Future Prospective of Future Prospective of Natural Gas Development Natural Gas Development in Indonesia in Indonesia Clean Development Mechanism Clean Development Mechanism (Gas Flaring Reduction and CO (Gas Flaring Reduction and CO 2 Sequestration) Sequestration) Research and Development Center for Oil and Gas Technology “LEMIGAS” CCOP Workshop, June 2006 Beijing - China Oil And Gas Business Activities Structure (Oil and Gas Law No. 22/2001) UNBUNDLING OIL AND GAS BUSINESS ACTIVITIES •Conducted by business license •Conducted trough the mechanism of appropriate, fair and transparent business competition •Pipeline natural gas transportation activities shall be regulated to open to all users •The regulatory Body is responsible for regulating and supervising Pipeline natural gas transportation Cooperating Contract between Implementing Body and Business entity/permanent establishment : •Natural resources ownership remain under the government up to the point of transfer •The Implementing Body Controls the management of operations •All capital and risk shall be undertaken by the Business entity or permanent establishment Downstream Business Activities Processing Transportation Storage Trading Upstream Business Activities Exploration Exploitation A business entity engaging in upstream business activities is prohibited from engagement in downstream business activities (and vice versa) Upstream Natural Gas Resources Management Downstream Natural Gas Resources Management
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Future Prospective of Future Prospective of Natural Gas Development Natural Gas Development in Indonesiain Indonesia
Clean Development MechanismClean Development Mechanism(Gas Flaring Reduction and CO(Gas Flaring Reduction and CO22 Sequestration)Sequestration)
Research and Development Center for Oil and Gas Technology“LEMIGAS”
CCOP Workshop, June 2006Beijing - China
Oil And Gas Business Activities Structure (Oil and Gas Law No. 22/2001)
UN
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IL A
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•Conducted by business license•Conducted trough the mechanism of appropriate, fair and transparent business competition•Pipeline natural gas transportation activities shall be regulated to open to all users•The regulatory Body is responsible for regulating and supervising Pipeline natural gas transportation
Cooperating Contract between Implementing Body and Business entity/permanent establishment :•Natural resources ownership remain under the government up to the point of transfer•The Implementing Body Controls the management of operations•All capital and risk shall be undertaken by the Business entity or permanent establishment
Downstream BusinessActivities
ProcessingTransportationStorageTrading
Upstream Business Activities
ExplorationExploitation
A business entity engaging in upstream business activities is prohibited from engagement in downstream business activities (and vice versa)
Upstream Natural Gas Resources
Management
Downstream Natural Gas Resources
Management
Future Key Issues:Future Key Issues:
Natural gas is play main role in providing affordable energy foNatural gas is play main role in providing affordable energy for r worldwide social and economicworldwide social and economic benefits. The demand is benefits. The demand is continuously increasing but the production tends to decrease.continuously increasing but the production tends to decrease.
Finding new gas reserves become more difficult, more advance Finding new gas reserves become more difficult, more advance technology and higher risks due to the complexity of technology and higher risks due to the complexity of geography, geology and reservoir.geography, geology and reservoir.
More environmental and social pressures, the future natural More environmental and social pressures, the future natural gas to be cleaner in production and processes, environmentally gas to be cleaner in production and processes, environmentally sound, social acceptable and efficient. sound, social acceptable and efficient.
Upstream Natural Gas Resources ManagementUpstream Natural Gas Resources Management
Joint CCOP Workshop:Joint CCOP Workshop:
The direct participate in this workshop has represented a The direct participate in this workshop has represented a collective approach in partnership to jointly seek consistent collective approach in partnership to jointly seek consistent solutions in addressing the future challenges.solutions in addressing the future challenges.
This workshop is essential to explore every possible avenue This workshop is essential to explore every possible avenue for cooperation to promote the application of scientific and for cooperation to promote the application of scientific and technological advances, as well as the study of economic technological advances, as well as the study of economic and management of the worldand management of the world’’s natural gas resources for s natural gas resources for the benefit of mankind with the appropriate planning and the benefit of mankind with the appropriate planning and investment. investment.
The Indonesia oil and gas industries began since 15 June 1889, The Indonesia oil and gas industries began since 15 June 1889, when the first discovery of the when the first discovery of the TelagaTelaga Said oil field in Said oil field in LangkatLangkat, , North Sumatra.North Sumatra.
In mid 1960s, natural gas has commercially been utilized for In mid 1960s, natural gas has commercially been utilized for PT. PUSRI fertilizer plant in PT. PUSRI fertilizer plant in PalembangPalembang, the gas was supplied , the gas was supplied by PT. STANVAC. by PT. STANVAC.
In 1970s, the natural gas becomes a worldwide commodity in In 1970s, the natural gas becomes a worldwide commodity in the form of LNG business. The increasing of gas utilization was the form of LNG business. The increasing of gas utilization was driven by the crisis of oil supply in 1973. More than 4.5 BSCF/Ddriven by the crisis of oil supply in 1973. More than 4.5 BSCF/Dof natural gas production had ever been exported as LNG that of natural gas production had ever been exported as LNG that made Indonesia to be the biggest LNG exporter.made Indonesia to be the biggest LNG exporter.
The continuous exploration activities in Indonesia have The continuous exploration activities in Indonesia have identified 60 main Tertiary Sedimentary Basins. identified 60 main Tertiary Sedimentary Basins. LargeLarge to small to small scale of natural gas reservoirs have been discovered within the scale of natural gas reservoirs have been discovered within the basins spreading throughout onshore and offshore areas from basins spreading throughout onshore and offshore areas from AcehAceh to to IrianIrian JayaJaya
Natural Gas Development in IndonesiaNatural Gas Development in Indonesia
Not Producing Yet (8)Producing (15)
Not Discovery Yet (15)Discovery (23)
Drilled (38)Undrilled (22)
Tertiary Sedimentary Basins in Indonesia (60)
-10
100 105 110 115 120 125 130 135 140
5
0
-5
Drilled basin, no discovery yet
Frontier Basin
Producing Basin
Tertiary Sedimentary Basins in Indonesia
Drilled and proven discovery, but not producing yet
North Sumatra Natural Gas Fields North Sumatra Natural Gas Fields (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
Gas Fields
Oil Fields
NatunaNatuna Sea Natural Gas Fields Sea Natural Gas Fields (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
Gas Fields
Oil Fields
Central Sumatra Natural Gas Fields Central Sumatra Natural Gas Fields (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
Gas Fields
Oil Fields
South Sumatra Natural Gas Fields South Sumatra Natural Gas Fields (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
Gas Fields
Oil Fields
West Java Natural Gas Fields West Java Natural Gas Fields (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
Gas Fields
Oil Fields
East Java Natural Gas Fields East Java Natural Gas Fields (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
Gas Fields
Oil Fields
East Kalimantan Natural Gas Fields East Kalimantan Natural Gas Fields (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
Gas Fields
Oil Fields
IrianIrian JayaJaya Natural Gas Fields Natural Gas Fields (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
Gas Fields
Oil Fields
Indonesia Natural Gas Resources (Prospects + Leads)Indonesia Natural Gas Resources (Prospects + Leads)(Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
OGIP RECOVERABLE GAS (BSCF) (BSCF)
WEST REGION
(NORTH SUMATERA, CENTRAL SUMATERA, NATUNA) 106,386 74,946
CENTRAL REGION
(SOUTH SUMATERA, JAVA) 101,062 69,399
EAST REGION
(KALIMANTAN, SULAWESI, IRIAN JAYA) 125,779 84,185
TOTAL 333,227 228,530
R E G I O N
Indonesia Natural Gas Reserves Indonesia Natural Gas Reserves (Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
1 B A N G G A I
2 B A R I T O
3 B I N T U N I
4 B O N E
5 C E N T R A L S U M A T R A
6 E A S T N A T U N A
7 K U T A I
8 N . E . J A V A
9 N . E . J A V A S E A
1 0 N . W . J A V A
1 1 N O R T H S U M A T R A
1 2 S A L A W A T I
1 3 S E R A M
1 4 S O U T H S U M A T R A
1 5 S U N D A
1 6 T A R A K A N
1 7 W E S T N A T U N A
G R A N D T O T A L
T O T A L
B a s i nN o
2 , 3 9 0 . 1 7 9 0 6 . 7 2 8 7 1 . 3 73 2 . 2 6 2 7 . 7 8 8 . 4 2
1 4 , 3 6 6 . 1 0 3 , 9 5 2 . 8 0 5 , 6 3 7 . 8 63 9 6 . 1 4 0 . 0 0 0 . 0 05 1 7 . 3 4 2 1 7 . 4 8 1 4 6 . 8 9
2 8 , 9 0 0 . 0 0 1 7 , 4 0 0 . 0 0 0 . 0 02 5 , 1 6 6 . 2 0 9 , 3 5 0 . 0 5 1 3 , 6 2 7 . 9 5
1 , 7 9 3 . 4 9 3 4 8 . 9 2 3 9 1 . 6 66 2 1 . 3 0 9 4 3 . 7 1 2 2 3 . 7 9
4 , 7 5 2 . 7 1 8 9 6 . 2 1 3 8 9 . 8 02 , 5 7 4 . 8 0 2 , 1 5 9 . 2 1 1 , 0 2 0 . 7 9
2 2 4 . 0 4 3 6 . 5 0 6 . 2 86 . 3 3 6 . 3 0 0 . 0 0
1 1 , 8 7 0 . 7 1 6 , 1 3 3 . 6 9 1 3 , 1 6 7 . 4 54 4 2 . 1 3 1 3 4 . 2 2 0 . 0 03 5 8 . 6 7 1 9 6 . 7 7 3 5 . 0 6
2 , 8 4 3 . 7 9 2 , 1 0 5 . 8 7 2 , 3 6 1 . 1 5
9 7 , 2 5 6 . 1 8 4 4 , 8 1 6 . 2 4 3 7 , 8 8 8 . 4 6
1 7 9 , 9 6 0 . 8 8
G A S ( B S C F )
P r o v e n P r o b a b l e P o s s i b l e
Producing and Non Producing Field (1993 - 2005)
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
180,000
200,000
199
3 1
994
199
5 1
996
199
7 1
998
199
9 2
000
200
1 2
002
200
3 2
004
200
5
YEARS
GA
S R
ES
ER
VE
S, B
SC
F
POSSIBLE
PROBABLE
PROVEN
Slightly decline
Indonesia Natural Gas Reserves HistoryIndonesia Natural Gas Reserves History(Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
500
1,000
1,500
2,000
2,500
3,000
3,500
1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004
YEARS
Slightly decline
Indonesia Natural Gas Production HistoryIndonesia Natural Gas Production History(Status : (Status : DitjenDitjen MigasMigas, Jan 2005), Jan 2005)
• To find new gas reserves through exploration activities by increasing in promotion and offering new working area;
• To increase gas production providing incentives for the developments of remote areas, deepwater offshore, marginal and brown fields;
• To ensure a sustainable of gas supply along with the development of its infrastructure;
• To provide subsidies for domestic natural gas consumers (National Industries) selectively for the limited time;
•• To encourage the international investors by improving To encourage the international investors by improving the political, legal and regulatory framework.the political, legal and regulatory framework.
Government Policies on Upstream Natural GasGovernment Policies on Upstream Natural Gas((DitjenDitjen MigasMigas))
•• Gas demand is continuously increasing, but the production Gas demand is continuously increasing, but the production tends to decrease;tends to decrease;
•• Gas exploration and exploitation become more difficult, more Gas exploration and exploitation become more difficult, more advance technology and higher risks; advance technology and higher risks;
•• Many medium to small scale gas discoveries are spreading Many medium to small scale gas discoveries are spreading throughout wide area, it requires integrated infrastructuresthroughout wide area, it requires integrated infrastructuresinstead of standinstead of stand--alone development; alone development;
•• Many gas reservoirs contain significant COMany gas reservoirs contain significant CO22 (>40%)(>40%)
•• Many gas reservoirs have low Many gas reservoirs have low producibilityproducibility due to limited in due to limited in thickness, the product of (K * h) is relatively small;thickness, the product of (K * h) is relatively small;
•• Carbon emission and gas flaring can not be hided from view, Carbon emission and gas flaring can not be hided from view, more environmental and social pressures. There is conflictingmore environmental and social pressures. There is conflictinggas demands and contradictory expectations;gas demands and contradictory expectations;
•• New scenario, the future gas to be cleaner in production and New scenario, the future gas to be cleaner in production and processes, environmentally sound, social acceptable and processes, environmentally sound, social acceptable and efficient;efficient;
Future Challenges on Upstream Natural Gas Future Challenges on Upstream Natural Gas in Indonesiain Indonesia
•• Intensive exploration activities in deepwater offshore and Intensive exploration activities in deepwater offshore and frontier areas to find new reserves;frontier areas to find new reserves;
•• Incentive for marginal and brown fields further development Incentive for marginal and brown fields further development to increase production and recovery;to increase production and recovery;
•• Establish integrated infrastructures for spreading small scale Establish integrated infrastructures for spreading small scale gas fields to achieve cost effectivegas fields to achieve cost effective development; development;
•• Promote clean development mechanism project (CDM) Promote clean development mechanism project (CDM) through COthrough CO22 sequestration along with EOR to increase the sequestration along with EOR to increase the development feasibility of gas reserves with relatively high development feasibility of gas reserves with relatively high content of COcontent of CO22; ;
•• Reduce gasReduce gas--flaring by developing domestic markets for flared flaring by developing domestic markets for flared gas or/and stranded gas;gas or/and stranded gas;
•• Develop Develop CoalbedCoalbed Methane (CBM) to find an alternative gas Methane (CBM) to find an alternative gas reserves;reserves;
Future Opportunities on Upstream Natural Gas Future Opportunities on Upstream Natural Gas in Indonesiain Indonesia
Oil and Gas Law No. 22/2001 : Upstream Business Activities (Article 11)Shall be conducted by the business entity or permanent establishment based on Cooperating Contract with the Implementing Body
Cooperating Contract shall contain, at least :State RevenuesOperational Area and its relinguishmentFund Expenditure obligationsTransfer of ownership of the products of oil and natural gasPeriod and conditions of contract’s extensionDispute settlementsObligation to supply natural oil and/or natural gas for domestic demandsExpiration of contractPost mining operation obligationsWork safety and healthManagement of the living environmentTransfer of rights and obligationsNecessary reportingField development plansPrioritizing the utilization of domestic goods and services
Natural Gas Upstream Management in IndonesiaNatural Gas Upstream Management in Indonesia
PSC FISCAL REGIME / SPLIT
Natural Gas Upstream Management in IndonesiaNatural Gas Upstream Management in Indonesia
Natural Gas Upstream Management in IndonesiaNatural Gas Upstream Management in Indonesia
Oil and Gas Law No. 22/2001 : Domestic Market Obligation (DMO)
Article 8Government gives priority to the utilization of Natural Gas for domestic needs and has a duty to provide the strategic reserve of Natural Oil to support the supply of the domestic Oil Fuel that shall be further regulated by the Government Regulation. (Paragraph 1)
Article 22The Business Entity or Permanent Establishment shall be obligated to submit a maximum of 25% (twenty-five percent) of its portion from the Natural Oil and/or Natural Gas production to fulfill the domestic demands.The implementation of the provision referred to in paragraph (1) shall be further stipulated by a Government Regulation.
DMO = Guaranteed Market
Natural Gas Upstream Management in IndonesiaNatural Gas Upstream Management in Indonesia
LNG63.07%
CNG0.10%
Power Generation9.20%
Own Use, Flared & Loss6.13%
Steel Mill1.35%
Fertilizer7.73%
LPG0.49%
City Gas2.48%
Cement, Paper, Wood, Melamine,Oil Refinery
9.45%
Current Gas Utilization In IndonesiaCurrent Gas Utilization In Indonesia
Reduce Gas Export,
Increase Domestic Gas Utilization For Power, Transport, Residential Sectors
FUEL SWITCHING PROGRAM :
Power generation :•New power plant•Fuel conversion
Target :1.4 BSCFD (2015)
Residential(KeroseneSubstitution)
Vehicles Target :Buses > 17,000
Mini Buses > 16,000Taxi cabs > 32,000Gas : 30 MMSCFD
(2007 – 2010)
DomesticNatural Gas
Market
Vehicle fuel (CNG & LPG)
CNG : 20 – 30 MMSCFD (2007)
LPG : 3.5 MT p.a (2007)
Domestic Natural Gas Management in IndonesiaDomestic Natural Gas Management in Indonesia
NA
TU
RA
L G
AS
DO
WN
ST
RE
AM
IN
FR
AS
TR
UC
TU
RE
DE
VE
LO
PM
EN
T M
AN
AG
EM
EN
T
Bidding :•Transmission Segment•Distribution Regionwww.bphmigas.esdm.go.id
License :•Entity’s Special Right•Open Access•Toll fee Basis
TransmissionEntity
DistributionEntity (LDC)
Storage Company :•LNG Regasification Plant•LPG Bulk Storage
Master Plan :•Gas Transmission •Gas Distribusion www.migas.esdm.go.id
Residential CNG Tank
(10 Bar, 22 L WC)
Residential 3 Kg LPG Tank
EntitiesBidding
Residential Tank
Producers
Gas Hydrate TankProducer
R e t a i l e r s
Standard and Code : Adapt and Adopt
Co
nsu
mers
Domestic Natural Gas Management in IndonesiaDomestic Natural Gas Management in Indonesia
Conclusions Conclusions
In addressing the future challenges in providing affordable In addressing the future challenges in providing affordable energy for worldwide social and economicenergy for worldwide social and economic benefits, Indonesia benefits, Indonesia needs to explore every possible avenue for cooperation with needs to explore every possible avenue for cooperation with international stakeholders in the effort to promote the international stakeholders in the effort to promote the management of Indonesiamanagement of Indonesia’’s natural gas resources with s natural gas resources with appropriate planning and investment.appropriate planning and investment.
Potential future works through the partnership winPotential future works through the partnership win--win win strategies in Indonesia: strategies in Indonesia:
-- Exploration and exploitation activities in deepwater Exploration and exploitation activities in deepwater offshore and frontier areas offshore and frontier areas
-- Development of Development of marjinalmarjinal dandan brown fieldsbrown fields-- Development of Development of CoalbedCoalbed Methane (CBM) Methane (CBM) -- Clean Development Mechanism (gas flaring Clean Development Mechanism (gas flaring
reduction and COreduction and CO22 sequestration along with EOR)sequestration along with EOR)-- Development of an integrated gas infrastructuresDevelopment of an integrated gas infrastructures-- Joint R & D and technology exchangeJoint R & D and technology exchange
Conclusions Conclusions
-- Exploration and exploitation activities in deepwater Exploration and exploitation activities in deepwater offshore and frontier areas offshore and frontier areas
-- Development of Development of marjinalmarjinal dandan brown fieldsbrown fields-- Development of Development of CoalbedCoalbed Methane (CBM) Methane (CBM) -- Clean Development Mechanism (gas flaring Clean Development Mechanism (gas flaring
reduction and COreduction and CO22 sequestration along with EOR)sequestration along with EOR)-- Development of an integrated gas infrastructuresDevelopment of an integrated gas infrastructures-- Joint R & D and technology exchangeJoint R & D and technology exchange
•OIL AND GAS BUSINESS ACTIVITIES IN INDONESIA HAVE BEEN UNBUNDLED :
Upstream Oil and Gas Business activity is managed and supervised by Implementing Agency (BPMIGAS)
Downstream Oil and Gas Business activity is managed and supervised by Regulatory Body (BPHMIGAS)
THANK YOU VERY MUCH FOR YOUR ATTENTION
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