Biofuel Business Development in Pertamina...Pertamina sell specific lubricant for engine using B20 • ESDM and BPPT did road and engine test for implementation of B20 in diesel engine

Herutama Trikoranto SVP Research Technology Center 25 September 2018

Biofuel Business Development in Pertamina

1

• Background

• What we have done so far

• Biofuel Initiatives in Pertamina

• Bioavtur

• Greendiesel & Co Processing

• Bioethanol

• Conclusion

Contents

PERTAMINA |

Vision To be a world class national oil energy company Mission To carry out integrated core business in oil, gas, &

renewable based on strong commercial principles

Value Clean; Competitive; Confident; Customer Focus; Commercial; Capable

Pertamina as State-owned enterprises have seen the growing importance of renewable energy and it is reflected through changes in our vision and mission

|

NRE category assessment framework

High

Low Low High

Shale gas

Coal chemical

Nuclear

PV

CSP

On-shore wind

Off-shore wind

Hydro large

Mini hydro

Tidal

Biofuel

Geothermal

New energy Renewables

Wait and watch De-prioritize

Industry catalyst High priority Market attractiveness: • Market potential • Regulatory

environment • Feedstock/resource

availability • Technology maturity • Partners availability • Economics • Risks • Competitive

landscape

Fit with Pertamina vision • Global and Indonesia current situation • Pertamina vision & current situation

Biomass

• Management & stakeholders expectations • Best practice

CBM

Base on our Strategic New & Renewable Energy Assessment, Biofuel Project is one the promising business to develop

|

Government has aggressively set new biofuels policy, which require biofuel players to blend up to 20% in 2016

Old blending mandate

New blending mandate

Biodiesel Bioethanol

Fuel 2008 2010 2015 2016 2020 2025

10%

10%

20%

15%

5%

5%

5%

5%

1%

1%

2.5%

3%

Tripled by 2020

New MEMR Regulation No. 12 year 2015

0% 0% 0% 0% 0% 0%

Bioavtur

Biodiesel Bioethanol

Fuel 2008 2010 2015 2016 2020 2025

30%

5%

30%

20%

20%

2%

15%

1%

3% 5% 2% 0%

Bioavtur

6

• Background

• What we have done so far

• Biofuel Initiatives in Pertamina

• Bioavtur

• Greendiesel & Co Processing

• Bioethanol

• Conclusion

Contents

7

Realization offtake FAME for Pertamina Biosolar

Government of Indonesia extends 20% B20 to Non-Public Service Obligation (Non PSO) Fuel. This mandatory regulation starts effectively on September 1st 2018. Pertamina is ready to implement this new policy by increasing its FAME intake and expanding its distribution to other fuel terminals

2.832.724

8

Business Process for Pertamina Biofuels Current business process in distributing Biofuels is through blending process in fuel terminals. Although with the increasing demand, Pertamina is looking into possibility to build its own Biorefinery plant.

9

Current Issues Related to Biofuels

No Issues Root Cause How to Overcome

1. Limited supply of FAME for blending B20 in Pertamina Fuel Terminals

Delay distribution from Suppliers

Release news for selling B0 instead, and Supplier asked to pay the penalty Rp. 6000/liter

2. Technical issues related to B20 usage in cars

Caused soap effect, especially in old cars (public transportation)

• Pertamina sell specific lubricant for engine using B20

• ESDM and BPPT did road and engine test for implementation of B20 in diesel engine with several types of car (2015 – 2016), and the results show no significant issues with B20 in engine

3. Infrastructure readiness for blending B20 Non-PSO

Increase FAME storage tank

Pertamina prepare additional tank for FAME storage in 112 fuel terminals

4. Accelerate B30 implementation

Reduce import volume of diesel product and as an effort to reduce current account deficit due to unstable economic situation

Co-processing project in Refinery Units Pertamina to produce green diesel, pilot project green diesel in Pertamina RTC, and conduct research for blending mix to get the highest performance engine fuel

10

• Background

• What we have done so far

• Biofuel Initiatives in Pertamina

• Bioavtur

• Greendiesel & Co Processing

• Bioethanol

• Conclusion

Contents

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Green Diesel/Bioavtur Initiatives Co Processing Initiatives

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Comparison between 1G trans esterification, 1.5G hydrodeoxygenation product with conventional oil and gas product

Why 2nd G ? • 2nd Generation of Biodiesel can act as a drop in fuel (no max limitation), even with greater spec than conventional

diesel (Cetane no 70 and low sulfur Euro 5 Spec)

|

CPO has the highest yield, with moderate price amongs all Vegetable Oil

On the upstream side, CPO is also more attractive due to its productivity and availability compare to other potential feedstock.

Notes: CPO (Crude Palm Oil); RBDPO (Refined Bleached Deodorized Palm Oil, PFAD (Palm Fatty Acid Distillate); RBDST (Refined Bleached Deodorized Stearin ; RBDO (Refined Bleached Deodorized Olein)

|

Indonesia CPO Production 2008 - 2017 (Million Tons)

“Based on Statistic Data, CPO Production will still increase in the future, can even goes up to 50-60 mio Ton/Year. This huge number needs new way out and new demand. Biofuel is the solution. So it is a win-win solution between Government, Businessman, and Pertamina”

4 5 6 8 8 10 6 5 7

15 17 17 18

18 22 22 26 27

31

0

5

10

15

20

25

30

35

40 38

2012

27 24

2017 2014 2010 2016 2

30

19

2011

19

32 33

2015

22

32

2008 2009 2013

Production

Domestic Export

Million tons

|

Potential Feedstock Partners; CPO still dominates Indonesia’s Market

Feedstock Company Overview Experience

Strengths / USP Years of ops.

Capacity / Size1

Biofuels experience

1G, 1.5G CPO and derivatives

Leading palm plantation and biodiesel firm 22 228,000 Ha Leading palm plantation firm 32 270,000 Ha × • Large Thailand state-

owned oil company • Interests in Indonesia

CPO assets

34 ~25,000 Ha × • Interests in project financing Leading palm plantation firm 51 464,000 Ha

2G Jatropha Oil

Primarily small holder firms currently – Jatoil, Curcas Oil, etc.

- - ×

2G Used Vegetable Oils

Municipal Corporations, Smallholders

• Lack of established market currently - - ×

1. In Indonesia; Planted area wherever area is shown 2. For the parent firm 3. For PT SMART 4. For biofuel plants / process industry Sources: News sources, Company websites, A.T. Kearney

Multiple potential feedstock partners are available for 1.5G; lack of established market and suppliers for 2G (non-food grade feedstock)

PERTAMINA | 16

ECO GREEN DIESEL

BIO GASOLINE & BIO PROPYLENE

Stage 1

Stage 2

Stage 3

2018

GREEN DIESEL EURO 5

• Location : RU II Dumai

• Own Catalyst, produced by RnD Pertamina

• 3 – 10% bio blending portion in Hydrotreater reactor

• Location : RU III Plaju

• Pioneer in The World for FCC Co processing

• 5 % Bio blending portion

• Producing Bio LPG & Bio Propylene

• Location : (tbc based on Refinery mapping)

• Euro 5 Green Diesel Product

• Cetane > 70, Ultra low sulfur

• Own Catalyst, by RnD Pertamina

• Most probably standalone plant

2022 2014

A quick win in Biofuels : Co Processing in our existing Refinery

RBDPO (refined bleached deodorized palm oil) is The main feedstock for trials

On current stage, Pertamina is re-assessing 2014 FS (Feasibility Study), and work together with Kemenperin & ESDM to realized Green Diesel Plant in Pertamina

PERTAMINA |

Pertamina Co-Processing Biofuels Project

17

• Pertamina will conduct first stage field trial for Co-Processing with existing units in RU II Dumai (DHDT unit) to produce Green Diesel and RU III Plaju (FCCU unit) to produce Green Gasoline.

• Pertamina RTC and ITB has develop catalyst for green processing (PIDO 130) to process RBDPO (Degum CPO).

Oil and/or Fats Trans-esterification Gylcerine by Product

FAME Biodiesel Blend X%

Oil and/or Fats Distillate Hydro-treater

Pre-Heaters

Green Biodiesel Blend

FA M E

G re e n D i e s e l C o - P ro c e s s

G re e n D i e s e l S t a n d a l o n e

Oil and/or Fats Hydro-Treating Propane/Naphta/Jet

Green Diesel Green Diesel Blend

Diesel

Hydrogen + Catalyst

Hydrogen + Catalyst

Methanol + Catalyst Blending

+ By-Products

Process Overview:

|

Bioethanol Initiatives

1. Includes biojet 2. Includes production from farnesene and bisabolene chemical compounds Source: A.T. Kearney

1995031,538

2,7443,133

5,655

10,926

9732,928

4,1334,5002,500

7,812

5,0256,000

Nipah Sweet Potato

Sugarcane Sweet Sorghum

Corn straw Rice straw Wheat straw

Sorghum straw

Sugarcane bagasse

Switchgrass Napier grass

Molasses Corn Sagoo Cassava

(Formula Crop Yield = ton/ha*Bioetanol Yield (liter/ton)

1st Generation 2nd Generation

Sugarcane Molasses Napier/elephant grass Sugarcane bagasse

There are several options available for Bioethanol feedstock, 1G are mostly food conflicting feedstock

Bioethanol blends used around the world

Ethanol blend Country Legal use

E5 Canada Mandate

E10 Finlandia Mandate

E15 Thailand Mandate

Ethanol blend Country Legal use

E25 Brazil Mandate

E85 USA/Europe Optional

E100 Brazil Optional

|

Feedstock Company Overview Experience

Strengths / USP Years of ops.

Capacity / Size1

Biofuels experience

Grass,Energy Crops, Wood residues

State-owned plantation firm – one of Indonesia’s largest

55 ×

EFB, Palm Fronds

Leading palm plantation and biodiesel firm 22

228,000 Ha

Leading palm plantation 32 270,000 Ha × • Large Thailand state-

owned oil company • Interests in Indonesia

CPO assets

34 ~25,000 Ha × • Interests in project financing

Leading palm plantation 51 464,000 Ha Rice Husk, Straw, Wood fuel, etc.

Farmer Cooperatives

Large potential to form cooperatives – stable feedstock supply

- - × • Access to economic and stable supply

Wood fuel Municipal Corporations • Access to region’s

municipal supplies • Large potential in Java

- MSW prodn. – ~64k MMT

× • Access to large feedstock base

1. In Indonesia; Planted area wherever area is shown 2. For the parent firm 3. For PT SMART 4. For biofuel plants / process industry Sources: News sources, Company websites, A.T. Kearney

There is ample availability of suitable partners across the multiple potential feedstock

PERTAMINA |

To cover National Mandate, Indonesia need more than 193

Bioethanol Refineries cap. 76,000KL/year in upcoming 10

years

To cover National Mandate, Indonesia need more than 19

Green Diesel Refineries cap. 10,000 bbl/day in upcoming 10

years

Other Partnership opportunity Green Diesel partnership with Pertamina 1 G Transesterification/FAME

There is still a huge gap between national supply and demand of Biofuel until 2025, large investment opportunity in biofuels projects and Pertamina is open for Co-partnership. Total project cover up : 3 % of demand.

Other Partnership opportunity

1G Yeast Bioethanol Bioethanol partnership with Pertamina

Bio/Green Diesel Demand & Opportunities (mio kL)

Bioethanol Demand & Opportunities (mio kL)

0.00 2.00 4.00 6.00 8.00

10.00 12.00 14.00 16.00 18.00

2016 2018 2020 2022 2025

0.00 2.00 4.00 6.00 8.00

10.00 12.00 14.00 16.00 18.00

2016 2018 2020 2022 2025

21

|

• Background • What we have done so far • Biofuel Initiatives in Pertamina

• Bioavtur • Greendiesel & Co Processing • Bioethanol

• Conclusion

Contents

|

Conclusions

▪ Indonesia will face an energy challenge in the future, Biofuel will play a very strategic role, especially with the current economic situation to reduce import.

▪ Pertamina is committed to develop 2nd Generation biofuels with integrated project approach, where Partners in Plantation and Process Licensor plays an important role in 2nd generation Biofuels projects.

▪ Co processing in existing Refinery is an ideal option for current situation, hence Pertamina will start utilizing its existing units for field trial.

▪ Export market and higher premium price will definitely be a positive swing for Green Diesel/Bioavtur Project.

▪ Energy fund need to be established for Bioethanol.

RAHASIA DAN TERBATAS

hank You T

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