PGNPGN’’SS BUSINESSBUSINESS PRESENTATIONPRESENTATION 20052005 RESULTSRESULTS
Remarks By:
Widyatmiko Bapang – Corporate Secretary
Mangatas Panjaitan – Head of Accounting & Budget Division
Jakarta April 6, 2006 AgendaAgenda
I. PGN’s Core Businesses a. Existing Transmission & Distribution Pipe Line b. Transmission Networks Expansion c. Distribution Networks Expansion
II. Operational and Financial Results
III. Ensuring Security of Supply
IV. Going Outside The Pipelines II.. PGNPGN’’ss CoreCore BusinessBusinesseses ExistingExisting CoreCore BusinessBusiness
Distribution Transmission
Gas Purchase and 2% Gas Retail Sales Agreements customers
100% 98% Gas Gas Gas Gas Large Upstream Upstream offtakers PGN supplier (Power, supplier Industrial supplier (Power, Petchem) customers PGN
GSPA GSA GTA
Supply Side Transport Third Party’s Gas
• Gas Sales & Purchase Agreement (GSPA) - • PGN does not own the gas - Long-term, Fix price in US$ • Long-term Gas Transmission Contract (GTA) - Take-or-pay volumes - Minimum ship-or-pay volumes - Tariffs in US$ End User • Gas Sale Agreements (GSA) - Short-term, Price in US$ - Take-or-pay volumes 1 PGNPGN’’ss UpcomingUpcoming TransformativeTransformative IntegrationIntegration
Current New Model – Post 2006
• Industry Industry 12 Cities PGN PGN and Small 8 Cities and Small Distribution 8 Cities Distribution Customers Customers Gas Gas • IPPs Medan Medan - - SSWJ SSWJ Phase I& II Phase I& II Upstream Upstream Duri Duri Upstream Upstream Structure Structure • Caltex PGN Grissik - Duri PGN • Caltex • S’pore Transportation Grissik - Duri Transportation Transmission Grissik - Sing Transmission • S’pore • IPPs Grissik - Sing
• No connection between transmission • Over 60% of distribution volumes to be and distribution – Lacking synergies provided by 3 new PGN transmission projects • Projects offer only stand-alone value Strong commercial and IRR synergies Result Strong commercial and IRR synergies Result and returns • • Emphasizes increasing volumes to underutilized, higher return distribution
1a PricingPricing DynamicsDynamics PromotePromote GasGas DemandDemand GrowthGrowth
PGN Gas Tariffs vs. Oil Price • Fuel oil price by average has increased 126% in October 2005, US$/MMBTU 20.00 hence, has created a stimulus to utilize more natural gas
• High international oil prices (above 16.00 US$60/bbl) increased the burden on 14.49 the Government to keep the subsidy in 12.95 place 12.00 11.96 10.73
Government emphasize on increasing • 8.00 gas usage: Reduce oil subsidy » 5.00 » Increase revenue from oil export 4.00 » Environmental benefits (Blue Sky Policy) 0.00 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06
Crude Oil International MOPS + 15% HSD Subsidised Price HSD Unsubsidised Price PGN Average Sales Price
NaturalNatural gasgas pricepricehas has becomebecomemore more competitivecompetitiveand andstable stablethan thanfuel fuel oiloil
2 a.a. ExistingExisting TransmissionTransmission andand DistributionDistribution PipelinePipeline ExistingExisting DistributionDistribution NetworksNetworks
MEDANMEDAN – – SBU SBU III III CAPACITYCAPACITY = = 123 123 MMSCFD MMSCFD
PEKANBARUPEKANBARU – – SBU SBU III III CAPACITYCAPACITY = = 75 75 MMSCFD MMSCFD BATAMBATAM – – SBU SBU III III CAPACITYCAPACITY = = 80 80 MMSCFD MMSCFD
PALEMBANGPALEMBANG – – SBU SBU I I CAPACITYCAPACITY = = 1 1 MMSCFD MMSCFD
JAKARTAJAKARTA + + BOGOR BOGOR – – SBU SBU I I CAPACITYCAPACITY = = 503 503 MMSCFD MMSCFD
CIREBONCIREBON – – SBU SBU I I CAPACITY = 8 MMSCFD CAPACITY = 8 MMSCFD SURABAYASURABAYA & & Surrounding Surrounding AreasAreas – – SBU SBU II II CAPACITYCAPACITY = = 242 242 MMSCFD MMSCFD
3 ExistingExisting && PlannedPlanned TransmissionTransmission NetworksNetworks
DURI–MEDANDURI–MEDAN (Preparation) (Preparation) EASTEAST KALIMANTAN KALIMANTAN – – CENTRAL CENTRAL JAVA JAVA SSWJ PHASE II (Under Construction) (License(License Tendered Tendered by by Government) Government) SSWJ PHASE II (Under Construction) CAPACITY = 700 – 1000 MMSCFD CAPACITYCAPACITY = = 520 520 MMSCFD MMSCFD CAPACITY = 700 – 1000 MMSCFD
Medan
Dumai Singapura
Duri Irian Jaya (Papua) Sumatera Kalimantan Grissik Sulawesi Pagardewa
GRISSIK – DURI (Operational) GRISSIK – DURI (Operational) Semarang CAPACITYCAPACITY = = 430 430 MMSCFD MMSCFD Jakarta Surabaya
Java GRISSIK – SINGAPORE (Operational) GRISSIK – SINGAPORE (Operational) CAPACITY = 377 MMSCFD CAPACITY = 377 MMSCFD SSWJSSWJ PHASE PHASE I I (Under (Under Construction) Construction) CAPACITYCAPACITY = = 460 460 MMSCFD MMSCFD
4 b.b. TransmissionTransmission NetworksNetworks ExpansionExpansion PGAS’ Role in Fueling Domestic Growth (South Sumatra-to-West Java Transmission Pipelines)
5 PGAS’ Role in Fueling Domestic Growth (Duri – Dumai – Medan Transmission Pipelines)
6 c.c. DistributionDistribution NetworksNetworks ExpansionExpansion PGNPGN’’ss RoleRole inin FuellingFuelling thethe DometicDometic GrowthGrowth (West( Java Distribution Network Expansion Update))
7 CapitalCapital ExpenditureExpenditure OutlookOutlook UpdateUpdate
Capex Forecast for Licensed Projects (US$mn) 970
27 124 318 205 93 34 467 246 107 161 6 76 8 22 71 352 47 12 242 12 16 88 24 4
2004 2005 2006 2007 2008 2009
SSWJ Phase I SSWJ Phase II West Java Distribution Duri-Dumai-Medan Capex = US$492 mio Capex = US$619 mio Capex = US$216 mio Capex = US$538 mio
Note: estimated capex in 2006
IncrementallyIncrementallygrowing growingcapex capexprogram programto tosupport supportintegration integrationand andmedium medium-term-term growth growth
8 IIII.. FinancialFinancial andand OperationalOperational ResultsResults ConsistentConsistent OperationalOperational GrowthGrowth (2005)(2005)
Distribution Volume Transmission Volume (In mmscf/d) (In mmscf/d) t pu gh t rou hpu Th h oug % wt Thr 27 ro 7% wth G Gro
262 287 308 366 475 602
2003 2004 2005 2003 2004 2005
Throughput Volume
Distribution Volume Growth Transmission Volume Growth Grissik-Duri: • YOY 2004 to 2005 = + 7% growth 328.33 mmscfd (2004) vs. 359.83 mmscfd • Commercial operations of Batam & (2005) (increased by 11%) Pekanbaru Distribution Network in Feb 2005 Grissik-Singapura • 92.08 mmscfd (2004) vs. 176.78 mmscfd • First gas in to Riau Andalan Pulp & Paper (2005) (increased by 92%) (RAPP) in March 2005 • Higher throughput volume of Grissik – Singapura has became the main driver for • Additional gas from Ellips Jatirarangon (Okt the growth of the transmission business 2004)
9 StrongStrong 20052005 EarningsEarnings
(In Billion IDR) Forex Gain / Loss Gain R p 52 bio
2003 2004 2005
Loss Loss R p 242 bio R p 90 bio % 22%
3596 4458 5434 0% 40 % 6% % 5 14 % 2 8 1231 1555 2175 824 1081 1229 832 998 1552 509 474 862
Revenues EBITDA Operating Expense Operating Income Net Income
2003 2004 2005 10 BalanceBalance SheetSheet ItemsItems ––2004/20052004/2005
2004 2005 % CHANGE 2004 - 2005
Balance Sheet Structure: Cash and Cash Equivalents*) 3,787 3,992 5% Fixed Assets 6,068 7,109 17% Others Assets 1,185 1,473 24% Total Assets 11,040 12,575 14
%
Debt 6,175 6,384 3% Other Liabilities 997 1,171 17% Minority Interest 562 694 23% Equity (Including Gov. Project Fund) 3,305 4,326 31% Total Equity and Liabilities 11,040 12,575 14
%
*) Cash and Cash Equivalents Include short term investment Exhange rate December 31, 2005 Rp 9.830 per 1 USD, December 31, 2004 Rp 9.290
11 20042004--20052005 FinancialFinancial SnapshotSnapshot
(Expressed in Billion Rupiah Except otherwise stated) Profit and Loss Summary 2004 2005 % CHANGE 2004 - 2005 Revenue 4,457,870 5,433,740 22% EBITDA 1,554,964 2,174,548 40% EBIT 997,833 1,552,281 56% Net Profit 474,338 862,013 82% EPS 108 192 77%
Balance Sheet Summary Total Debt 6,174,967 6,384,093 3% Cash and cash equivalent 3,786,998 3,992,385 5% Minority Interest 562,203 694,154 23% Net Debt 2,387,969 2,391,708 0% Book Value (BV) 3,305,043 4,325,733 31% Share Price 1,900 6,900 263% No of Share Issued (mn) 4,379 4,486 2% Dividend Yield 2.9% 1.4% -51% Market Capitalization 8,320,620 30,953,088 272% Enterprise Value 10,708,589 33,344,796 211%
Ratios Debt Ratio 65% 60% Debt/ Equity (X) 1.9 1.5 Debt/ EBITDA 3.97 2.94
12 PGASPGAS PerformancePerformance
EPS in 2004 &2005 I. PGAS Share Ownership Composition per March 160
20, 2006; 120 - GOI: 59,79% (including DPP I convertion reaching 56,943,305 shares) 80 - Public : 40,21% (including MSOP I & II 40 convertion reaching 125,487,500 shares) 0 II. Market Capitalization per March 20, 2006 was IDR Q1 1H Q3 FY 45 trillion & the third biggest market cap in 2004 2005 Jakarta Stock Exchange
Performance of PGAS vs IHSG PGAS vs JCI MOVEMENT 11,000 December 15, 2003 - March 20, 2006 1,900 10,000 PGAS Closed per 20/03/06 = Rp. 9,750,- 9,000 JCI Closed per 20/03/06 = 1,330.113 1,700 8,000 1,500 7,000 1,300 6,000 JCI 5,000 1,100 PGAS 4,000 900 3,000 700 2,000 1,000 500 15/12/2003 13/04/2004 02/08/2004 25/11/2004 18/03/2005 07/07/2005 24/10/2005 17/02/2006 20/03/2006 PGAS JCI 13 IIIIII.. EnsuringEnsuring SecuritySecurity ofof SupplySupply 2,000
1,800TransmissionTransmission GrowthGrowth ProfileProfile
1,600 Transmission Volume 1,400 (mmscfd)
1,200 Duri - Medan R AG 1,000 CA S Sumatra - West Java P II 5% ~2
800 S Sumatra - West Java P I
600 R Grissik Singapore CAG ~20% 400
200 Grissik Duri
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 Key Drivers Grissik - Singapore S Sumatra - W Java East - West Java Duri - Medan Transmission growth through 2009 is from approved projects currently under engineering and development 14 Total Estimated Distribution Volumes
Distribution Volumes (MMSCFD) Source 2005 2006E 2007E 2008E 2009E 2010E
T O T A L SBU REG I 171.46 329.96 551.06 722.22 797.68 853.16 Total Average Weighted Purchased Price 2.58 3.10 3.32 3.43 3.45 3.49 (US$/MMBTU)
T O T A L SBU REG II 88.46 179.85 174.17 230.00 365.00 380.00 Total Average Weighted Purchased Price 2.50 2.64 2.66 2.82 2.85 2.88 (US$/MMBTU)
T O T A L SBU REG III 47.77 67 104 172 297 352 Total Average Weighted Purchased Price 2.52 2.60 2.78 3.14 3.42 3.52 (US$/MMBTU)
T O T A L PGN 308 577 829 1124 1460 1585 Total Average Weighted Purchased Price 2.55 2.90 3.11 3.26 3.30 3.35 (US$/MMBTU)
15 DistributionDistribution GrowthGrowth OutlookOutlook
Volume Pasokan Gas Terkontrak (1)
1,800 (mmscfd)
1,600 Gas under negotiation for MOU 1,400 R AG CA 1,200 8% ~3 1,000 Gas under MOU 800 AGR 5% C 600 ~2
400 Gas under GPA
200
0 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Key Incremental Supply to South Sumatra gas to Additional Volumes Drivers West Java Market West Java Market Required (1) 2003 and 2004 based on actual
PGNPGN continuescontinuesto toprogress progressin in securingsecuringsignificant significantgas gas supplysupplygrowth growth
16 IIV.V. GoingGoing OutsideOutside TheThe PipelinesPipelines Coal Bed Methane (CBM)
•• CoalCoal Bed Bed Methane Methane contains contains gas gas methan methanee (CH4) (CH4) trapped trapped in in layers layers of of coal coal •• IndonesiaIndonesia has has mammoth mammoth reserve reserve of of CBM CBM esp especiallyecially in in the the following following regions: regions: 1.1. East East Kalimantan Kalimantan Reserves Reserves = = approximately approximately 270 270 TCF. TCF. 2.2. South South Sumatra Sumatra Reserves Reserves = = approximately approximately 180 180 TCF. TCF. WithWith the the latest latest technology technology approximatel approximatelyy 10% 10% - - 20% 20% coal coal can can be be extracted extracted as as CBMCBM •• TheThe amount amount of of CBM CBM that that be be produced produced fr fromom the the Kalimantan Kalimantan and and South South Sumatra Sumatra basinsbasins reaches reaches 18.2 18.2 – – 37.2 37.2 TCF TCF with with high high CH4 CH4 composition composition of of 94%-97%. 94%-97%. CBM CBM isis an an alternative alternative gas gas source source that that can can be be carried carried from from East East Kalimantan Kalimantan and and SouthSouth Sumatra Sumatra to to Western Western part part of of Java Java. . High High CH4 CH4 has has made made CBM CBM as as the the best best alternativealternative energy energy that that is is environmental environmental friendly friendly •• PGNPGN plans plans to to develop develop CBM CBM both both in in E Eastast Kalimantan Kalimantan and and South South Sumatra Sumatra collaboratingcollaborating with with the the local local re regenciesgencies and and mining mining operators operators
17 CNGCNG && LNGLNG TransportationTransportation ModesModes
CNG on Barge Transportation • CNG and Mini LNG technologies is utilized to penetrate market that has lower gas demand • CNG on Barge utilized cylinder that is developed from carbon fiber composite reinforcement (CFCR)
Mini LNG Marine Transportation • Mini LNG utilizes conventional LNG technology that has been modified for small scale transportation • Potential gas sources include Donggi, Matindok, Bontang & Makapan • Potential markets include Makassar, Bali, East Java & Ambon • Estimated economical capacity:150 – 250 mmscfd
CNG Inland Transportation
• CNG Inland Transportation utilizes truck or train to transport gas in CNG form from city to another. • CNG Inland is utilized to transport gas to refueling natural gas stations located in Java
18 MotherMother –– DaughterDaughter SystemSystem ofof InlandInland CNGCNG TransportationTransportation PGN’s Pipelines
Gas Distribution Pipeline supplies Gas is compressed gas to main Compressor in Mother station to refueling station become CNG (“Mother” station) CNG is stored in specially designed tube and transported CNG to refueling stations located far Modules from gas distribution pipelines Mother Station (“daughter” stations) transported utilizing special truck or train Carbon Fibre Composite CNG Modules CNG Modules CNG Trucks • Light weight or • Bullet proof Rail Road • Fire proof • Two times smaller than the LPG cylinder CNG from truck / train is distributed Aluminium Alloy to Daughter station Franchise w/ local SOEs or gov’t Franchise w/ financings private / local SOEs
Remote Residential Remote Industrial Compound & Commercial Area Daughter Daughter Remote Industrial Compound Daughter & IPP Power Plant Substitute LPG Station Station Station and Kerosene Substitute HSD, CNG is distributed to Daughter Station to supply gas to consumers LPG Kerosene 19 Gas to Hydrate (GTH) Transportation Mode
• GTH technology is developed for storage and natural gas transportation, especially for “stranded gas” from marginal gas fields in Indonesia • “Stranded gas” is gas reserves geographically located “Gas hydrate is a far from the transmission pipelines or the volume is mixture of gas and excessively low to be transported with pipelines or LNG water that is trapped inside the molecule technology of water” • The conversion from gas to hydrate results in volume compression of 150 to 180 times which is viable to be transported • Feasibility study shows that GTH technolgy for long- distance transportation is 25 percent cheaper than LNG technology
20 ThankThank YouYou
www.pgn.co.id