1. 0 Opportunities under the New Law Peter Roberts Adam Summerly Pipeline M&A in Indonesia

2. 1 Peter Roberts Jones Day, Hong Kong Ph: (852) 3189 7286 Fax: (852) 2868 5871 Email: peterroberts@jonesday.com Adam Summerly Jones Day, Singapore Ph: (65) 6233 5994 Fax: (65) 6536 3939 Email: asummerly@jonesday.com

3. 2 Introduction The Old Oil & Gas Law The New Oil & Gas Law The PGN South Sumatra Pipeline Project Development of the Trans-ASEAN Gas Pipeline

4. 3 The Old Oil & Gas Law Law 44/1960 Mining undertakings of mineral oil and gas are exclusively carried out by State Enterprises Law 8/1971 Pertamina appointed as the only State Enterprise granted the mining authority to transport gas in Indonesia

5. 4 The Old Oil & Gas Law contd Regulation 37/1994 Pertaminas exclusive transportation authority opened up to PGN PGN obliged to: –develop, produce, supply and distribute processed gas –develop and construct transmission lines –supply and distribute natural gas in accordance with GOI policies No opportunity for private sector participation in owning onshore gas pipelines in Indonesia

6. 5 The New Oil & Gas Law 3 components: Law 22/2001: passed by Parliament on 23 October 2001, ratified on 23 November 2001 Elucidation: Supplement to State Records No. 4152 Implementing regulations: yet to be established for downstream business activities

7. 6 The New Oil & Gas Law contd Transportation activities may be conducted by: state-owned business entity regional government-owned business entity cooperatives; small companies private business entities Business entities undertaking Transportation must be established, function and be located in Indonesia

8. 7 The New Oil & Gas Law contd Transportation shall be the activity of transferring Natural Oil, Natural Gas and/or the product of their processing from the Operational Area or from the gathering place and Processing, including Natural Gas transportation through transmission and distribution pipelines.

9. 8 The New Oil & Gas Law contd Must obtain a Business License to undertake Transportation business activities Business entity engaging in Transportation may not engage in Upstream Business Activities The Minister shall stipulate a master plan for a gas transmission and distribution network A Business Entity holding a Business License for natural gas pipeline Transportation shall only be granted a certain Transportation segment

10. 9 The New Oil & Gas Law contd The Regulatory Body will implement and regulate pipeline gas Transportation Regulation will cover tariffs price of gas for households and small customers natural gas transmission and distribution businesses Open access regime for pipelines that concern public interests

11. 10 The New Oil & Gas Law contd It is now open for private sector participants to: acquire interests in existing pipeline infrastructure participate in future pipeline infrastructure projects

12. PGN South Sumatra Pipeline Project

13. 12 PGN South Sumatra Pipeline Assets Grissik – Duri A 540km gas pipeline from the Grissik gas fields in South Sumatra to the Duri steamflood project in Central Sumatra (transporting approximately 300 MMSCFD) Grissik – Batam – Singapore A 500 km gas pipeline from the Grissik gas fields to Batam and to Singapore, supplying gas to Singapore utilities (ramping up to 350 MMSCFD in 2009)

14. 13 PGN South Sumatra Pipeline Background Construction of the project funded by: ADB EIB JBIC PGN Partial divestment of equity Partial divestment to experienced international investors a condition of ADB financing

15. 14 PGN South Sumatra Pipeline Acquisition Competitive bidding process 4 bidders shortlisted in early 2002 Successful bidder Transasia Pipeline Company Petronas35% Gulf Indonesia (now ConocoPhillips)35% Singapore Petroleum Corp15% Talisman Energy15%

16. 15 PGN South Sumatra Pipeline Acquisition Acquisition agreements executed on 12 September 2002 Purchase price around US$187.6 million Expected to close mid-October

17. PGN South Sumatra Pipeline Investment Structure PETRONAS (35%) SINGAPORE PETROLEUM CO (15%) TALISMAN (15%) CONOCO PHILLIPS (35%) PGN 60%PT TRANSGASINDO 40% TRANSASIA PIPELINE

18. 17 2002 PT Transgasindo created as a wholly owned subsidiary of PGN Business license issued to PT Transgasindo Grissik-Duri pipeline assets transferred from PGN to PT Transgasindo GTA to Duri for Caltex steamflooding operations September 2002 Execution of Transasia Pipeline Cos buy in to PT Transgasindo PGN South Sumatra Pipeline Investment Schedule

19. 18 October 2002 40% of shares in PT Transgasindo to be transferred to Transasia Pipeline Co August 2003 expected completion of construction of the Grissik-Batam-Singapore pipeline November 2003 expected transfer of the Grissik-Batam-Singapore pipeline to PT Transgasindo GTA to Singapore for Gas Supply Pte Ltd GTA to Batam for PGNs distribution network PGN South Sumatra Pipeline Investment Schedule

20. 19 Indonesian Integrated Transmission System South Sumatra to West Java East Kalimantan to East Java East Java to West Java Trans-ASEAN Gas Pipeline Duri to Malaka East Natuna to Sabah Arun to Pauh Future Opportunities

21. Trans-ASEAN Gas Pipeline

22. 21 THANK YOU