTION :
<50 MBOD = 80% : 20%
50 – 150 MBOD = 85% : 15%
>150 MBOD 90% : 10%
CONVENTIONAL AREA = 85% : 15%
MARGINAL FIELD AND EOR IN TERTIARY RESERVOIR :
CONVENTIONAL AREAS = 80% : 20%
FRONTIER AREAS = 75% : 25%
PRE-TERTIARY AND DEEP SEA (OVER 600 FT) PRODUCTION :
INCREMENTAL SPLIT AS SAME FRONTIER PRODUCTION IN THE FIRST PACKAGE.
FIELD DEVELOPED IN FRONTIER AREAS = 80% : 20%
FILED DEVELOPED IN AREAS WITH WATER DEPTH > 1500 M = 75% : 25%
65% : 35% WITHOUT INVESTMENT CREDIT
FOR GAS
FRONTIER PRODUCTION = 70% : 30%
COVENTIONAL AREAS = 70% : 30%
FIELD DEVELOPED IN CONVENTIONAL AREAS = 65% : 35%
FIELD DEVELOPED IN FRONTIER AREAS = 60% : 40%
FIELD DEVELOPED IN AREAS WITH WATER DEPTH > 1500 M = 55% : 45%
60% : 40% WITHOUT INVESTMENT CREDIT
*) FOR EASTERN INDONESIA AREAS AND PART OF WESTERN INDONESIA AREAS HAVING SIMILAR GEOLOGICAL AND GEOPHYSICAL CONDITIONS

50. OIL AND GAS INCENTIVE POLICIES
TERM
PREVIOUSLY
NEW INCENTIVES
FIRST TRANCHE PETROLEUM (FTP)
20% (IP–1988) – 15% (IP-1993)
(Devided between Government and Contractor)
10 %
(Not Devided)
SPLIT (%)
OIL
GAS
85 : 15
70 : 30
65 : 35
60 : 40
RELEVANT SPECULATIVE (MULTICLIENT) SEISMIC DATA (2D/3D) PURCHASED PRIOR TO THE COOPERATION CONTRACT
Non cost recovery
Cost recovery

51. INVESTMENT OPPORTUNITIES
PLENTY OF HYDROCARBON BASINS HAVE NOT BEEN EXPLORED
POTENTIAL GEOLOGICAL PROSPECT IS STILL PROMISING. SIGNIFICANT NEW DISCOVERIES IN OLD PRODUCING AREAS, DEEP WATER AND REMOTE AREAS.
GAS RESERVES INCREASED SIGNIFICANTLY OVER THE LAST 5 YEARS
HIGH SUCCESS RATIO ON EXPLORATION DRILLING.
AROUND US$ 19 BILLIONS HAS BEEN SPENT FOR ON GOING AND FUTURE E&P PROJECTS.
MORE NEW INVESTMENTS ARE NEEDED TO DISCOVER NEW OIL & GAS AND TO DEVELOP POTENTIAL RESERVES.

52. OPPORTUNITIES (Cont…)
ENERGY MARKET IS HUGE AND GROWS RAPIDLY
INDONESIA’S GAS DOMESTIC DEMAND IS INCREASING. A TOTAL 1.5 BCFD SALES GAS AGREEMENT HAVE BEEN SIGNED DURING THE LAST 2 YEARS. EXPANSION AND PENETRATION TO NEW PIPED GAS AND LNG MARKETS.
SUBSIDY ON DOMESTIC PETROLEUM PRODUCTS PRICE WILL BE ROLED BACK
STRATEGIC POSITION OF INDONESIA IN THE CENTER OF GROWING CONSUMER REGIONS.
GOVERNMENT ORDINENCE NO. 35 YEAR 2004 OF UPSTREAM OIL & GAS BUSINESS ACTIVITIES HAS BEEN ENACTED TO PROVIDE MORE CONDUCIVE AND COMPETITIVE BUSINESS CLIMATE

53. IMPLEMENTATION OF DWONSTREAM OIL AND GAS BUSINESS ACTIVITIES

54. REGULATION AND SUPERVISION
DEVELOPMENT AND SUPERVISION OF DOWNSTREAM OIL AND GAS BUSINESS ACTIVITIES
DOWNSTREAM BUSINESS ACTIVITY
REGULATION AND SUPERVISION
DEPARTMENT ENERGY AND MINERAL RESOURCE
DIRECTORATE GENERAL OF OIL AND GAS
DEVELOPMENT AND SUPERVISION
THE IMPLEMENTATION OF GOVERNMENT’S ALFAIRS IN
FIELD OF OIL AND NATURAL GAS BUSINESS ACTIVITY
POLICY DETERMINATION ON OIL AND GAS
BUSINESS ACTIVITY
REGULATORY BODY
REGULATION AND SUPERVISION
IMPLEMENTATION OF OIL FUEL SUPPLY AND
DISTRIBUTION
TRANSPORTATION OF NATURAL GAS THROUGH
THE PIPELINES
BUSINESS LICENSE
BUSINESS ENTITIES
STATE-OWNED BUSINESS ENTITY/
REGIONAL-OWNED BUSINESS ENTITY
COOPERATIVES/SMALL BUSINESS/
PRIVATE BUSINESS ENTITY
OIL FUEL AND
NATURAL GAS

55. DOWNSTREAM OIL AND GAS MAIN POLICIES
KEY ISSUES :
Petroleum Product Business Activities
- National Petroleum Fuel Supply Concept;
- Category of Petroleum Fuel;
- Volume, Pricing and Supply Policy.
Natural Gas Transmission and Distribution Business Activities

56. DOWNSTREAM POLICY
TO STIMULATE NATIONAL/INTERNATIONAL PRIVATE PARTICIPATION ON OIL AND GAS DOWN STREAM SECTORS
TO STIMULATE JOINT FACILITY UTILIZATION (OPEN ACCESS) OF OIL AND GAS STORAGE AND TRANSPORTATION FACILITY
TO ASSURE EFFECTIVITY OF IMPLEMENTATION AND BUSINESS SUPERVISION OF OIL AND GAS PROCESSING, TRANSPORTATION, STORAGE AND TRADING AS WELL AS OTHER PROCESSING RESULT FOR PUBLIC NEED SERVICE
TO STIMULATE NATURAL GAS UTILIZATION FOR ENERGY DIVERSIFICATION
TO ELIMINATE OIL FUEL SUBSIDY GRADUALLY TOWARD MARKET MECHANISM
TO BUILD INFRASTRUCTURE FOR INTEGRATED GAS NETWORK IN THE COUNTRY TO APPLY UNBUNDLING PRINCIPLE (SEPARATE PRODUCTION-TRANSPORTATION-DISTRIBUTION)

57. DOWNSTREAM OIL AND GAS MAIN POLICIES
NATIONAL PETROLEUM FUEL SUPPLY CONCEPT
REDUCTION OF BBM SUBSIDY WHILST MAINTAINING MINIMUM SECURITY OF SUPPLY
MORE EFFICIENT AND TRANSPARRENT BBM SUPPLY
RISKS SHIFTING TO PRIVATE SECTORS
FREEDOM OF PRIVATE NTERPRISES TO UITABLY DESIGN HEIR BUSINESS PLAN
NATIONAL ECONOMIC GROWTH
NATIONAL ECONOMIC GROWTH
NON-REGULATED
BBM
STATE REVENUE
FROM OIL AND GAS
OTHER ENERGY
(22 %)
BBM (78%)
OTHER ENERGY
PERTAMINA
PERTAMINA
& OTHERS
NON-GOVERNMENTAL
ECONOMIC SECTORS
NON-GOVERNMENTAL
ECONOMIC SECTORS
REGULATED
BBM FOR
HOUSEHOLDS;
SMALL ENTERPRISES;
PUBLIC TRANSPORTATION
AND SPR
STATE BUDGET
(APBN)
STATE BUDGET
(APBN)
STATE REVENUE
FROM NON-OIL AND GAS

58. PROPOSED GOVERNMENT POLICY ON PETROLEUM FUEL TRADING
TYPE OF PETROLEUM FUEL UNDER FREEMARKET SCHEME :
AVIGAS
JET FUEL
MARINE FUEL OIL, CERTAIN TYPES OF FUEL OIL
CERTAIN TYPES OF GASOLINE (INCLUDING PERTAMAX & PERTAMAX PLUS)
CERTAIN TYPES OF DIESEL OIL (HIGH/MEDIUM/LOW SPEED)
TYPE OF PETROLEUM FUEL UNDER REGULATED AND SUBSIDIZED SCHEME :
PREMIUM
KEROSENE / MINYAK TANAH
MINYAK DISEL
MINYAK SOLAR
CERTAIN TYPES OF FUEL OIL (MINYAK BAKAR)
ENACTED BY A DECREE FROM DIRECTOR GENERAL OF OIL AND GAS

59. DOWNSTREAM OIL AND GAS MAIN POLICIES
CATEGORY OF PETROLEUM FUEL
GRADE A
GRADE B
GRADE C
Producer/Supplier
Specifications
Pricing Mechanism
Regulatory Time
Frame
Supply Area
Wholesaler
Euro/WWFC/Int.Specs
Market Rules
Starting
As of Present
Free Range (A-C)
Floor and Ceiling
Scheme
(fixed margin)
Defined
PT PERTAMINA (Persero)
(Until 2005)
Current Brand Names And
Subsidized Scheme
Now to 2005 And Beyond

60. DOWNSTREAM OIL AND GAS MAIN POLICIES
VOLUME, PRICING AND SUPPLY POLICY OF PETROLEUM FUEL
GRADE A
GRADE B
GRADE C
Producer/Supplier
Method of Supply
Pricing Mechanism
Volume of Trade
Target of Supply
Wholesaler
Open Market Rules
Market Demand
Open Market
PT PERTAMINA (Persero)
(Until 2005)
Tender Rules
Subsidized Scheme
Approved by the Parliament based on Actual Assessment by Various Govt. Institutions
Low Income Class, Public Service Utilities
Wholesaler
Regulated Market
Floor and Ceiling
Scheme (fixed margin)
Market Demand
Middle Income Class and SME

61. DOWNSTREAM OIL AND GAS MAIN POLICIES
NATURAL GAS TRANSMISSION AND DISTRIBUTION ACTIVITIES
Original Proposal
Owner
Funding Origin
Obtained
Licenses
Feature of Permit Bid Criteria
GOI/SOE
SOE
GOI / GOI Warranty
Through Bidding Or
Direct Appointment
Lower Bid Price
Private Enterprise
(PVTE)
Bidding Or
Lower Bid Price,
Capacity, Open
Access Features
PVTE
Bidding/
Direct App./ex.
Coop. Agmt.
No PMT Req. For Coop. Agmt
Existing
Network
GOI/SOE/PVTE
No LIC Req. For
Coop. Agmt
No PMT Req. For
CATEGORY 1
CATEGORY 2
CATEGORY 3
CATEGORY 4
Network Name
Open Access
Open Access,
Fully Dedicated,
Shared Dedicated

62. UP VII-KASIM CAPACITY : 10 MBSD
RIFENERY LOCATION
UP VII-KASIM CAPACITY : 10 MBSD
UNIT : CDU
N H D T
P L F
BUNYU METHANOL PLANT
CAPACITY : T/Y
SOUTH CHINA SEA
ARUN
P. BRANDAN
MEDAN
BONTANG
SULAWESI
IRIAN JAYA
SINGAPORE
DUMAI
B. PAPAN
SUMATERA
S. PAKNING
KALIMANTAN
PALEMBANG
MUSI
ARUN LNG PLANT
LNG : M T/Y
LPG : M T/Y
BONTANG LNG PLANT
LNG: MT/Y
LPG: MT/Y
JAVA SEA
MUNDU
JAKARTA
BALONGAN
BALI
JAWA
UP I-PK BRANDAN
CAPACITY : 5 MBSD
UNIT : CDU
LPG PLANT
UP III-MUSI
CAPACITY : 134 MBSD
UNIT : C D U
H V U
F C C U
CILACAP
UP IV-CILACAP
CAPACITY 348 MBSD
UNIT : C D U
LUBE-OIL PLANT
UP II-DUMAI/S PAKNING
CAPACITY : 170 MBSD
UNIT : CDU
H V U
H-CRACKER
D. COKER
UP V-BALIKPAPAN
CAPACITY : 260 MBSD
UNIT : CDU
H V U
H-CRACKER
UP VI BALONGAN
CAPACITY: 125 MBSD
UNIT : CDU
RCC COMPLEX

63. BENEFIT OF PSC IN INDONESIA
Contract period for PSC : 30 years
Contract may be extended.
Consolidation of several prospect within one (1) Field.
Availability of skillful human resources.
A Hundred percent (100 %) cost recoverable.
Government assume and discharge Value Added Tax (VAT) and import duties on material related to Petroleum Operation in PSC.
Flexible split, considering technical and economical (for contractor: 15 – 35 % after tax).
Size of the acreage is +4,000 km2.
Supported by many service companies (drilling, logging, etc).
E & P activities is controlled under the authority of Central Government.
Investment Credit for Gas Field development (80 – 110%).
Availability of subsurface data (well, seismic, etc) from authorized Data Provider.