Indonesia LPG Challenges and Opportunities

Daniel S. Purba SVP Integrated Supply Chain - PT. Pertamina (Persero) CONTENT

Introduction • Indonesia at a Glance • Pertamina Business Overview • Downstream Business Practice

LPG Supply & Distribution • Annual LPG Demand • LPG Supply Figure & Sources • Indonesia LPG Supply & Distribution

Future Challenges • Indonesia LPG Supply-Demand Outlook • Long Term Corporate Plan

2 INDONESIA AT A GLANCE

Area 1.904.569 km 2 Population ±255 million Population Growth Rate 1.2% Islands 17,508 Inhabited Islands ±4,000 Capital Jakarta Provinces 34 Per capita Income USD 3,511 Economy Growth Rate 4-5% (2015) INDONESIA POPULATION DISTRIBUTION

5.8% 21.3% 1.1% 7.3% 1.5%

57.5 % 5.5%

Population in Java and Sumatra dominate with 78.8% from Total Population Pertamina’s Business Process

Upstream New & Renewable Energy Downstream • PT Pertamina EP • PT Pertamina Internasional Eksplorasi & Produksi • PT Pertamina Gas • PT Pertamina Trans Kontinental • PT Pertamina Hulu Energi • PT Pertamina East Natuna • PT Arun NGL *) • PT Pertamina Retail • PT Pertamina Geothermal Energy • PT Pertamina EP Cepu ADK • PT Badak NGL *) • PT Pertamina Lubricants • PT Pertamina EP Cepu • Pertamina EP Libya Ltd. • PT Nusantara Regas (JV) • PT Pertamina Patra Niaga • PT Pertamina Drilling Services Indonesia • ConocoPhilips Algeria Ltd. • PT Elnusa Tbk. Non Core *) Pertamina’s share in PT Arun NGL & PT Badak NGL were 55% respectively. • PT Patra Jasa • PT Pertamina Bina Medika But since Pertamina is not the controlling shareholder of both companies, then they cannot be Classified as Pertamina’s subsidiary • PT Pertamina Dana Ventura • PT Pelita Air Service • PT Pertamina Training & Consulting • PT Tugu Pratama Indonesia Key Company Highlights 2015

Overview Upstream Midstream Downstream

2015 Key Financial Discoveries of Oil and Gas Sales Refining 94.2 Condensate Reserves 46,445.0 (USD Billion) (BBTU) (MMBO) ° Revenue : 43.73 Crude Oil, Gas and 305.96 Intermediate Processing ° Net Income : 1.39 (Million Barrel) Crude Oil Production ° EBITDA : 5.26 101.6 1,624 Gas Pipeline (KM) (MMBO) Fuel Production Volume 231.03 (Million Barrel) Employees (Group) Discoveries of Natural (Va;uable Products) Gas Pipeline Capacity ° 27,429 persons 876.8 Gas Reserves 7,920 (MMSCFD) 6 refineries Affiliation (BSCFG) ° (Total capacity : 1,031 mbs/d) ° Subsidiaries : 23 units ° JV & Associates : 13 units Natural Gas 694.3 Marketing Production (BSCF)

Fuel Sales (Million KL) Steam Production 61.68 (10 Main Fuel Products) 3.056,8 Equivalent to Electricity (GWh) Sales of Non Fuel Products ° Upstream subsidiaries: 13.98 (Million KL) • PT Pertamina EP (Gas, Lubricants, Petrochemical, and other Non-Fuel) • PT Pertamina Hulu Energi • PT Geothermal Energy ° 8 Marketing Operation Region • PT Pertamina EP Cepu ° 557 LPG Filling Station • PT Pertamina Drilling Service Fortune Global 500 ° 62 Aviation Fuel Depo Indonesia ° 21 LPG Terminal • PT Pertamina International EP 123 ° 109 Fuel Terminal • PT Pertamina East Natuna ° 5155 Fuel Stration • PT Pertamina EP Cepu ADK Recognized as one of the ° 25 Fuel Gas Station • Pertamina EP Libya Fortune Global 500 companies, ° 192 Tanker Vessels • ConocoPhillips Algeria Ltd ranked at 123 in 2014 • PT Elnusa Tbk

Source: Annual Report 2014 Pertamina Refinery Units

Capacity : Capacity : Capacity : Capacity : Capacity : Capacity : 170 MBCD 118 MBCD 348 MBCD 260 MBCD 125 MBCD 10 MBCD

New Tuban Refinery Project with capacity + 100 MBCD

7 DOWNSTREAM BUSINESS PRACTICE

Marketing Highlight: Public Services Obligation (PSO) Mandate from • Dominates the downstream infrastructure and Government: distribution network, comprised of pipelines, fuel • One of Pertamina’s key roles is to distribute subsidized stations, terminals, depots, and vessels fuel and LPG in Indonesia under the PSO mandate • Comprehensive coverage through 8 marketing and • Pertamina still maintains over 99% market share in trading units, each covering one or more provinces supplying and distributing subsidized fuel and 100% • Pertamina is the sole distributor of LPG in Indonesia market share in subsidized LPG • Key advantage of already having a fully-integrated and extensive distribution infrastructure network

Pertamina’s Downstream Distribution Network

Retail fuel station 5,155 units

Gas pipelines 1,624 km

LPG filling plant 557 units

Tankers 192 units

Fuel terminals 109 units

Aviation fuel depot 62 units

LPG terminal & depot 21 units

Lube oil blending plant 3 units

8 LPG ANNUAL CONSUMPTION

6.4 Million MT 6.0 Million MT 5.3 Million MT 4.2 Million MT 5.1 Million MT

2011 2012 2013 2014 2015

Average of annual Increasing Rate 11% Estimate of demand in 2016 7.4 Million MT

9 LPG SUPPLY FIGURES

Indonesia Supply Figures 10.00

9.00

8.00

7.00

6.00

5.00

4.00 in Million MT in Million

3.00

2.00

1.00

- 2016 2017 2018 2019 2011 2012 2013 2014 2015 (est) (est) (est) (est) Import 2.06 2.71 3.30 3.58 4.17 4.73 5.83 6.63 7.24 Domestic 2.20 2.39 2.42 2.49 2.32 2.72 2.39 2.19 2.06

10 DEMAND LPG 2015

13 % LPG NON PSO (PUBLIC SERVICE OBLIGATION) (Industrial Consumption, LPG 6 Kg, LPG 12 Kg, LPG 50 Kg, Vi-Gas)

DEMAND LPG 2015 87 % LPG PSO (PUBLIC SERVICE (LPGOBLIGATION) 3 Kg)

Total LPG Consumptions for 2015 reached 6,4 million MTon. Indonesia LPG Supply Sources in 2015

LPG Import Sources in 2015

Middle East (92.7%)

Africa (4.3%)

Southeast & East Asia (1%)

Australia (2.1%) LPG SUPPLY & DISTRIBUTION

Supply Scheme to Main Terminal Main Terminal: • Tj. Uban (Inland Terminal) capacity 38,000 MT C3 & 50,800 MT C4 • Teluk Semangka (STS) SABANG KRUENG RAYA 3 VLGC as floating storage Import LHOK SEUMAWE Belanak • Kalbut (STS)

P. NATUNA 3 VLGC as floating storage MEULABOH TARAKAN LAB. DELI Dumai SIBOLGA

P. BATAM Bontang G. SITOLI TOLI - TOLI SIAK BONTANG GORONTALO Tj. Uban SINTANG P. SAMBU MOUTONG PONTIANAK SAMARINDA DONGGALA SUBUNG BIAK BALIKPAPAN POSO JAMBI MANOKWARI PARIGI LUWUK CILIK RIWUTBalikpapan SERUI Jabung SAMPIT KOLONDALE PALOPO BENGKULU BANGGAI JAYAPURA PKL.BUN P. PISANG NAMLEA BULA KENDARI MASOHI Sorong Plaju BANJARMASIN PARE - PARE FAK - FAK NABIRE

KOLEKA KOTA RAHA PANJANG BARU BAU -BAU UJ. DOBO PLUMPANGBalongan Gresik PANDANG TUAL Import SEMARANG CAMPLONG Teluk SURABAYA Kalbut MENENG MERAUKE Semangka BADUN MAUMERE KALABAHI G REO SAUMLAKI AMPENAN L. TUKA Cilacap BIMA END DILI E ATAPUPU WAINGAPU

KUPANG Production Sharing Contractors (PSC) Pertamina Own Fleet Pertamina Refineries Domestic Private Refineries

Pertamina Gas 1 Pertamina Gas 2 ( 84000 m3 ) ( 84000 m3 ) LPG SUPPLY & DISTRIBUTION

Distribution Scheme from Main Terminal

SABANG KRUENG RAYA

LHOK SEUMAWE Pkl. Susu P. NATUNA MEULABOH TARAKAN LAB. DELI

SIBOLGA

P. BATAM G. SITOLI TOLI - TOLI SIAK BONTANG GORONTALO Tj. Uban SINTANG P. SAMBU MOUTONG PONTIANAK SAMARINDA DONGGALA SUBUNG BIAK BALIKPAPAN POSO JAMBI MANOKWARI PARIGI LUWUK CILIK RIWUT SERUI SAMPIT KOLONDALE PALOPO BENGKULU BANGGAI JAYAPURA PKL.BUN P. PISANG NAMLEA BULA KENDARI MASOHI BANJARMASIN PARE - PARE FAK - FAK NABIRE

KOLEKA KOTA RAHA PANJANG BARU BAU -BAU UJ. DOBO PLUMPANG PANDANG TUAL SEMARANG CAMPLONG Kalbut Teluk SURABAYA MENENG MERAUKE Semangka BADUN MAUMERE KALABAHI G REO SAUMLAKI AMPENAN L. TUKA BIMA END DILI E ATAPUPU WAINGAPU

KUPANG PSC Pertamina Refinery Private Refinery Depot LPG SUPPLY POINT LPG IMPORT 2015 Future Challenges and Opportunities

1. Decreasing of LPG in Domestic Supply shall be balanced from import. 2. LPG demand growth is expected ± 5-7% until 2019

LPG Supply - Demand Outlook 10.00 9.00 8.00 7.00 6.00 5.00 Demand 4.00 Domestic Supply

in Million MT in Million 3.00 2.00 1.00 - 2017 2018 2019

2. Inland receiving terminal and storage facilities need to be built to replace existing floating facilities 3. Government regulation on LPG specification is slightly different from LPG guaranteed specification from producers LONG TERM CORPORATE PLAN

1. Upgrade Terminal Tg Sekong Storage Capacity 2. Build LPG Terminal Storage in East Java & West Java

3. Utilize LPG Storage Tanks in Terminal Bontang and Arun