Indonesia and its surrounding fossil energy outlook 2012-2013

Indonesia And its Surrounding Fossil Energy Outlook 2013-2014

EMP New Venture Review Dec-2013

Prepared by Alfaidhul Akbar

“ To become the leading Independent Oil and Gas Exploration

and Production Company in Asia.

Implementing safety, health and environment excellence,

uphold good corporate governance, contributing in community

development.”

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GLOBAL OUTLOOK

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World Proven Oil & Gas Resources

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Proven Crude Oil Reserves Asia Pasific The most biggest proven crude oil

reserves was held by China in 2012 with 25584 MMBBL.

Second big proven reserves was held by Malaysia and India.

Brunei and Vietanme have a constant proven reserves year by year.

China and Malaysia show increasing trend of proven crude reserves

0

10,000

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60,000

2008 2009 2010 2011 2012

mill

ion

bar

rels

World Proven Crude Oil Reserves by Country

Others

Australia

Vietnam

Malaysia

Indonesia

India

China

Brunei

2008 2009 2010 2011 2012

Brunei 1,200 1,100 1,100 1,100 1,100

China 15,493 18,000 18,000 20,350 25,584

India 5,651 5,673 5,673 5,549 5,571

Indonesia 3,990 3,990 3,990 3,885 4,030

Malaysia 5,357 5,500 5,500 5,850 5,850

Vietnam 4,700 4,500 4,400 4,400 4,400

Australia 3,428 4,239 4,061 3,872 3,872

Asia and Pacific 41,030 44,180 43,943 46,262 51,587

Brunei 2%

China 51%

India 11%

Indonesia 8%

Malaysia 11%

Vietnam 9%

Australia 8%

Crude Oil Reserves (2012)

OPEC Annual Statistic 2013

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Proven Natural Gas Reserves Asia Pasific

0 500 1000 1500 2000 2500 3000 3500 4000

Bangladesh

Brunei

China

India

Indonesia

Malaysia

Myanmar

Pakistan

Thailand

Vietnam

Australia

Others

(Billion standard cu m)

Proven Natural Gas Reserves

2012 2011 2010 2009 2008

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18000

2008 2009 2010 2011 2012

(Bill

ion

sta

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ard

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m)

Proven Natural Gas Reserves

Others

Australia

Vietnam

Thailand

Pakistan

Myanmar

Malaysia

Indonesia

India

China

Brunei

Bangladesh

Top 4 bigest natural gas reserves are Australia, China, Indonesia, and Malaysia.

Both Australia and China show positive trend, increasing proven reserves year by year.

Indonesia shows negative trend that natural gas reserves decreases.

OPEC Annual Statistic 2013

Malaysia has a positive trend both in oil

and gas proven reserves growth

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Crude Oil Prices

Oil price was fallen in 2009 due to economic crisis hit in Europe and US (Western Recession)

In 2010 to 2012, oil drove up due to turmoil in Middle East, and demanded high oil supply in China and India to support their industri growth.

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cru

de

Oil

Pri

ces

($/b

)

Selected Country Crude Oil Price

Indonesia Attaka Indonesia Minas China Daqing

Malaysia Tapis Malaysia Miri Australia Gippsland

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Crude Oil Prices

All crude oil price normalized to OBR (OPEC Reference Basket)

Malaysia oil price is higher than Indonesia oil price and others. It might be the reason why Hess Corp farmout Indonesia and Thailand’s assets and keep its assets in Malaysia.

In 2009, China crude oil prize droped down below normalized prices. Even,China crude oil is most lower price in vicinity country.

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

US$

/bar

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Crude Oil Prices to OPEC Reference Basket (US$/b)

Indonesia Attaka Indonesia Minas China Daqing Malaysia Tapis Malaysia Miri Australia Gippsland

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Policy Index Rank

Indonesia sit at bottom rank in Policy Perception Index. It is showed that Petroleum Policy in Indonesia were not liked by Investor due to uncertain regulations and policies, with nationalization of resources as the ultimate goal.

(Frasser Institute, 2013)

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Policy Index and Reserves Comparisson

Lower policy index score means a better investment choice

Bubble shows reserves size, bigger bubble means bigger reserves.

(Frasser Institute, 2013)

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Policy Index Summary

• Strong: • Rich natural resources • First PSC sytem in the world

• Weakness: • Nationalization issues • Land acces • High fiscal intake • Uncertain regulatory • Official corrupted

Indonesia

• Strong: • Single national regulator • clear, transparent, and efficient

legal and administrative • Weakness:

• A lot of regulations and operation controls

Malaysia

• Strong: • favorable fiscal terms,

exploration is incentivized, regulations transparent

• ease of access to authorities and technical data

• Weakness: • High labour cost • Anti-fossil fuel paradigm

Australia

• Strong: • favorable fiscal terms, • Good regulations • Good labour issues

• Weakness: • Underexplored • Natural gas resources

Phillipine

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Global Investment Climate Map

Actractiveness measuring is not only based hydrocarbon richness, but weighted by several factor such as policies, geopolitic, and financial support

(Frasser Institute, 2013)

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INDONESIA INSIGHT

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Oil Refinery Map

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Importing Crude Oil

In 2011, Indonesia imported around 460 thousand bbl/d of crude oil and lease condensate, according to Lloyd's List Intelligence tanker tracking service.

More than a quarter of imports came from Saudi Arabia.

Other significant suppliers included Malaysia (13 percent), Nigeria (11 percent), and Australia (7 percent).

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Indonesia LNG

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Indonesia LNG Export

Initially, gas production oriented towards export, but declining oil production shits gas towards domestic comsumption.

In 2011, Indonesia consumed 1.3 Tcf of natural gas, or just under half of its total dry gas production.

Although the industrial sector accounts for the largest portion of domestic consumption, industry analysts expect the power sector to be the most significant driver of future consumption growth.

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Indonesia Basin Map

Future petroleum development in Indonesia depend on producing from drilled with discovery basin, new exploration concept to explore drilled without discovery basin, and drill undrilled basin.

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Indonesia Discovery Map

Dominantly, number of discoveries was held by West Indonesia with highest discovery in South Sumatra Basin.

In size of discovery, East Indonesia is much bigger than West Indonesia.

(IHS 2008 op cit Satyana, 2013)

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Indonesia Petroleum Working Area

In 2012, total working area in Indonesia is 309 working area, cosists of:

- Conventional: Production area: 75, Exploration area: 180

- CBM area: 54

In average 2002-2012, ratio production to exploration block averaging 59%. So it means probability of exploration succes is about 59%.

- trendline of Prod./Expl. shows declined, Rosing of exploration blocks were not followed by production block rose.

0%

20%

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120%

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Pro

d./

Exp

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WA

Indonesia Working Area

Production Working Area Exploration Working Area

CBM Working Area Ratio Prod/Exp(SKK MIGAS, 2012)

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Seismic Survey

2D seismic survey was peak in 2010 and then fallen below 30% in 2011. sligthly, it shows positive trend during 2011-2012.

3D seismic survey was peak in 2008, followed by a 50% declining in 2009. After positive trend during 2009-2010, it came to fall again during 2010-2012.

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2007 2008 2009 2010 2011 2012

Seismic Survey Length

2D Seismic 2D Seismic Cum.

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3D Seismic Survey Coverage

3D Seismic 3D Seismic Cum.

(SKK MIGAS, 2012)

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Exploration Well

High onshore to offshore ratio, it suggest that exploration was strongly in onshore area.

Succes ratio averaged 59%, and showing decline trend.

Both of number of well discoveries and resources were rosed in 2012 with 27 discoveries and 987 mmboe.

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2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Exploration Well Drilled

Onshore Offshore

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Succ

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Wildcat Well

Wildcat Discovery Succes Ratio

154

235

508

361 987

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35

2007 2008 2009 2010 2011 2012 2013

Well Discovery and Resources Bubble

Well Discovery

(SKK MIGAS, 2012)

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Upstream Activity Obstacles

The biggest issue doing business in Indonesia is External Factor such as land usage, overlapping area, work permit, and social relation.

Internal company is second issue, it is about holding priority/focuss, financial, and operatorship.

Equipments and facilities is about rig, pipelines, etc.

0% 10% 20% 30% 40% 50%

External Factor

Equipments and Facilities

Internal Company

Subsurface Complexity

Obstacles Doing Upstream Business 2012

(SKK MIGAS, 2012)

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Conclussion

Largest proven oil & gas reserve in the world:

- Oil: Venezuela, Suadi Arabia, Iran, Iraq, and Kuwait. As for Indonesia rank 28 in the world.

- Gas: Rusia, Iran, qatar, Turkmenistan, and USA. As for Indonesia rank 15 in the world.

In Asia Pacific, China has the biggest proven reserve both crude oil (1st rank) and natural gas (2nd rank).

Based on policy factor in Asia Pacific, Indonesia has poor rank and not suggested to do investment. It is caused by uncertain regulatory, nationalization issue.

Major obstacles doing investment in Indonesia are land clearances, social issue, overlapping area, uncertain regulatory.

Future development in Indonesia will be East Indonesia which is underexplored now, and high risk.

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Thank You

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“ To become the leading Independent Oil and Gas Exploration and Production Company in Asia”