LNG Demand Outlook in Asia; Indonesia Outlook PT Pertamina (Persero) JCCP-15 24 July 2018-1 August 2018
South Asia, ASEAN and China will drive the LNG demand growth out to 2030 LNG Outlook 2016-2030, Million tonnes per annum (MTPA) mtpa CAGR % Growth, mtpa 11 15 6 244 127 22 27 37 4.5% p.a. 455 114 76 99 19 44 2 102 S. Asia 2 ASEAN China Middle East Europe North America 1 Japan Korea Taiwan 13% 15% 10% 2% 1% -8% -2% 93 65 72 5 6 (4) (25) ~95% LNG Demand Growth coming from China, India and ASEAN 2016 2030 1 Includes US, Canada and Mexico 2 Include Bangladesh, India and Pakistan SOURCE: McKinsey Energy Insights, McKinsey Global Gas Model 2
Contractual preferences have moved to shorter durations and smaller volumes; oil indexation remains prevalent outside the EU Portfolio composition % of total LNG buyers Key insights Buyers future preferences for long-term contracts are shifting to shorter duration and smaller volumes, while DES contracting remains prevalent A straight preference for Henry Hub indexing has subsided vs. 1-2 years ago, in favor of hybrid formulas to better balance exposure Marked regional differences exist in a few dimensions: A preference for gas hub indexing is pervasive in Europe, in SE Asia oil linkage dominates Open tenders may prevail in M. East and S. America 1 Includes NBP/TTF and Henry Hub SOURCE: McKinsey s Energy Insights LNG buyer survey 2016 3
By 2030, Indonesia would need to rely on imported LNG (equivalent to ~2.5-4 bcfd) to replace the decline in domestic gas supply Contracted PNA import supply 1 Potential supply Project supply Existing supply Demand verifikasi Dit. Gas Demand ESDM mmscfd 10,000 8,000 6,000 9,800 9,600 9,600 9,400 9,200 9,250 9,100 9,150 9,150 9,200 8,900 9,000 9,000 8,900 8,700 8,600 8,350 8,431 8,663 8,375 8,201 8,022 7,670 7,713 7,766 7,704 7,554 7,177 7,318 7,051 6,952 7,064 6,851 6,668 8,640 8,700 2030 Domestic Gas deficit ~2.5-4 bcfd 4,000 2,000 0 2018 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 1 Contracted PNA import supply (Corpus Cristi, TGPL, Woodside, Exxon) SUMBER: Gas Balance Indonesia 2016-2035, Kementerian ESDM 4
ASEAN countries are investing in new infrastructure development to anticipate this increase of LNG Demand Myanmar Lao PDR LNG Regasification Terminal Eksisting Development Planning Trans pipelines Regas Infrastructure Name A B C D FSRU Jawa Barat FSRU Lampung Arun (Aceh) FSRU Jawa Tengah Capacity mtpa 3.0 3.0 3.0 3.0 bcm/y 4.1 4.1 4.1 4.1 Operated Year 2012 2015 2014 2020+ Owner Pertamina PGN Pertamina Pertamina Thailand E Lekas (Malaca) 3.8 5.2 2013 Petronas III J Map Ta Phut* Cambodia Vietnam L Bin Thuan K Thi Vai H Batangas FSRU Philippines F G H Lahad Datu (Sabah) Pengerang (Johor) Batangas FSRU 0.8 3.8 4.0 1.1 5.2 5.5 On hold 2018+ 2020+ TBC Petronas PNOC IV V I Jurong Island 9.0 12.2 2013+ SLNG C Arun E B Malaysia G Pengerang Lekas I Singapura Sumatra II FSRU Lampung I Jurong Island A Brunei Kalimantan FSRU Jawa Barat Lahad Datu Sulawesi F J Ma Ta Phut 10.0 13.8 K L Thi Vai Bin Thuan 1.0 10.0 1.4 13.8 Pipeline Infrastructure Connected Countries I Indonesia-Malaysia-Singapura 2011+ PTT 2020+ PV Gas 2020+ PV Gas Capacity mmscfd 150/250 Jawa Tengah D Timor Timur II III Indonesia (Sumatra)-Singapura Perbatasan Myanmar-Thai 350 410/565 IV Thailand-Malaysia 750 V Malaysia-Vietnam 270/300 SOURCE: IEA, Enerdata 5
Pertamina is building a global LNG portfolio leveraging its capabilities (LNG infrastructure, commercial) and strong market position Pertamina s business model in LNG value chain Core LNG operational and commercial capabilities Business model Trusted LNG and Regas developer and operator Reputed LNG marketer Pure LNG Supply LNG supply and Regas infra Respected partner in LNG and Power value chain Integrated LNG to Power Building gas and power and Retail LNG business model Retail LNG 6
Pertamina has a comprehensive presence across the gas value chain Gas business Sourcing and trading Transmissi on and distribution Processing LNG Infrastructure Marketing Gas, New & Renewable Energy Pertamina Gas Transportation of natural gas through pipeline network ~2,130 km of gas pipelines PT Badak (Bontang) LNG provider Kalimantan Donggi Senoro (DS) LNG LNG provider Sulawesi PT Perta Daya Gas LNG provider East Indonesia Mini LNG storage and regas PT Pertamina Power Indonesia Gas and NRE power plants Subsidiary in gas trading business: Pertagas Niaga PT Nusantara Regas JV Co with PGN, operating floating storage facilities and regas terminals PT Perta Arun Gas LNG receiving terminal and regasification PT Perta Samtan Gas LPG, NGL and CNG plant 7
Key priorities for Pertamina Gas business Set up affordable gas infrastructure and innovative solution 2120 kms of Transmission and distribution lines 800 mmscfd Regas infrastructure LNG parcel in portable tanks Competitive sourcing of LNG molecules Balanced portfolio in term of contract duration, indexation and sources Accelerate domestic gas commercialization Provide reliable and affordable gas to end customer Cost effective construction of distribution pipelines Increase Pertamina Global LNG footprint Minority share ownership in LNG-backed infrastructure Partnership with global players 8
Pertamina is bringing LNG parcel in portable tank to the customer gate (virtual pipeline) Source Transportation Market Big - Medium Medium - Small Customer Road transportation (trucking) LNG for industry LNG microbulk for hotel/restaurant/cafe Electricity LNG dispenser Rail transportation LNG vertical gas liquid for promotion LNG for mall/ hotel/apartment LNG for workshop Eastern Indonesia Shipping & other transportation LNG for co-gen 9
Pertamina has established itself as global LNG portfolio player LNG &Gas supply International LNG Supply Domestic LNG Supply Domestic Pipelines Gas Pertamina as Global portfolio LNG player: Secure long term LNG and Gas supply LNG Spot trading, short term and long term Taking calculated risks to deliver profit Electricity Demand Captive Refinery Demand Domestic Industry Existing International Buyers Emerging LNG markets LNG & Gas Offtakers Source: Pertamina 10
Main challenges in the gas industry in Indonesia Pipeline Gas Limited long-term gas supply Mismatch between supply-demand locations Field development timeline is not in line with market needs Field economics not compatible with price regimes in domestic gas market LNG Long-term supply commitments must be decided and finalized 4-5 years before delivery to ensure alignment with development of LNG infrastructure Unavailability of gas/ LNG import policy in Indonesia Currency exchange risks Absence of fiscal incentives Absence of regulations that will govern reasonable margins 5 1 4 2 Fixed price with annual escalation Price indexation with the crude oil price Indexation of the product price 3 Inadequate infrastructure Overlap in infrastructure development: planning and utilization of infrastructure not optimized yet Complex land acquisition process Gas infrastructure master plan is not aligned with supplydemand profile Difficult to make long-term demand projections Anchor customers are more likely to be traditional consumers Demand is strongly influenced by: Electricity supply plan by PLN Global prices (not Indonesia-specific) for fertilizer l 11
HUMAN CAPITAL DEVELOPMENT as A FUNDAMENTAL to SUPPORT GAS GROWTH IN PERTAMINA Staffing Status MAN POWER STRENGTH (GAS DIVISION) 33.82% Occupied Vacant 60 51 66.18% 50 40 39 35 30 25 By Age 30 20 10 26 20 Occupied Vacant 20 15 0 系列 1 Commercial Engineering 10 5 0 26-30 31-35 36-40 41-45 46-50 51 above
Main Challenge Human Capital Development 1. Demographic Issue Generation Gap About 10 % of the employee will retire in the next 5 years Competency Acceleration in order to overcome the gap generation 3. Global LNG Business How to Survive in the VUCA World? V = Volatile U = Uncertainty C = Complexity A = Ambiguity Agility as a new core competency 2. Culture Silo wall within organization in Pertamina how to break silo?
Talent Development Acceleration in Pertamina HIGH LEVEL ENTRY LEVEL General Skill Technical Skill MID LEVEL Technical Skill Leadership Skill Global Leadership Development Program EPDP (Early Professional Developmet Program) LNG Global Venture Academy People Leader Development Program PGEDP (Pertamina Global Executive Development Program)
2018 年 7 月 25 日プレゼンの様子 @JCCP