Indonesia Oil & Gas Report Q1 22 - Fitch

Q1 2022
www.fitchsolutions.com
Indonesia
Oil & G
Gas
as R
Report
eport
Includes 10-year forecasts to 2030
Indonesia Oil & Gas Report | Q1 2022
Contents
Key View............................................................................................................................................................................................ 5
SWOT .................................................................................................................................................................................................. 8
Oil & Gas SWOT .............................................................................................................................................................................................................................. 8
Industry Forecast........................................................................................................................................................................... 9
Upstream Exploration................................................................................................................................................................................................................. 9
Upstream Projects .....................................................................................................................................................................................................................15
Upstream Oil Production.........................................................................................................................................................................................................29
Upstream Gas Production.......................................................................................................................................................................................................33
Refining...........................................................................................................................................................................................................................................38
Refined Fuels Consumption ...................................................................................................................................................................................................43
Gas Consumption.......................................................................................................................................................................................................................47
Oil Trade..........................................................................................................................................................................................................................................50
Gas Trade........................................................................................................................................................................................................................................55
Industry Risk/Reward Index ....................................................................................................................................................59

Asia Upstream Oil & Gas Risk/Reward Index ...................................................................................................................................................................59
Asia Downstream Oil & Gas Risk/Reward Index .............................................................................................................................................................68
Indonesia Upstream Oil & Gas Risk/Reward Index........................................................................................................................................................78
Indonesia Downstream Oil & Gas Risk/Reward Index..................................................................................................................................................80
Market Overview..........................................................................................................................................................................82
Energy Market Overview..........................................................................................................................................................................................................82
Oil & Gas Infrastructure ............................................................................................................................................................................................................87
Competitive Landscape.............................................................................................................................................................90
Company Profile...........................................................................................................................................................................92
Pertamina ......................................................................................................................................................................................................................................92
Regional Overview.......................................................................................................................................................................94
Asia Oil & Gas Regional Overview .........................................................................................................................................................................................94
© 20
2021
21 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2021 Fitch Solutions
Group Limited.
THIS COMMENTARY IS PUBLISHED BY FITCH SOLUTIONS COUNTRY RISK & INDUSTRY RESEARCH and is NOT a comment on Fitch Ratings' Credit Ratings. Any comments or data included in the report are solely
derived from Fitch Solutions Country Risk & Industry Research and independent sources. Fitch Ratings analysts do not share data or information with Fitch Solutions Country Risk & Industry Research.
fitchsolutions.com 3
Oil & Gas Glossary..................................................................................................................................................................... 101
Oil & Gas Methodology............................................................................................................................................................ 102
Key View
Key View: In spite of ambitious state-set targets for oil and gas production over the coming decade, the outlook for output growth
in the Indonesian upstream continues to be bearish amid natural declines, slowing FDI inflows and elevated above-ground risks. The
forecast decline in gas production in particular is set to see Indonesia's current surplus in gas flip into a net deficit in 2030, as LNG
imports are expected to be raised to compensate for lower output and rising demand. The demand for both oil and gas is forecast to
see a larger rebound in 2022, after recoveries were derailed in 2021 amidst elevated new infections, strict Covid-19 curbs and slow
progress in vaccinations. In the long term, the domestic energy mix is expected to make a stronger transition towards cleaner, lower-
carbon energy sources in line with Indonesia’s pledge to be carbon neutral by or before 2060.
HEADLINE FORECASTS (INDONESIA 2019-2025)

Indicator 2019 2020 2021f 2022f 2023f 2024f 2025f
Crude, NGPL & other liquids prod, 000b/d 902.0 871.0 804.2 788.8 765.3 746.9 730.8
Refined products production, 000b/d 1,088.0 1,103.0 904.5 1,008.5 1,038.7 1,028.3 1,069.5
Refined products consumption & ethanol, 000b/d 1,862.4 1,636.2 1,589.3 1,711.6 1,794.2 1,855.1 1,902.1
Dry natural gas production, bcm 65.8 58.7 55.2 54.4 52.7 51.1 49.6
Dry natural gas consumption, bcm 35.5 32.8 33.5 34.6 35.7 36.9 38.3
Brent, USD/bbl 64.16 43.21 71.50 72.00 73.00 75.00 78.00

f = Fitch Solutions forecast. Source: EIA, SKK Migas, JODI, Fitch Solutions
Latest Updates And Key Forecasts
• The outlook for hydrocarbon reserves growth in Indonesia continues to be downbeat as new exploration slows and upstream
assets mature.
• In the face of a general decline in FDI inflows the onus will fall on state-owned Pertamina and its subsidiaries to maintain
investments into the sector, further stretching finances against multitude of spending commitments across the value chain.
• The state-set upstream investment target for 2021 is set to miss the annual target for the sixth consecutive year. SKK Migas
confirmed that total upstream investment through September 2021 totaled USD7.9bn, equivalent to 64% of 2021’s target of
USD12.4bn.
• The regulator has offered an optimistic forecast for end-year investment to reach USD11.2bn, although barring a significant
rebound in capital inflows in Q421, the target could be missed by a wider margin than anticipated.
• The outcome from the ‘Indonesia Petroleum Bid Round 2021’ launched in June 2021 and offered six exploration blocks to
investors under stronger, more flexible licensing terms, has yet to be revealed, providing modest upside risk to reserves growth
down the line.
• There are offshore uncertainties forming as China expands its assertiveness in the South China Sea. Indonesia has had to
increase naval and air petrol in the North Natuna sea, after a Chinese vessel entered its exclusive economic zone for undisclosed
reasons.
• Upstream regulator SKK Migas in response has lowered the crude oil output target to 665,000b/d from the previous target of
705,000b/d, representing a reduction of more than 8%, to account for the sector’s underwhelming performance.
• The same target for natural gas has also been revised down by about 2% to 5,529mmscfd (57.2bcm) from 5,638mmscfd
(58.3bcm), although actual production is set to come in lower due to disruptions across feed gas fields to major liquefaction
projects.
• An ongoing trend of Pertamina and its subsidiaries taking on more responsibilities in the sector, particularly in taking over mature
assets from foreign operators, remains a concern, as spending requirements continue to pile up on the SOE.
• For instance, Pertamina has taken over the Rokan oil block from Chevron in August 2021, and revealed plans to drill more than
600 new wells in the mature block over the remainder of 2021 and 2022.
• The SOE has also revised up its planned investment into the block to USD3bn (from USD2bn) through to 2025, equivalent to
about USD750mn per annum, although whether this will be realised in full remains to be seen, given that the amount represents
some 28% of its 2021 capex, which itself was more than double its typical annual capex spend averaged during the past five
years.
• Indonesia’s upstream projects pipeline as per state regulator SKK Migas includes four ‘national strategic’ projects that could add
65,000b/d of liquids and more than 36bcm of gas production at peak rates, although project risks remain elevated with all four
having seen deadlines adjusted further back due to Covid-19-related disruptions.
• The low base set for Indonesia’s refining output in 2021 should see refining output stage a solid recovery in 2022 as normal runs
are restored, although this is contingent on concurrent easing of restrictions and upturn in domestic, external demand.
• The number of new Covid-19 cases in Indonesia remains on a rapid decline since suffering major relapses in July and August
2021, and this provides some optimism heading into 2022, but risks remain as vaccination rate remains rather low at 30% and
the year-end holiday season approaches.
• The long-term plan for the sector continues to be ambitious with multiple expansions and construction of newbuilds planned
down the line.
• The state-led expansion for the sector remains ambitious with more than 1mn b/d of new projects lined to be brought online in
the next seven years (2021-2027).
• The full iteration of the plan would go some way to addressing the large and expanding fuel deficit and import bill, which has
been among President Joko Widodo’s top priorities every year since assuming office in 2014.
• Both Pertamina and the Indonesian government appear aligned in the want for more refining capacity, although face persistent
risks from funding constraints, complex regulations and chequered history of working with foreign partners.
• By Pertamina’s own estimation, its refineries pipeline, which comprises two newbuilds and five expansions, is expected to cost
north of USD60bn, or average annual spend of about USD8.5bn stretched out over a seven-year period, far higher than the
USD3.9bn that is expected to be allocated for downstream activities in 2021.
• Of the seven, only three projects – the planned expansions across Balikpapan, Balongan and Cilacap refineries, are factored in
our forecasts based on progress of contract awards and available funding, although there are heightened risks of delays and
cancellations for the overall pipeline.
• 2022 is also likely to feature a strong rebound in Indonesia’s fuel demand from the low bases set in pandemic-hit 2020 and
2021, as improving vaccine rate allows for rules easing.
• However, short-term risks cannot be ruled out including rising inflation fears, owing to tax hikes and high global energy input
prices, and potential for another relapse in outbreaks.
• The long-term outlook has become more uncertain for fuel demand, as Indonesia works towards reaching carbon neutrality by
2060.
• As part of the plan to eliminate emissions from key pollutive sectors, Indonesia is expected to pursue a dramatic transformation
of its transport fuels mix in favor of biofuels and electric vehicles, at the expense of oil-based fuels and natural gas
• Indonesia has committed to stringent climate targets at COP21 including the pledge to reach carbon neutrality by 2060 albeit
the bulk of set targets are conditional on there being sufficient foreign funding available.
• At the centerpiece of the long-term plan is to transition away from coal-fired generation, into renewables, which as per the
government’s decarbonisation scenario estimated to require some USD48bn to retire coal plants, and another USD23bn, to help
subsidise oncoming new renewables capacities.
• There is still room for natural gas-based power projects to thrive at least in the initial stages in the place of other renewables such
as phasing out coal proves challenging, due to cost concerns and solar and wind as investors await clearer and more favorable
policies.
• In addition, the government is carving out a place for gas to continue to play a role in moving away from coal, by introducing
incentives to convert old coal and diesel plants to run on gas, and encourage coal gasification.
• The resumption of normal production activities at offshore feed gas fields could see a near-term boost in disrupted pipeline flows
to Singapore, although outlook for the longer term is bearish as existing contracts are due to roll off from 2023 and Singapore
makes the transition to using LNG.
• Indonesia’s LNG export volumes are also due to come in lower in 2021 and remain under pressure heading into 2022 due to
multitude of disruptions across feed gas fields. The Merakes field has been shut in from October 2021 due to sanding issues
affecting outflows from Bontang LNG.
• Tangguh LNG is also producing below optimal rate after a boiler leak in May 2021, and has seen the start-up of its new third
production train delayed to Q222 from the initial deadline of 2021. Donggi Senoro LNG also only returned to normal production
in October 2021, after undergoing a major maintenance programme from September.
• An expanding biofuels mandates poses a risk to future diesel imports. Indonesia is mulling the implementation of a higher B40
mandate, which would require more palm-oil based fuel to be blended into diesel consumed at home, but plan to rollout the
plan in 2021 or 2022 appears to have been put on hold in response to soaring palm oil prices.
• The current deficit in refined fuels is forecast to increase steadily over the next decade as refining output proves insufficient to
meet rising demand.
• This will provide added impetus for the government and Pertamina to deliver on the ambitious refining capacity expansion plans,
more so due to the lofty aim to stop importing fuels by 2030, although with domestic crude oil production in a perpetual
struggle this risk exacerbating the deficit in crude oil.
SWOT
Oil & Gas SWOT
SWOT Analysis
Strengths • Substantial below-ground potential, with size of proven oil and gas reserves amounting to fifth and second
largest in Asia respectively.
• Access to a large and growing consumer market with significant incremental consumption growth potential.
Weaknesses • Output from existing oil and gas fields is rapidly declining, while investor appetite for new projects
is diminishing due to substantial risks.
• The state exerts considerable influence over the entire oil and gas value chain through various state-owned
regulatory bodies, national oil and gas company Pertamina and its numerous subsidiaries.
• Oil and gas reforms have been slow to pan out or have struggled to have the desired effects, namely across
the regulatory and licensing landscape.
Opportunities • Large swaths of underexplored blocks remain in the offshore, deepwater and unconventional acreages.
• The government has an ambitious expansion plan for the refining sector, as it strives to cut imports and
improve self-sufficiency in fuels.
• Indonesia's bid to increase gas consumption, also a part of broader efforts to reduce imports, will open up
new investment opportunities, especially in building up additional import terminals, distribution pipelines,
gas-to-power plants and storage facilities.
• Indonesia's sprawling archipelago, and with it small pockets of demand in remote areas, makes it suitable for
FSRU-based LNG-to-power projects.
Threats • Heightened sense of resource nationalism, rise in populist policies, including fuel price controls, are negative
for investor sentiment.
• Frequent, heavy state intervention in regulating domestic fuel prices drags on foreign investor appetite,
squeeze downstream profits.
Industry Forecast
Upstream Exploration
Key View: The outlook for oil and gas exploration in Indonesia remains mixed despite strong below-ground prospects and reserves
growth as investment inflows continue to fall short of state-set targets due to significant above-ground risks. The reforms that are
being introduced or proposed are aimed towards attracting more investments into the sector, although a notoriously complex
regulatory environment, unattractive licensing terms and resource nationalism inform our current bearish long-term outlook.
Latest Updates
• The outlook for hydrocarbon reserves growth in Indonesia continues to be downbeat as new exploration slows and upstream
assets mature.
• In the face of a general decline in FDI inflows the onus will fall on state-owned Pertamina and its subsidiaries to maintain
investments into the sector, further stretching finances against multitude of spending commitments across the value chain.
• The state-set upstream investment target for 2021 is set to miss the annual target for the sixth consecutive year. SKK Migas
confirmed that total upstream investment through September 2021 totaled USD7.9bn, equivalent to 64% of 2021’s target of
USD12.4bn.
• The regulator has offered an optimistic forecast for end-year investment to reach USD11.2bn, although barring a significant
rebound in capital inflows in Q4 2021, the target could be missed by a wider margin than anticipated.
• The outcome from the ‘Indonesia Petroleum Bid Round 2021’ launched in June 2021 has yet to be revealed.
• The round offered six exploration blocks to investors under significantly more flexible licensing terms but industry reaction to the
round remains difficult to gauge at this point as public expressions of interest have been few and far between.
• There are offshore uncertainties forming as China expands its assertiveness in the South China Sea. Indonesia has had to
increase naval and air petrol in the North Natuna sea, after a Chinese vessel entered its exclusive economic zone for undisclosed
reasons.
• China has been contesting the offshore activities of regional peers in the disputed SSC waters, most of which it claims based on
the historical ‘nine dash line’.
• UK-based Harbour Energy and partner Russia’s Zarubezhneft are conducting appraisal works in the Tuna block in the area,
which is estimated to contain as much as 100mn bbl of oil equivalents in reserves.
Structural Trends
Indonesia’s oil reserves are mostly concentrated around the island of Sumatra. Proven oil reserves stood at 2.5bn bbl at the end of
2020, down from 3.2bn bbl in 2019, and a peak of 4bn bbl in 2013, due to the effects of natural declines and a slowdown in
exploration, and are forecast to see further declines over our 10-year forecast period.
Indonesia’s gas reserves are concentrated in West Papua and Kalimantan provinces, and like oil, are expected to dwindle over the
coming years. Proven reserves were estimated at 96tcf (2.7trn cubic meters) in 2020, down from 100tcf (2.8tcm) in 2019, and the
2012 peak of 141tcf (4tcm). A significant rebound in exploration, either through new project sanctions and/or renewed progress for
stalled projects could boost reserves growth.
However, market headwinds are significant more so as investors continue to be wary of over-regulation, bureaucracy and resource
nationalism that are still prevalent across the sector. IOCs already face significant challenges from low, volatile oil prices and growing
shareholder pressure for more returns, and would find it difficult to justify large-scale investments into higher-risk locales such as
Indonesia, absent significant improvements.
Sumatra Holds Significant Oil And Gas Reserves

Indonesia - Crude Oil, Condensates & Natural Gas Reserves Distribution
Source: SKK Migas, Fitch Solutions
Indonesia Backtracks On Mandatory Gross-Split Plan
To its credit, the Indonesian government has rolled out several measures to improve conditions in the upstream, including
simplifying certain regulations and streamlining petroleum permit application and land acquisition processes. Though by and large,
promised reforms in oil and gas have largely failed to have the desired effect, as international investors are yet to be convinced.
A case in point is the domestic licensing environment, which continues to be largely unattractive despite the introduction of a new
gross-split PSC model in addition to the existing cost recovery regime. Introduced in January 2017 under Ministerial Regulation
No.8/2017, and initially made compulsory for new contracts and contract extensions, Indonesia’s new gross-split PSC for oil and gas
contracts was designed to attract further IOC investments into the upstream, although to date, is almost exclusively used by state-
owned Pertamina and its subsidiaries.
Even after several amendments were made in September 2017 (Ministerial Regulation No.52/2017) following consultation with
industry stakeholders, industry response to the new PSC remained lukewarm. Contributing to this was the belief that the proposed
production splits and adjustment components were less favourable to investors than the previous cost-recovery model, and did not
include sufficient incentives for the development of marginal fields, mature fields, EOR projects, fields located in remote, frontier
zones and natural gas projects.
In response, in July 2020, Indonesia passed into law Ministerial Regulation No. 12/2020, revoking the previous plan to make the
gross-split model mandatory for new oil and gas contracts, instead allowing firms to choose between a cost-recovery or gross-split
regime for their respective blocks.
Amended Gross-Split PSC
The notable characteristic of the revised gross-split PSC is the removal of the traditional ‘cost-recovery mechanism’, often a source
of disagreement between contractors and upstream regulator SKK Migas. Previously, upstream contractors were entitled to recover
all allowable costs (including production costs, amortised exploration and capital costs), after deduction of 20% ‘first tranche
petroleum’. The new gross-split PSC provides for a variable percentage production share on a field-by-field basis. The base
production split between the government and contractor is: 57:43 for oil and 52:48 for gas, which may then be adjusted by taking
into account several different factors:
• Commercial Evaluation: The split can be revised if a certain ‘economic value’ is not met for a field, for which a plan of
development has already been approved, although the method for which to compute the ‘economic value’ is not clear. The
adjustment allowed is at the discretion of the MEMR and has no limit.
• Field Characteristics: Field characteristics include but are not limited to location, reservoir depth and type, and CO2/H2S
content. Contractors are rewarded for developing more challenging, higher-priority fields.
• International Oil & Gas Price: Monthly adjustments will be made to the production split calculation based on a formula using
the Indonesian Crude Price (ICP). The ICP in turn, is based on a moving average of a basket of eight international crude grades.
Formula: Adjustment = (85 – ICP) * 0.25%.
• Cumulative Production: Contractors are entitled to a lower split, as more oil and gas is produced.
Reserves Growth To Slow Investment Slows

Indonesia - Oil And Gas Reserves Forecasts (2019-2030)
f = Fitch Solutions forecast. Source: EIA, Fitch Solutions
2001 Oil & Gas Law Under Review
Indonesia is planning revisions of its outdated oil and gas law (2001), as the country seeks a long-term solution to stemming the
decline in its hydrocarbon production, and attract more private, foreign investment into domestic oil and gas.
In response to the parliament’s December 2018 call for a new draft law, President Joko Widodo remarked that the forthcoming
revisions would seek to make the oil and gas sector more ‘efficient, transparent, straightforward, sustainable and provide added
value to the national economy.’
A separate statement from the country’s cabinet secretary also noted that in addition to reviving oil and gas production, the new law
would seek to:
1. Support the strengthening of national capacities

2. Strengthen domestic industries
3. Promote investment in human resources in the oil and industry
Among the change proposed by the parliament is the creation of a new oil and gas regulatory entity called BUKMigas, to assume
the functions of current regulators SKKMigas and BPHMigas. BUKMigas will regulate activities in the upstream and downstream,
while also being able to partake in E&P projects, while BPHMigas will retain oversight over pipelines and the gas transportation
business. Another proposal calls for the creation of Indonesia’s first ‘State Petroleum Fund’, to be bankrolled by a combination of
revenues from oil and gas, levies and bonuses. The government is currently compiling a list of problems with the draft law for further
discussion with parliament over subsequent months.
Providing clarity over the new oil and gas law will be critical, as Indonesia seeks more investment into oil and gas, and prepares to
launch licensing round for new petroleum blocks. Reportedly up to 10 blocks will be made available to investors in 2019, including
greenfield blocks in Anambas, West Ganal and West Kaimana and brownfield blocks across West Kampar and Selat Panjang.
Omnibus Laws
On February 12 2020, Indonesia submitted a draft of the ‘omnibus law’ on job creation to the House of Representatives for review.
The law is one of four such bills that were promised by President Joko Widodo in an inauguration speech in October 2019. The
omnibus bills are intended to bring about sweeping changes across four core areas: job creation, taxation, capital relocation and
pharmaceuticals, focusing on simplifying regulations, streamlining processes, reducing red tape and enhancing the ease of doing
business in Indonesia for private, foreign companies, including those in oil and gas. In addition, the government also revealed a
separate plan to introduce a ‘positive investment list’, which would replace the existing ‘negative list’ and outline several priority
sectors that are available for FDIs. Oil and gas, along with other extractive industries, continue to be areas that Indonesia is keen to
develop, and are thus likely to benefit from any measures to boost FDI inflows.
That said, while the Laws simplify the steps needed for domestic, foreign companies to engage in downstream activities, in contrast,
they do little to ease similar complexities in the upstream. Instead, the laws add on a new requirement for upstream PSC holders to
obtain a business license from the ‘central government’ – comprising of the president, the vice president and the minister of energy
and mineral resources – prior to being able to engage in upstream activities. The laws also do not stipulate the specific criteria,
requirements needed for PSC contractors to obtain these licenses, while also being unclear about how existing PSC holders will be
affected.
In addition, the Laws also seek to build on an ongoing plan to designate or form a ‘special’ state-owned entity to carry out upstream
activities. The state entity would assume the role of current upstream regulator SKK Migas and also serving as a partner for private
companies in PSCs. It remains uncertain how the current roles of Pertamina or SKK Migas would be impacted as a result. But the
creation of another state vehicle to ‘curb red tape and regulations’ appears counterproductive, and risks adding another layer of
governance over an already heavily regulated sector.
Coal-Bed Methane
Indonesia holds the world's sixth largest CBM reserves, with more than 454tcf or 12.8tcm of CBM resources spread out across Java,
Kalimantan, Sulawesi and Sumatra. To date, exploration and development of CBM patches in Indonesia have mainly been taken on
by local companies and independents, with a combination of low oil prices, regulatory uncertainties and insufficient incentives
arresting significant interest among the larger IOCs. ExxonMobil's exit from its Indonesian CBM business in December 2013 could
be indicative of tough times ahead for the under-developed, under-funded sector:
• Regulatory contradiction at the central and local government levels. Local governments often have the final say over
regulations. CBM producers are also sometimes subject to separate sets to laws governing subsurface coal and subsurface
natural gas exploitation, leading to confusion and inefficiency.
• Large water requirements for CBM operations. This not only raises the cost of production, but also concerns about using
water for CBM development instead of domestic consumption. Groundwater contamination is another major issue to be
addressed.
• Geographical distance from population centres. CBM deposits are often located at a distance from immediate market
demand, requiring large-scale transport infrastructure, raising the price of development.
• The lack of sufficient incentives. CBM producers are offered a production split of 45:55 with the government, which is lower
than the baseline split for conventional natural gas projects (48:52) under Indonesia's recently revised gross-split PSC. To
encourage more investment into the CBM sector, Jakarta is reportedly mulling introducing further incentives, including improved
company-take of profits, tax breaks and VAT exemptions.
DISTRIBUTION OF UNCONVENTIONAL GAS RESOURCES IN INDONESIA

CBM
Basin Area Type Resources, tcf
Jatibarang Java CBM 1
Barito Kalimantan CBM 102
Berau Kalimantan CBM 8
Kutei Kalimantan CBM 80
North Tarakan Kalimantan CBM 18
Pasir & Asem Asem Kalimantan CBM 3
Southwest Sulawesi Sulawesi CBM 2
Bengkulu Sumatra CBM 4
Central Sumatra Sumatra CBM 53
Ombilin Sumatra CBM 1
South Sumatra Sumatra CBM 183
Shale Gas
Basin Area Type Resources, tcf
Northeast Java Java Shale Gas 42
Northwest Java Java Shale Gas 6
Barito Kalimantan Shale Gas 75
Ketungau Kalimantan Shale Gas 20
Kutei Kalimantan Shale Gas 81
Melawi Kalimantan Shale Gas 12
Tarakan Kalimantan Shale Gas 7
Akimeugah Papua Shale Gas 63
Bintuni Papua Shale Gas 31
Sengkang Sulawesi Shale Gas 5
North Sumatra Sumatra Shale Gas 65
Central Sumatra Sumatra Shale Gas 87
Ombilin Sumatra Shale Gas 25
South Sumatra Sumatra Shale Gas 56
Source: Indonesia Ministry Of Energy And Mineral Resources
Shale Gas
Indonesia's Ministry of Energy and Mineral Resource estimates that the country could hold up to 16.2tcm of shale gas reserves, the
majority of which is concentrated in the islands of Sumatra and Kalimantan, followed by smaller amounts in Papua, Java and
Sulawesi. However, like CBM, development and production of shale gas in Indonesia to date has been largely insignificant to date,
due to low prices, regulatory uncertainties and limited incentives, compared to high cost structure and technical difficulties.
PROVEN OIL AND GAS RESERVES (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Proven oil reserves, mn bbl 3,200.0 3,200.0 2,513.5 2,432.9 2,360.4 2,294.1
Proven oil reserves, bn bbl 3.2 3.2 2.5 2.4 2.4 2.3
Proven oil reserves, % y-o-y -3.0 0.0 -21.5 -3.2 -3.0 -2.8
Reserves to production ratio (RPR), years 9.7 10.1 8.6 8.5 8.4 8.4
Natural gas proven reserves, bcm 2,830.0 2,700.0 1,644.8 1,560.5 1,497.8 1,436.6
Natural gas proven reserves, tcm 2.8 2.7 1.6 1.6 1.5 1.4
Natural gas proven reserves, % y-o-y -0.7 -4.6 -39.1 -5.1 -4.0 -4.1
Natural gas reserves-to-production ratio, years 43.0 46.0 29.8 28.7 28.4 28.1
PROVEN OIL AND GAS RESERVES (INDONESIA 2025-2030)
Indicator 2025f 2026f 2027f 2028f 2029f 2030f
Proven oil reserves, mn bbl 2,233.3 2,176.6 2,124.1 2,076.0 2,031.9 1,991.3
Proven oil reserves, bn bbl 2.2 2.2 2.1 2.1 2.0 2.0
Proven oil reserves, % y-o-y -2.7 -2.5 -2.4 -2.3 -2.1 -2.0
Reserves to production ratio (RPR), years 8.4 8.3 8.2 8.2 8.2 8.2
Natural gas proven reserves, bcm 1,377.0 1,318.9 1,262.2 1,206.9 1,153.0 1,100.4
Natural gas proven reserves, tcm 1.4 1.3 1.3 1.2 1.2 1.1
Natural gas proven reserves, % y-o-y -4.1 -4.2 -4.3 -4.4 -4.5 -4.6
Natural gas reserves-to-production ratio, years 27.8 27.4 27.0 26.7 26.3 25.8
Upstream Projects
INDONESIA MAJOR UPSTREAM PROJECTS
Est.Peak
Est.Peak Oil/
Gas
Name Field Name Companies Status Liquid Range Type Of Project
Output
(b/d)
(bcm)
Ande Ande Lumut,

Ande Ande Lumut Santos (50%), AWE (50%) Appraisal 25,000 Oil
West Natuna Basin
GeoPetro Resources
(12%), Continental
Engineering Corporation
Bengara II Block Seberaba Appraisal Oil & Gas
(18%), China National
Petroleum Corporation
(70%)
Block Bengara South Sebuku MedcoEnergi (100%) Appraisal Gas
Block East
Block East Ambalat Pertamina (100%) Appraisal 40,000 Oil & Gas
Ambalat
Block Kampar Block Kampar Pertamina (100%) Appraisal Oil
Block MNK
Block MNK Sumbagut Pertamina (100%) Appraisal 1.0 Shale Gas
Sumbagut
Ophir Energy (45%), Cue

Block Sampang, Energy (8.2%), Singapore
Jeruk Appraisal Oil
East Java Basin Petroleum Company
(21.8%)
Block Sangatta I, Block Sangatta I Ephindo (48%),

Appraisal CBM
East Kalimantan (Sangatta West) Pertamina (52%)
Block Sangatta II, PT Visi Multi Artha (60%),

Block Sangatta II Appraisal CBM
East Kalimantan Pertamina (40%)
Block Tanjung NuEnergy Gas (45%), PT

Block Tanjung
Enim, South Bukit Asam (27.5%), Appraisal CBM
Enim
Sumatera Pertamina (27.5%)
HyOil (42.5%), Satria

Bulu PSC Lengo (15%), KrisEnergy Appraisal 0.7 Gas
(42.5%)
Central Mahakam PT Percie Mahakam

Central Mahakam Block Appraisal Oil & Gas
Block, Kutai Basin Petroleum
PTT Exploration and

East Natuna Block, East Natuna Block
Production (15%), Appraisal 40.0 Gas
Riau Islands (Natuna D Alpha)
Pertamina (35%)
East Sepinggan Pertamina (15%), Eni

Merakes Appraisal Gas
Block, Kutei Basin (85%)
Indonesia Deep
Water Gendalo - Gehem Eni (20%), Chevron (63%) Appraisal 47,000 11.0 Gas & Condensate
Development
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
CBM Asia (18%), Ephindo

Kutai West PSC Kutai West PSC (27%), Newton Energy Appraisal Gas
(55%)
Mandala Energy (35%),

Lemang Block Selong Sugih Energy (34%), Appraisal Oil & Gas
Ramba Energy (31%)
Mahakam Hilir PSC Sambutan, Naga Utara Cue Energy (100%) Appraisal Oil & Gas
Royal Dutch Shell (35%),

Masela Block Abadi (Masela) Appraisal Gas
INPEX Corporation (65%)
Black Platinum Energy

North Sokang PSC Dara Appraisal 1.1 Gas
(100%)
Videocon Group (23.0%),

Nunukan PSC, Pertamina (64.5%),
Badik, West Badik Appraisal 0.6 Oil & Gas
Tarakan Basin Bharat Petroleum
Corporation (12.5%)
South Sesulu PSC,

South Sesulu PSC Saka Energi (100%) Appraisal Gas
Kutei Basin
Bumi Resources (30%),

Tabulako PSC Tabulako PSC PT Energi Mega Persada Appraisal CBM
(70%)
Block A Aceh, Alur Rambong,

KrisEnergy (15%),
North Sumatra Alur Siwah, Julu Rayeu, Development Gas & Condensate
MedcoEnergi (85%)
Basin Matang
Government of Central
Oil, Gas &
Block Cepu Jambaran-Tiung Biru Java (9.2%), Pertamina Development 3.3
Condensate
(90.8%)
China National
Block Kepala
Petroleum Corporation
Burung PSC (Basin North Klalin Development Oil & Gas
(30%), RH Petrogas
PSC)
(60%), Pertamina (10%)
Krueng Mane
Jambu Aye Utara Eni (100%) Development 1.1 Oil & Gas
Block
Mandala Energy (35%),

Lemang Block Akatara Ramba Energy (31%), Development 10,000 Oil & Gas
Sugih Energy (34%)
Pertamina (11.5%), PTT

Exploration and
Production (11.5%),
Natuna Block A
Bison Petronas (15.0%), Development Gas
PSC
Premier Oil (28.7%),
Kuwait Foreign
Petroleum Exploration
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
Company (33.3%)

Exploration and
Production (11.5%),
Natuna Block A Petronas (15.0%),
Iguana Development Gas
PSC Premier Oil (28.7%),
Kuwait Foreign
Company (33.3%)

Exploration and
Production (11.5%),
Natuna Block A Petronas (15.0%),
Gajah Puteri Development Gas
PSC Premier Oil (28.7%),
Kuwait Foreign
Company (33.3%)
Abar Block Abar Block Pertamina (100%) Discovery Gas
Bunga Mas PSC, Samudra Energy (49%),

Bunga Mas
South Sumatra Asia Pacific Exploration Discovery Oil & Gas
PSC
Basin Consolidated (51%)
East Jabung Repsol (51%), Pan Orient

East Jabung PSC Discovery Oil & Gas
PSC Energy (49%)
Pabuaran
Pabuaran Kerjasama Pertamina (5%), IEV
Kerjasama Operasi Discovery Oil & Gas
Operasi Block Holdings (95%)
Block
Peak Oil And Gas (59.3%),

South Block A South Block A Discovery Oil & Gas
Lion Energy (40.7%)
GS Energy (15%), Premier

Kuda, Singa
Tuna Block Oil (65%), Moeco Oil & Discovery Gas
Laut
Gas (20%)
PT Energi Mega Persada

Bentu PSC Seng, Segat Expansion 1.0 Gas
(100%)
Block West Kodeco Energy (20%),

Block West Madura Expansion 27,000 1.7 Oil & Gas
Madura Pertamina (80%)

Offshore
Offshore (36.7%), Risco Energy
Northwest Java Expansion 175,000 2.3 Oil & Gas
Northwest Java PSC Investments (5.0%),
PSC
Pertamina (58.3%)
Rokan PSC Duri Pertamina Expansion 300,000 Oil
Anggursi Block Anggursi Block Pertamina (100%) Exploration Oil & Gas
Arguni PSC, Arguni PSC Eni (100%) Exploration Oil & Gas
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
Bintuni Basin
Statoil (40%), Ophir

Aru PSC Aru PSC Exploration Oil & Gas
Energy (60%)
Aru Trough I
Aru Trough I License Statoil (100%) Exploration Oil & Gas
License
Babar Selaru Pertamina (15%), INPEX

Babar Selaru PSC Exploration Oil & Gas
PSC Corporation (85%)
Bala-Balakang PSC Bala-Balakang

(formerly Tanjung PSC (formerly Tanjung Mandala Energy (85%) Exploration Gas
Aru) Aru)
Batanghari China National Offshore

Batanghari Block Exploration Oil & Gas
Block Oil Corporation (100%)
Pertamina (79.5%),
Block Air Benakat I Block Air Benakat I Exploration CBM
Sugico (20.5%)
Block Air Benakat Pertamina (69.7%),

Block Air Benakat II Exploration CBM
II Sugico (30.3%)
Block Air Benakat Pertamina (73.5%),

Block Air Benakat III Exploration CBM
III Sugico (26.5%)
Block Ambalat, Eni (66.25%), Pertamina

Block Ambalat Exploration Oil & Gas
East Kalimantan (33.75%)
Ophir Energy (70%), Saka

Block Bangkanai Kerendan Exploration Gas
Energi (30%)
Block Cendrawasih
Block Cendrawasih VII Medco Energi (100%) Exploration Oil & Gas
VII
Block Cendrawasih
Block Cendrawasih VIII MedcoEnergi (100%) Exploration Oil & Gas
VIII
NuEnergy Gas (40%),

Block Muara Enim Block Muara Enim Exploration CBM
Pertamina (60%)
Pertamina (65%), Sugico

Block Muara Enim I Block Muara Enim I Exploration CBM
(35%)
Sugico (30%), NuEnergy

Block Muara Enim
Block Muara Enim II Gas (30%), Pertamina Exploration CBM
II
(40%)
Block Muara Enim Pertamina (73%), Sugico

Block Muara Enim III Exploration CBM
III (27%)
Block Pulau Moa Block Pulau Moa Royal Dutch Shell (100%) Exploration Oil & Gas
Block Pertamina (40%),

Randugunting, Block Randugunting Petronas (30%), Exploration Oil & Gas
Central & East Java PetroVietnam (30%)
Block Semai II Block Semai II Murphy Oil (28.3%) Exploration Oil & Gas
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
Block Suban I Block Suban I Pertamina (58%) Exploration CBM
Block Suban II Block Suban II Pertamina (50%) Exploration CBM
Block Tanjung II,

Block Tanjung II Pertamina (100%) Exploration CBM
South Kalimantan
Block West Glagah

Block West Glagah
Kambuna, North Pertamina (40%) Exploration Oil & Gas
Kambuna
Sumatera
Block Wokam II Block Wokam II Saka Energi (100%) Exploration Gas
Blue Sky International

(50%), Surya Buana
Bohorok PSC Bohorok PSC Exploration Oil & Gas
Letarijaya (10%), New
Zealand Oil & Gas (45%)
Bone PSC Bone PSC AziPac (100%) Exploration Oil & Gas
East Seruway PSC,

North Sumatra East Seruway PSC KrisEnergy (100%) Exploration Oil & Gas
Basin
Interra Resources
Garung Block Garung Block Exploration Oil & Gas
(33.3%)
Lundin Petroleum (90%),

Gurita PSC Gurita PSC Exploration Oil & Gas
Nido Petroleum (10%)
Halmahera-Kofiau Tately NV (20%), Ophir

Halmahera-Kofiau PSC Exploration Oil & Gas
PSC Energy (80%)
Icewine
Icewine Development 88 Energy (63.4%) Exploration Oil
Development
Kofiau PSC Kofiau PSC Ophir Energy (100%) Exploration Oil & Gas
Kuala Kurun Block Kuala Kurun Block ConocoPhillips, Petronas Exploration Oil & Gas
RAIN Group (8%),

Kutai II Block, East
Kutai II Block Newton Energy (25%), Exploration CBM
Kalimantan
Ephindo (67%)
Orchid Kutai (22%), Ophir

Kutai PSC Kutai PSC Exploration Oil & Gas
Energy (23.4%)
Kutai Timur Block,

Kutai Timur Block Ephindo (100%) Exploration CBM
East Kalimantan
Cue Energy (12.5%),

Arrow Energy (20.0%),
Mahato PSC Mahato PSC Exploration Oil & Gas
Black Diamond Energy
(67.5%)
Mangkalihat PSC Mangkalihat PSC Samudra Energy (100%) Exploration Oil & Gas
Merangin III PSC,

Merangin III PSC Mandala Energy (100%) Exploration Oil & Gas
South Sumatra
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
Basin
North East
North East Bangkanai
Bangkanai PSC, Ophir Energy (100%) Exploration Gas
PSC
Greater Kerendan
Ophir Energy (18.5%), Eni

North Ganal PSC, (24.5%), Statoil (26%),
North Ganal PSC Exploration Gas
Kutai basin Black Platinum Energy
(18.5%), Engie (12.5%)
North Madura II
North Madura II Block Petronas (100%) Exploration Oil & Gas
Block
North Madura PSC North Madura PSC AziPac (100%) Exploration Oil & Gas
Blue Sky International

Palmerah Baru (54%), PT Sarana Niaga
Palmerah Baru Block Exploration Oil & Gas
Block Petrogas (10%), New
Zealand Oil & Gas (36%)
Rombebai PSC Rombebai PSC AED Oil (100%) Exploration Oil & Gas
Sakakemang Block Sakakemang Block Repsol (90%) Exploration Oil & Gas
KrisEnergy (95%), Golden

Sakti Block Sakti Block Exploration Oil & Gas
Heaven Jaya (5%)
Sebatik PSC, Star Energy Indonesia

Sebatik PSC Exploration Oil & Gas
Tarakan Basin (100%)
Star Energy Indonesia

Sekayu PSC Sekayu PSC Exploration Oil & Gas
(100%)
Black Platinum Energy

Sokang PSC Sokang PSC Exploration Oil & Gas
(100%)
South Bengara II
Samudra Energy
PSC, Greater South Bengara II PSC Exploration Oil & Gas
(97.85%)
Tarakan Basin
Gujarat State Petroleum

South East South East Tungkal
Corporation (50.5%), Exploration Oil & Gas
Tungkal Block Block
Essar (49.5%)
South Sokang PSC South Sokang PSC Medco Energi (100%) Exploration Oil & Gas
Sumbagsel PSC,
South Sumatra Sumbagsel PSC Mandala Energy (100%) Exploration Oil & Gas
Basin
Tanjung Lontar
KSO, South Tanjung Lontar KSO Samudra Energy (84%) Exploration Oil & Gas
Sumatra Basin
Telen Block Telen Block Total (100%) Exploration Oil & Gas
Udan Emas PSC Udan Emas PSC KrisEnergy (100%) Exploration Oil & Gas
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
Ujung Kulon Block Ujung Kulon Block M3nergy (100%) Exploration Oil & Gas
PT. Pandawa Prima

Wain Block Wain Block Exploration Oil & Gas
Lestari
West Bangkanai
Saka Energi (30%), Ophir
PSC, Greater West Bangkanai PSC Exploration Gas
Energy (70%)
Kerendan
West Jambi Block,

West Jambi Block Ramba Energy (100%) Exploration Oil & Gas
Jambi Sub Basin
Ophir Energy (49.9%),

West Papua IV PSC West Papua IV PSC Statoil (40%), Tately NV Exploration Oil & Gas
(10.1%)
Mubadala Petroleum
West Sebuku Block West Sebuku Block (75.5%), INPEX Exploration Oil & Gas
Corporation (24.5%)
China National
Bangko Block, Gambang, West Piano,
Petroleum Corporation Production Oil & Gas
South Sumatera Kenong
(100%)
Chevron (25%), Medco

Block B Belida Production 130,000 Oil
Energi (75%)
Chevron (25%), Medco Oil, Gas &

Block B Belanak Production 50,000
Energi (75%) Condensate
Chevron (25%),
Block B Hiu Production Gas
MedcoEnergi (75%)
Chevron (25%),
Block B Kerisi Production Oil & Gas
MedcoEnergi (75%)
MedcoEnergi (75%),
Block B North Belut Production 33,000 3.2 Gas & Condensate
Chevron (25%)
Chevron (25%),
Block B Bawal Production Gas
MedcoEnergi (75%)
Chevron (25%), Medco

Block B South Belut Production 1.2 Gas
Energi (75%)
Block B, Aceh
Arun ExxonMobil (100%) Production 130,000 34.0 Gas & Condensate
Province
Badan Kerja Sama Blok

Block Cepu Banyu Urip Cepu (10%), ExxonMobil Production 201,000 Oil
China National
North Geragai, Makmur, Petroleum Corporation
Block Jabung,
North Betara, Northeast (CNPC) (27.86%), PP Oil & Production 50,000 Oil & Gas
Jambi
Betara and Gemah Gas (30%), Petronas
(27.86%), Pertamina
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
(14.28%)
Repsol (25%), Pertamina

Block Jambi Sungai Kenawang,
(50%), Pacific Oil & Gas Production Gas & Condensate
Merang Pulau Gading, Gelam
(25%)
Star Energy Indonesia

(56.25%), Singapore
KH, KRA, Jangkar, South
Block Kakap Petroleum Company Production 7,500 0.6 Oil & Gas
KRA, KF
(15%), Pertamina (10%),
Premier Oil (18.75%)
China National
Block Kepala Petroleum Corporation
Klalin Production Oil & Gas
Burung (30%), RH Petrogas
Block Lematang Singa Medco Energi (100%) Production 0.5 Gas
Block Makassar Chevron (90%),

West Seno Production 60,000 1.5 Oil & Gas
Strait, Kutei Basin Pertamina (10%)
Block Ogan Air Serdang, Guruh,

Pertamina (100%) Production 8,300 Oil
Komering Mandala
Block Raja and

Air Hitam, Tanjung Golden Spike Indonesia
Pendopo (King Production Oil & Gas
Kurung, and Tempira (50%), Pertamina (50%)
and Pendopo)
China National
Block Salawati Block Salawati Kepala Petroleum Corporation
Production Oil
Kepala Burung Burung (16.8%), RH Petrogas
(33.2%), Pertamina (50%)
Ophir Energy (45%), Cue

Block Sampang, Energy (15%), Singapore
Oyong, Wortel, Paus Biru Production 0.9 Gas
East Java Basin Petroleum Company
(40%)
Block South
Block South Sumatera MedcoEnergi (100%) Production 8,000 1.3 Oil & Gas
Sumatera
Block Tarakan Block Tarakan MedcoEnergi (100%) Production Oil & Gas
Pertamina (4.2%), INPEX

Block Tengah,
Sisi, Nubi Corporation (47.9%), Production 3.5 Gas
Block Mahakam
Total (47.9%)
China National
Block Tuban, East
Mudi, Sukowati Petroleum Corporation Production 60,000 Oil & Gas
Java

Wunut, Carat, (50%), Prakarsa
Brantas PSC Production Gas
Tanggulangin Transforma Indonesia
(32%), Santos (18%)
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
Repsol (36%),
Corridor PSC Corridor PSC ConocoPhillips (54%), PT Production 48,000 8.1 Oil & Gas
Pertamina (10%)
Indonesia Deep Tip-Top Oil & Gas (18%),

Water Bangka Eni (20%), Chevron Production 1.1 Gas & Condensate
Development (62%)
Jangkrik Complex, Saka Energi (11.7%),

Jangkrik, Jangkrik North
Muara Bakau Engie (33.3%), Eni Production 4.5 Gas & Condensate
East
Block, Kutei Basin (55.0%)
Ngimbang, Rancak, Japan Petroleum

Sepanjang, North Exploration (25%),
Kangean PSC, East
Pagerungan, West Mitsubishi Corporation Production 38,000 Oil & Gas
Java
Kangean, Terang, (25%), PT Energi Mega
Sirasun, Batur Persada (50%)
Japan Petroleum
Exploration (25%), PT
Kangean PSC, East
Terang, Sirasun, Batur Energi Mega Persada Production 3.0 Gas
Java
(50%), Mitsubishi
Corporation (25%)
PT Perusahaan Gas
Ketapang Block Bukit Tua Negara (20%), Petronas Production 20,000 0.5 Oil & Gas
(80%)

Korinci Baru PSC Baru, West Baru Production Gas
(100%)
Samudra Energy (20%),

Madura Block, East MDA, BD, MBH, MDK, China National Offshore
Production 6,000 2.5 Gas & Condensate
Java Basin MAC, MAX, MBJ, MBF Oil Corporation (40%),
Husky Energy (40%)
PT Petrogas Pantai
Madura Offshore Madura (10.0%), PC
Maleo, Peluang Production 1.1 Gas
PSC Madura (22.5%), Santos
(67.5%)
INPEX Corporation (50%),

Mahakam Block Peciko Production 13.0 Gas & Condensate
Total (50%)

Mahakam Block Bekapai Production 60,000 1.0 Oil & Gas
Total (50%)

Mahakam Block Handil Production 180,000 Oil
Total (50%)

Mahakam Block Tunu Production 180.0 Gas & Condensate
Total (50%)
INPEX Corporation (50%), Oil, Gas &

Mahakam Block Tambora Production 3.0
Total (50%) Condensate
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
China National Offshore

Kuat, Lalang, Kurau,
Oil Corporation (39.51%),
Malacca Strait PSC Ponder, Melibur, Production 7,000 Oil & Gas
Selatan, Mengkapan
(60.49%)
Donggi, Matindok,
Matindok, Banggai
Sukamaju, Maleo Raja Pertamina (100%) Production 1.0 Gas
Basin
and Minahaki
Saka Energi (20%),

Muriah Block Kepodang Production 1.2 Gas
Petronas (80%)
Kuwait Foreign
Company (33.33%),
Natuna Block A Premier Oil (28.67%),
Gajah Baru Production 1.4 Gas
PSC Petronas (15%), PTT
Exploration and
Production (11.5%),
Pertamina (11.5%)
PTT Exploration and

Production(11.5%),
Pertamina (11.5%),
Natuna Block A Kuwait Foreign
Anoa Production 25,000 Oil & Gas
PSC Petroleum Exploration
Company (33.3%),
Petronas (15.0%),
Premier Oil (28.7%)

Exploration and
Production (11.5%),
Naga Production Gas
Company (33.3%),
Petronas (15.0%),
Premier Oil (28.7%)

Exploration and
Production (11.5%),
Pelikan Production Gas
Company (33.3%),
Petronas (15.0%),
Premier Oil (28.7%)
North Sumatra North Sumatra Offshore

Pertamina (100%) Production 4.0 Gas
Offshore Block Block
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
Paku Gajah Paku Gajah Pertamina Production 0.5 Oil & Gas
Pangkah PSC Ujung Pangkah, Sidayu Saka Energi (100%) Production 25,000 1.5 Oil & Gas
Pase PSC, Aceh

Pase PSC PT Enso Asia (100%) Production 1.4 Gas
Province
Rokan PSC Rokan PSC Chevron (100%) Production 213,550 Oil & Gas
Badak, Mutiara, PT Karunia Utama

Sanga Sanga Semberah, Nilam, Perdana (13.7%), Opicoil
Production Oil
Block, Kutei Basin Pamaguan, Lampake (8.78%), Pertamina
and Beras (67.5%)
Universe Gas and Oil

Sanga Sanga CBM
Sanga Sanga CBM Block (4.4%), BP (37.8%), Eni Production 4.2 CBM
Block, Kutei Basin
(37.8%), Opicoil (20.0%)
Mubadala Petroleum
Sebuku PSC Ruby (70%), INPEX Corporation Production 1.0 Gas
(15%), Total (15%)
Kampung Baru,
Energy World
Sengkang PSC Wasambo (Walanga, Production Gas
Corporation (100%)
Sampi Sampi, Bonge)
Tomori E&P (20%),

Senoro, Tiaka, Oil, Gas &
Senoro-Toili PSC Pertamina (50%), Production 8,000 3.1
Cendanapura, Toili Condensate
MedcoEnergi (30%)
Lion Oil Company (2.5%),

Gulf Petroleum
Investment (16.5%),
Seram PSC (Non-
Oseil, Lofin, Nief Utara Kuwait Foreign Production 35,000 Oil & Gas
Bula), Seram Basin
(30.0%), CITIC Group
(51.0%)
Stupa, West Stupa, East

Total (50%), INPEX
South Mahakam Mandu, Jempang, Production 14,000 3.3 Gas & Condensate
Corporation (50%)
Metulang
Pertamina (20.5%), Saka

Energi (8.91%), China
National Offshore Oil
Southeast
Southeast Sumatra PSC Corporation (65.5%), Production 200,000 Oil & Gas
Sumatra PSC
Kuwait Foreign
(5.0%)
Repsol (3.06%), BP
(37.16%), China National
Tangguh Berau, Muturi, Wiriagar Production Gas
Offshore Oil (13.9%),
Nippon Oil (12.23%), LNG
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
Japan (7.35%), KG Berau /

KG Wiriagar Petroleum
(10%), MI Berau (16.3%)
Uno Dos Rayu

Uno, Dos, Rayu, Seriang, Indrillco (50%), Samudra
KSO, South Production Oil & Gas
Rayu Utara, Petunang Energy (50%)
Sumatra Basin
Amborip VI Block Amborip VI Block Government of Indonesia Suspended Oil & Gas
Arafura Sea Block Arafura Sea Block Government of Indonesia Suspended Oil & Gas
Baronang PSC Baronang PSC Government of Indonesia Suspended Oil & Gas
Batu Gajah PSC Batu Gajah PSC Government of Indonesia Suspended Gas & Condensate
Block Bengkulu I-
Block Bengkulu I-
Mentawai/ Government of Indonesia Suspended Oil & Gas
Mentawai/Mentawai
Mentawai
Block Bukat, East

Block Bukat Government of Indonesia Suspended Oil & Gas
Kalimantan
Block Halmahera II Block Halmahera II Government of Indonesia Suspended Oil & Gas
Block Karama,
Block Karama Government of Indonesia Suspended Oil & Gas
Makassar Strait
Block Semai IV Block Semai IV Murphy Oil (100%) Suspended Gas
Block Tanjung IV,

Central Block Tanjung IV Government of Indonesia Suspended CBM
Kalimantan
Block West Aru I Block West Aru I Government of Indonesia Suspended Oil & Gas
Block West Aru II Block West Aru II Government of Indonesia Suspended Oil & Gas
Block West Papua

Block West Papua I Government of Indonesia Suspended Oil & Gas
I, Kaimana
Block West Papua

Block West Papua III Government of Indonesia Suspended Oil & Gas
III, Fakfak
Chinese Petroleum
Bulungan PSC Bulungan PSC Suspended Oil & Gas
Corporation, Eni
Buton PSC Buton PSC Government of Indonesia Suspended Oil & Gas
Cakalang PSC Cakalang PSC Government of Indonesia Suspended Oil & Gas
East Muriah PSC East Lengo AWE (50%) Suspended Gas
Kuma PSC,
Kuma PSC Government of Indonesia Suspended Oil & Gas
Makassar Strait
Malunda Block,
Malunda Block Government of Indonesia Suspended Oil & Gas
Makassar Strait
Mandar Block Mandar Block Government of Indonesia Suspended Oil & Gas
Merangin I PSC Merangin I PSC Government of Indonesia Suspended Oil & Gas
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
North Makassar North Makassar Strait

Government of Indonesia Suspended Oil & Gas
Strait PSC PSC
North Sumbawa II
North Sumbawa II PSC Government of Indonesia Suspended Oil & Gas
PSC
Obi PSC Obi PSC Government of Indonesia Suspended Oil & Gas
Palangkaraya
Palangkaraya Block Government of Indonesia Suspended Oil & Gas
Block
Rengat PSC,
Rengat PSC NuEnergy Gas (100%) Suspended Oil & Gas
Central Sumatra
Sadang Block Sadang Block Government of Indonesia Suspended Oil & Gas
Sageri Block Sageri Block Government of Indonesia Suspended Oil & Gas
Semai V PSC Semai V PSC Government of Indonesia Suspended Oil & Gas
Sibaru Block Sibaru Block Government of Indonesia Suspended Oil & Gas
South Barito Block South Barito Block Government of Indonesia Suspended Oil
South East Ganal I

South East Ganal I Block Government of Indonesia Suspended Oil & Gas
Block
South East Seram South East Seram Government of Indonesia Suspended Oil & Gas
ConocoPhillips (45%),
Teluk Rendah, Geger
South Jambi B PSC PetroChina (30%), Suspended Gas
Kalong and Bungin
Pertamina (25%)
South Mandar
South Mandar Block Government of Indonesia Suspended Oil & Gas
Block
South Matindok
South Matindok Block Government of Indonesia Suspended Oil & Gas
Block
South Sageri Block South Sageri Block Government of Indonesia Suspended Oil & Gas
South West Bird's

South West Bird's Head
Head Block, Government of Indonesia Suspended Oil & Gas
Block
Salawati Basin
Sunda Strait I
Sunda Strait I Block Government of Indonesia Suspended Oil & Gas
Block
Terumbu PSC Terumbu PSC AWE (100%) Suspended Oil & Gas
Timor Sea Block I Timor Sea Block I Government of Indonesia Suspended Oil & Gas
Titan PSC Titan PSC Government of Indonesia Suspended Oil & Gas
Warim Block Warim Block Government of Indonesia Suspended Oil & Gas
West Sageri Block West Sageri Block Government of Indonesia Suspended Oil & Gas
West Timor PSC West Timor PSC Government of Indonesia Suspended Oil & Gas
Block Bawean Block Bawean MedcoEnergi (100%) Upgrade/EOR Oil
Block Gebong Arbei, Anggor, PT Energi Mega Persada Upgrade/EOR Oil & Gas
Est.Peak
Est.Peak Oil/
Gas
Output
(b/d)
(bcm)
(Gebang JOB PSC) Secanggeng, Gebang (50%), Pertamina (50%)
Perusahaan Daerah
Pertambangan & Energi Upgrade/
Block Rimau Kaji Semoga 68,000 Oil
Sumsel (5%), EOR
MedcoEnergi (95%)
Coastal Plains Kasikan, Zamrud, PT Bumi Siak Pusako Upgrade/

99,000 Oil
Pekanbaru Block Pedada, Beruk (50%), Pertamina (50%) EOR
Meruap KSO,
South Sumatra Meruap KSO Samudra Energy (100%) Upgrade/EOR Oil
Basin
Arahan-Banjarsari,
Pilona TAC, South
Sengkuang, Tanjung Samudra Energy (84%) Upgrade/EOR Oil
Sumatra Basin
Lontar
Upgrade/
Rokan PSC Minas Chevron (100%) 190,000 Light Oil
EOR
Source: Fitch Solutions
Upstream Oil Production

Key View: The state-set crude oil output target for 2021 has been revised down, illustrating persistent challenges within the sector,
and these risks look unlikely to abate in the coming years, as existing assets mature and FDI inflow cools. The long-term outlook
continues to be bearish with the current structural downtrend set to remain in play through to 2030. In spite of reforms introduced
to date, the sector continues to be among the riskiest in the region, due to high regulatory and operational risks and also pervasive
resource nationalism.
Latest Updates
• Indonesia’s crude oil output through August 2021 averaged 665,000b/d, 6% below its original 2021 output target of 705,000b/
d and 7% below 2020’s production.
• Upstream regulator SKK Migas in response has lowered the output target to 665,000b/d, a shaving off of more than 8%, to
account for the sector’s underwhelming performance.
• The sector is mature and there is limited scope for a quick turnaround from the ongoing structural downtrend.
• An ongoing trend of Pertamina and its subsidiaries taking on more responsibilities in the sector, particularly in taking over
mature assets from foreign operators, remains a concern, as spending requirements continue to pile up on the SOE.
• For instance, Pertamina has taken over the Rokan oil block from Chevron in August 2021. It plans to drill 161 new wells in the
block through to the end of 2021, and add another 500 wells in 2022 to stablise output.
• The SOE has also revised up its planned investment into the block to USD3bn (from USD2bn) through to 2025, equivalent to
about USD750mn per annum.
• However, feasibility questions remain as it would represent a massive commitment on the SOE’s part, equaling 28% of its 2021
capex, which itself was more than double its typical annual capex spend averaged during the past five years.
Structural Trends
Indonesia’s crude oil production is forecast to remain on a firm structural decline out to 2030. Falling global oil prices and demand
disruptions arising from the Covid-19 pandemic have triggered a wave of capital spending cuts across the sector, and have
compounded already cooling FDI inflows amid high above-ground risks and limited efficacy of reforms introduced to date.
Upstream capital budgets of most firms in Indonesia should come in stronger in 2021 than compared to 2020’s lows, as pandemic,
demand-side headwinds dissipate. Pertamina is set to lead capital spending in the sector having announced the intention to more
than double its 2020 spending in 2021 to the tune of USD10.7bn. However, the extent to which these will be channeled into new
output growth projects in Indonesia remains to be seen, against rising maintenance costs and large spending commitments across
the value chain.
In contrast, a number of IOCs with sizable operations in Indonesia such as ExxonMobil, Chevron and ConocoPhillips have already
hinted at plans to decrease spending and/or divest stakes in Indonesia-based projects, as strategic focus across these majors shifts
to cutting cost, reducing risks and diversifying into non-fossil fuels. For 2021, upstream regulator SKK Migas expects crude oil lifting
to come in at about 705,000b/d, down 3% from the revised down 2020 figure of 725,000b/d, although actual output could very
well underperform this figure, as the severity of domestic Covid-19 outbreaks continue to hamper business activities and upstream
operations.
Key Oil Assets
Banyu Urip: ExxonMobil's Banyu Urip field in the onshore Cepu block remains a bright spot Indonesia’s embattled oil sector. The
block produces about 216,000b/d, equivalent to more than a quarter of total domestic crude oil production, although is believed to
hold sufficient reserves in place to support an expansion of up to 300,000b/d. Output could increase further on the back of first oil
from the Kedung Keris field in December 2019, which has capacity to produce up to 5,000b/d. Future investments needed to
sustain the block may prove hard to come by, as Exxon reportedly remains keen to make further divestments across its Asia-Pacific
portfolio.
Rokan: The operatorship of Indonesia’s second largest crude block, Rokan in Riau, has been transferred to state-owned Pertamina
from the hands of Chevron after its request to extend the contract was denied by the Indonesian government. Pertamina secured
the 20-year contract for the block in July 2018, after offering USD784mn in signature bonus and investment commitment of
USD500mn. From a peak of about 1mn b/d in the past, output from the block is currently down to about 160,000/d, and expected
to decline further to as low as 140,000b/d, although Pertamina is attempting to stabilise it at around 165,000b/d by the end of
2021.
Pertamina has previously sought to drill up to 44 wells in 2021 to cushion the rate of decline in Rokan's output. Though the
expected number of wells to be drilled still falls short of the estimated 200 wells needed just to maintain the block’s output at status
quo. Pertamina has previously estimated that an investment of up to USD70bn may be needed over its contract duration of 20
years, equivalent to annual injection of about USD3.5bn, or equivalent to more than 58% of its revised down capex for 2020.
East Kalimantan: Pertamina subsidiary PT Pertamina Hulu East Kalimantan (PHKT) assumed operatorship of Chevron’s East
Kalimantan and Attock assets in October 2018, after the supermajor, which had operated the blocks for more than 50 years chose
not to renew its contracts. PHKT has announced plans to invest up to USD79mn annually over 2019-2021 to operate the mature
block, where output has declined to about 11,000b/d, from a peak of 18,000b/d.
Southeast Sumatra: PT Pertamina Hulu Energi (PHE) replaced CNOOC as operator of the Southeast Sumatra oil and gas
block in September 2018, in line with the government’s policy of granting ownership of expiring blocks to the state-owned firm. PHE
will invest up to USD130mn annually through to 2021 on EOR and well workovers at the block, which produces around 31,000b/d
of oil and 137.5mscfd of gas.
Oil Sector Set For Chronic Declines

Indonesia - Oil Production Forecast (2019-2030)
f = Fitch Solutions forecast. Source: SKK Migas, JODI, Fitch Solutions
Pre-FID Projects
A number of pre-FID projects identified in SKK Migas’ annual report on the domestic oil and gas industry shows four projects that
could add as much as 67,000b/d of production by 2025 - project risks are elevated, however.
PRE-FID OIL PROJECTS IN INDONESIA

Project Peak Production, b/d Date Operator(s) Remarks
Bukit Tua Phase 2B 14,000 Q421 Petronas Carigali Ketapang
Malacca Strait Phase I 3,000 - EMP Malacca Strait Delayed from Q22.
Badik & West Badik 3,000 Q222 Pertamina Hulu Energi Nunukan Delayed from Q320 to Q222
Gendalo 20,000 2025 Chevron Delayed from Q422 to 2025
Gehem 27,000 2025 Chevron Delayed from Q223 to 2025
Highly Dependent On Pertamina
Many of Indonesia’s major oil producing blocks are mature and as such susceptible to rapid output declines and rising production
costs, which in turn, render these assets unattractive to foreign investors, many of whom are expected to become more selective in
their asset choices. As the SOE, the responsibility of 1) maintaining and boosting domestic oil and gas production and 2) filling the
investment gap created by much more conservative spending by the IOCs would continue to befall on Pertamina. The SOE had
planned for an aggressive increase in capex in 2020 before market conditions prompted a downward revision, although its new
capex of USD6bn still marks an increase from the USD4.3bn spent in 2019.
The large number of sizable, maturing assets in Pertamina’s portfolio would require investment focus to continue to be on output
maintenance over growth. For instance, the estimated combined annual spend for the Rokan and Mahakam blocks alone, the latter
of which Pertamina took over from Total and Inpex on January 1 2018, is expected to amount to over USD5bn per annum, or over
83% of its estimated capex spent in 2020.
Pertamina’s portfolio of expired blocks previously owned by IOCs is also growing larger. After taking over 10 such blocks over
2018-2019, the SOE will take on a further three projects through to 2021, including the Rokan, Kepala Burung and Salawati . The
growing investment burden is further compounded by Pertamina’s spending needs across other areas of its businesses, including
expanding the domestic refining capacity and distributing oil products nationwide at standardised rates at a loss.
High Risks K
Keep
eep Inv
Invest
estor
orss A
Att Bay
Pertamina’s focus on domestic oil and gas is unlikely to be matched in kind by the IOCs operating in Indonesia, as low oil prices and
shareholder pressures lead to spending cuts and divestment of high-cost, low-return assets. Investment inflows into Indonesia will
continue to be impacted by significant above-ground risks, stemming from its regulatory and bureaucratic environment and
insufficiently attractive licensing terms. The latter has not been addressed, even after the introduction of a new gross PSC in 2017,
which was specifically devised to make the domestic licensing environment more favourable to investors. Growing signs of resource
nationalism also remains a concern, and may underpin further IOC withdrawal from mature, expiring blocks. For instance, a record
25 blocks previously owned by IOCs expired in 2017 without being renewed. This could continue under President Joko Widodo’s
second term in office, with his newly inaugurated cabinet featuring strong advocates of nationalistic policies.
OIL PRODUCTION (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Crude, NGPL & other liquids prod, 000b/d 902.0 871.0 804.2 788.8 765.3 746.9
Crude, NGPL & other liquids prod, % y-o-y 0.8 -3.4 -7.7 -1.9 -3.0 -2.4
OIL PRODUCTION (INDONESIA 2025-2030)
Crude, NGPL & other liquids prod, 000b/d 730.8 718.0 705.4 691.9 679.9 669.0
Crude, NGPL & other liquids prod, % y-o-y -2.2 -1.8 -1.8 -1.9 -1.7 -1.6
Upstream Gas Production

Key View: The outlook for Indonesia’s natural gas production is mixed for the forecast period out to 2030, despite a robust offshore
pipeline, significant above-ground risks and cooling FDI inflows pose risks to future progress of projects.
Latest Updates
• As with that for crude oil, upstream regulator SKK Migas has lowered its production target for natural gas for 2021 amid
underwhelming performance of existing assets.
• In particular, feed gas fields to major LNG terminals have struggled to maintain optimal rates of production due to disruptions
created by Covid-19, next to operational issues and need for maintenance.
• The 2021 target has been lowered to 5,529mmscfd from 5,638mmscfd, 3.4% below 2020’s target.
• The long-term gas production target to 2030 remains highly ambitious at 12,300mmscfd, equivalent to over 127bcm or an
increase of more than 90% from output levels in 2020.
• Indonesia’s upstream projects pipeline as per state regulator SKK Migas includes four ‘national strategic’ projects capable of
producing 65,000b/d of liquids and more than 36bcm of gas at respective peak rates.
• Though how many of these would come online in the current timeline and whether they would reach full potential and whether
those would be sufficient to reverse the overall structural downtrend in production remain to be seen.
• All four projects have already seen deadlines delayed due to operational and financial challenges that have been compounded
by the Covid-19 pandemic.
• In addition, major IOC partners such as Chevron and Shell are planning to exit from the Indonesia Deepwater Development
(IDD) and Abadi LNG, respectively, further complicate the outlooks for these projects.
• FID for the Abadi LNG project, despite securing government approval for its revised development plan in 2019, has again has
been pushed back as lead developer Inpex grapples with Covid-19-related difficulties.
Structural Trends
The outlook for Indonesia’s natural gas production is mixed for the forecast period out to 2030. The market conditions are expected
to improve from the low base set during a pandemic-hit 2020. However, the main factors that have historically held back the sector
including high above-ground risks and rising resource nationalism, have not yet been addressed.
The potential output gains from an otherwise robust offshore projects pipeline stands to be numerous, although attracting
sufficient FDIs to progress these projects will prove challenging in the current risk environment, absent significant reforms. The
long-term gas production target set forth by SKK Migas is highly ambitious at more than 127bcm by 2030, representing about a
90% increase from 2020 levels. However, this contrasts sharply with that of the central government, which anticipates output to
only see a modest increase from current levels to 60bcm by the end of the current decade.
Mahak
Mahakam
am Maint
Maintenanc
enancee TToo Pr
Proove Challenging
The Mahakam block, offshore East Kalimantan, is Indonesia’s biggest source of natural gas. Pertamina has replaced Total as the
operator in January 2018, but has largely struggled to match the IOC in annual investments. Indeed, output from the block is already
fallen to about 662mscfd or 6.8bcm, below Pertamina’s initial target of 1,100mscfd or 11.4bcm. The mature block is believed to
require annual input of about USD2bn, based on previous annual spends by Total and project partners, equivalent to about 41% of
Pertamina entire upstream budget for 2021.
Pertamina had previously announced that it is prepared to allocate about USD1bn per annum to fund maintenance activities at the
block, and the shortfall in capital injections could very well result in the block's decline accelerating even further down the line. The
Indonesia government did attempt to bring back Total and Inpex as minority shareholders in the project, although negotiations
broke down due to the failure to agree on appropriate incentives and share distribution ratios.
Outlook Downbeat, Projects Pipeline Offers Modest Upsides

Indonesia - Gas Production Forecast (2019-2030)
f = Fitch Solutions forecast. Source: JODI, Fitch Solutions
In addition to issues forecast within the Mahakam block, the oil price downturn has triggered a wave of spending cuts and project
delays across the Indonesia upstream. Seven out of 10 natural gas projects worth a combined 2.3bcm that were flagged by SKK
Migas to have targeted first production in 2020 have been postponed indefinitely due to adverse market conditions; risks of further
delays down the line cannot be ruled out as numerous spending obligations stretch Pertamina's finances and spending appetite by
the SOE's project partners remain lukewarm.
SKK Migas has also identified four ‘national strategic’ projects capable of producing 65,000b/d of liquids and more than 36bcm of
gas at respective peak rates - these include the Indonesia Deepwater Development (Gendalo & Gehem), Jambaran Tiung Biru,
Tangguh Train 3 and the Abadi field. Though how many of these would come online in the current timeline and whether they would
reach full potential and whether those would be sufficient to reverse the overall structural downtrend in production remain to be
seen. All four projects have already seen deadlines delayed due to operational and financial challenges that have been
compounded by the Covid-19 pandemic, while planned exits by major IOC partners further complicate the outlooks for Indonesia
Deepwater Development and Abadi LNG.
OIL & GAS PROJECTS PIPELINE IN INDONESIA

Project Peak Oil Peak Gas Peak Gas Planned Start Operator(s) Remarks
Production, Production, Production, Date
'000b/d mmscfd bcm
Bukit Tua Phase 3 31.5 0.3 Q120 Petronas Delayed

Carigali
Grati Pressure Lowering 30.0 0.3 Q120 Ophir Indonesia Completed in

Q120.
Buntal-5 45.0 0.5 Q120 PT Medco Completed in

Energi Q120.
Randu Scissors 5.0 0.1 Q220 PT PHE Completed in

Randugunting Q120.
Betung Compressors 15.0 0.2 Q220 PT Pertamina Delayed
Meliwis 20.0 0.2 Q220 Ophir Indonesia Delayed
PT Sele Raya Belida 2.5 0.0 Q320 Sele Energi Delayed
LP-MP SKG-19 150.0 1.6 Q320 PT Pertamina Delayed
Mahakam Workover 8.0 0.1 Q320 PT Pertamina Delayed
Merakes 4.0 2020 Eni Delayed to

2021
Source: SKK Migas
Key Gas Assets
• BD: The BD gas field, offshore Madura Strait, started production in 2017 and currently produces 1.1bcm. The project is operated
by HCML, a JV between Canada’s Husky Oil and China’s CNOOC. HCML is also leading the development of the MDA-MBH field
in the same block. The field has targeted start-up by 2021, although this has been postponed indefinitely.
• IDD: The Chevron-led IDD project, offshore East Kalimantan, comprises of three PSC blocks, Ganal, Rapak and Makassar Strait.
PSC for the Makassar Strait will not be renewed after the current contract expires in 2020, due to concerns about project
economics. PSCs for the Ganal and Rapak blocks are set to expire in 2027 and 2029, respectively.
• IDD’s Phase I started in August 2016, with first gas from the Bangka field in Kutei basin. The field currently produces around
1.1bcm. Phase II would involve the development of the Gendalo and Gehem fields. Initially scheduled to come online in 2018,
and subsequently by 2022-2023, the fields are now reportedly targeting first gas by 2025. Peak output could reach 11.5bcm. As
of August 2019, disagreements between the government and project stakeholders, which also includes Eni and Sinopec, over
several key issues were still ongoing, including production share.
• Jangkrik: Eni's Jangkrik Development Project, offshore Muara Bakau, will be capable of producing 4-5bcm at peak, supported by
output tie-back from the Merakse field in the vicinity. In April 2018, Eni secured government approval for its plan of
development for the Merakes field, discovered in 2014 just 35km southwest of the Jangkrik field. Merakes is stimated to hold
about 2tcf or 57bcm of gas reserves in place, although Eni has declared a force majeure on all offshore works due to the
Covid-19 pandemic.
• Tangguh: The Tangguh gas fields underpin BP's 7.6mtpa Tangguh LNG export offshore Bintuni Bay, West Papua, and is one of
Indonesia's biggest sources of natural gas. Expansion works are ongoing in the wake of BP's July 2016 decision to go ahead with
the USD8bn addition of a third production train (7.2bcm of additional gas production, and 3.8mtpa of LNG export capacity).
• Works to underpin development of Tangguh T3 will involve the construction of two offshore platforms, 13 new production wells
and accompanying offshore and subsea infrastructure. In July 2019, SKK Migas confirmed that the project would be delayed by
approximately one year to Q3 2021 due to natural disasters and financial constraints faced by certain stakeholders. Though in
March 2020, field works have been put on hold due to enhanced social distancing measures.
Longer-term outlook for Indonesia’s gas production growth remains similarly bearish. As with crude oil, despite proven below-
ground potential and a robust pre-FID projects pipeline, attracting the investment needed to push new projects forward will
continue to prove challenging, as investors remain wary of low oil prices and high risks. Moreover, the growing investment burden
on state-owned Pertamina could see the SOE struggle to fulfill all of its hefty spending requirements across the value chain, hence
posing downside risks to already-declining output from some of Indonesia’s most mature assets.
• Corridor PSC: ConocoPhillips' Corridor PSC, offshore South Sumatra, produces 8.4bcm of natural gas per annum from seven
gas fields, notably the Grissik and Suban. Longer-term outlook for the block beyond Conoco’s current concession term of 2023
remains uncertain. In July 2019, the Indonesia government agreed to extend the Corridor PSC by 20 years to 2043, on the
condition that operatorship for the block be transferred to Pertamina from 2026. Pertamina will also see its share increase to
30% from 10% currently, at the expense of shares that are currently held by Conoco and partner Repsol. In addition, a municipal
entity will reportedly have rights to up to 10% stake in the project.
• South Natuna Block B: Maintaining output from the 2bcm block is likely to prove increasingly challenging for sole operator
and developer PT Medco Energi, following high-profile exits by foreign partners: ConocoPhillips (2016), Inpex (March 2017)
and Chevron (October 2017).
• East Natuna: Despite the potential to be Indonesia's (and Asia's) biggest gas development, with estimated reserves at 1.3tcm
and peak production capacity of over 40bcm, the East Natuna block, offshore Greater Sarawak, is unlikely to make much
progress in the foreseeable future. In particular, the block's high cost structure and difficulty associated with extracting,
processing and storing its extremely high CO2 content natural gas have proven prohibitive for many firms,
including ExxonMobil, Petronas, PTT and Total, all of whom have exited the project, after previously being involved.
Pre-FID Projects
Upstream regulator SKK Migas’ annual report on the domestic oil and gas industry includes seven projects that could add over
1,700mscfd or 18bcm of new production by 2025. However, risks of delays and cancellations remain high, owing to Indonesia's
high-risk above ground environment. As such, these projects are not yet accounted for in our forecasts.
PRE-FID GAS PROJECTS IN INDONESIA

Projects Peak Production, mscfd Date Operator(s) Remarks
MDA & MBH 175 - HCML (Husky Oil, CNOOC) Delayed from Q320.
Jambaran Tiung Biru 190 - PT Pertamina EP Cepu (PEPC) Delayed from 2021.
Bukit Tua Phase 2B 30 Q421 Petronas Carigali Ketapang
Badik & West Badik 60 Q222 Pertamina Hulu Energi Nunukan Delayed from Q320 to Q222
Asap Merah Kido (AMK) 170 2023 Genting Oil Kasuri
Gendalo 700 Q4 2025 Chevron Delayed from Q422 to Q4 2025
Gehem 420 Q4 2025 Chevron Delayed from Q223 to Q4 2025
Abadi 1,750 Q2 2027 Inpex FID likely to be postponed
GAS PRODUCTION (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Dry natural gas production, bcm 65.8 58.7 55.2 54.4 52.7 51.1
Dry natural gas production, bcm, % y-o-y -9.0 -10.8 -6.0 -1.5 -3.0 -3.0
Dry natural gas production, % of domestic consumption 185.4 179.0 164.9 157.0 147.8 138.5
GAS PRODUCTION (INDONESIA 2025-2030)
Dry natural gas production, bcm 49.6 48.1 46.7 45.3 43.9 42.6
Dry natural gas production, bcm, % y-o-y -3.0 -3.0 -3.0 -3.0 -3.0 -3.0
Dry natural gas production, % of domestic consumption 129.5 120.7 113.2 106.6 101.3 97.3
Refining
Key View: Indonesia's refinery runs is set to see a strong rebound in 2022, after remaining depressed for much of 2021 amid strict
pandemic restrictions, soft demand and other operational challenges. The planned, proposed refinery projects pipeline remains
robust and could add more than 1mn b/d of new refining capacity over the coming years, if current development plans can be
realised in full. The impetus to see through new projects is strong, next to the government's desire to cut dependence on imports,
although high project risks pose headwinds.
Latest Updates
• Indonesia’s refining output is struggling amid Covid-19 disruptions. Output has been further affected by several fires across
refineries, a major one at the Balongan facility in March 2021 and another at the Cilacap refinery in October 2021.
• The low base set in 2021 should see refining output stage a solid recovery in 2022 as normal runs are restored, although this is
contingent on concurrent easing of restrictions and upturn in domestic, external demand.
• The number of new Covid-19 cases in Indonesia remains on a rapid decline since suffering major relapses in July and August
2021, and this provides some optimism heading into 2022, but risks remain as vaccination rate remains rather low at 30% and
the year-end holiday season approaches.
• Among individual fuels, the jet fuel sector has been hit the heaviest with output shown to be down more than 90% from pre-
pandemic levels although nascent travel lane negotiations with regional peers offer some promise in spite of slow progress
made to date.
• The long-term plan for the sector continues to be ambitious with multiple expansions and construction of newbuilds planned
down the line.
• The state-led expansion for the sector remains ambitious with more than 1mn b/d of new projects lined to be brought online in
the next seven years (2021-2027).
• The full iteration of the plan would go some way to addressing the large and expanding fuel deficit and import bill, which has
been among President Joko Widodo’s top priorities every year since assuming office in 2014.
• In addition to improving domestic energy supply security, the new refineries will also be configured to produce higher quality
fuels, enabling the transition to Euro-5 standard gasoline, as well as higher mandates of biodiesel and bio-jet fuel to reduce the
need for imports.
• Both Pertamina and the Indonesian government appear aligned in wanting to boost domestic refining capacity, although face
persistent risks stemming from funding constraints, complex regulations and chequered history of working with foreign partners.
• By Pertamina’s own estimation, its refineries pipeline, which comprises two newbuilds and five expansions, is expected to cost
north of USD60bn, or average annual spend of about USD8.5bn stretched out over a seven-year period, far higher than the
USD3.9bn that is expected to be allocated for downstream activities in 2021.
• Of the seven, only three projects – the planned expansions across Balikpapan, Balongan and Cilacap refineries, are factored in
our forecasts based on progress of contract awards and available funding, although there are heightened risks of delays and
cancellations for the overall pipeline.
Structural Trends
Indonesia has seven oil refineries operated by state-owned Pertamina, the Balikpapan, Balongan, Cilacap, Dumai, Kasim, Plaju and
Sungai Pakning. These refineries have a combined refining capacity of 1.1mn b/d. PT Tri Wahana Universal also operates a mini-
refinery in Cepu, East Java, with a capacity of 3,800b/d. Annual refining output typically exceeds 1mn b/d, although this is still
insufficient to meet Indonesia's growing demand for fuels, which is on course to surpass the 2mn b/d mark by 2027. Close to 60%
of the production slate comprises gasoline and diesel.
Do
Downstr
wnstream
eam Plans Ambitious
The Indonesian government launched two programmes pertaining to the downstream sector in July 2014, the Refinery
Development Master Plan and the plan for New Grass Root Refineries. Completion of the eight refinery projects included under the
two programmes would more than double Indonesia’s refining capacity by 2027, while significantly improving the quality of locally
produced refined fuels (from Euro-II to Euro-V), although project risks are significant. However, in spite of strong expressions of
interest from outer-regional parties - mostly Middle East NOCs, most have seen little to no concrete progress, either due to
disagreements over contract terms, or amid concerns about the growing refining capacity overhang in Asia. The same set of risks
are expected to remain in play over our forecast period of 10 years, and for this reason, only projects that have secured foreign
partners and/or means of funding in place are included in our forecasts for the next 10 years. These include the planned expansions
for the Balikpapan, Balongan and Cilacap refineries, as described below:
Pressure Builds For More Refineries

Indonesia - Refining Capacity Forecast (2019-2030)
f = Fitch Solutions forecast. Source: MEMR, JODI, Fitch Solutions
Refinery Upgrades
Cilacap: In May, it was confirmed that Saudi Aramco would pull out of the project, after failing to agree on the project's valuation
despite months of talks. Pertamina initially indicated that it will move forward with the USD4-5bn project alone, although it is
believed to have approached ADNOC for a potential partnership. The planned upgrade will boost Cilacap's total refining capacity by
52,000b/d to 400,000b/d from 348,000b/d, and enable production of Euro-5 compliant fuels. Project completion has been pushed
back to 2027, from 2025 previously.
Balikpapan: Pertamina is fast-tracking the expansion of Balikpapan, Phase I of which is expected to cost USD4bn and involve the
addition of 100,000b/d of new refining capacity in 2023-2025. Phase II will enable the refinery to produce Euro 5 compliant fuels,
from Euro-2 currently, by 2025. In December 2018, Pertamina appointed a consortium comprising of South Korea’s SK
Engineering & Construction, and Hyundai Engineering, along with local firms PT Pembangunan Perumahan and PT
Rekayasa Industri to spearhead the project. In March 2019, Pertamina announced that it has signed an agreement with South
Korean financial institution Korea Trade Insurance Corporation for financial backing to support its plan to upgrade the
Balikpapan refinery.
Balongan: Pertamina will pursue Phase I and II of the project alone following Saudi Aramco’s decision to opt out of the project in
2016. The initial two phase will involve a modest capacity boost of 25,000b/d, next to a slight boost in clean
fuels. Pertamina secured substantial investment from Taiwan’s CPC for the project to the tune of USD22bn for the project's Phase
III, which would see another 90,000b/d expansion of the refinery, next to a huge boost in petrochemcials output. Completion of all
three phases have been pushed back further to 2027, from 2026.
Dumai: In May 2020, Pertamina announced the signing of an MoU with state-owned PT Nindya Karya and a South Korean
consortium led by DH Global, to study the feasibility of the Dumai refinery expansion project, which seeks to add 200,000b/d of
refining capacity.
INDONESIA - PLANNED, PROPOSED REFINERY PROJECTS

Location Project Name Capacity, b/d Status Construction- Main Owner(s)
Completion
East Kalimantan Balikpapan 100,000 Expansion 2023-2025 Pertamina
Java (West) Balongan I & II 25,000 Expansion 2022-2025 Pertamina
Java (West) Balongan III 90,000 Expansion 2026-2027 Pertamina, CPC
East Kalimantan Bontang 300,000 Greenfield - Pertamina
Java (Central) Cilacap 52,000 Expansion 2027 Pertamina
Sumatra (Riau) Dumai 200,000 Expansion 2026 Pertamina, PT

Nindya Karya, DH
Global Holdings
Sumatra (Palembang) Plaju 20,000 Expansion 2023 Pertamina
Java (North) Tuban 300,000 Greenfield 2026 Pertamina, Rosneft
Total - 1,087,000 - - -
Source: Company data, Fitch Solutions
Greenfield Refineries
Tuban: Pertamina and Russia’s Rosneft formed the JV PT Pertamina Rosneft Pengolahan dan Petrokimia in November 2017,
to spearhead development of a USD15bn greenfield refining and petrochemical complex in Tuban, East Java. The refinery, start-up
of which has been delayed to 2024 from 2021 previously, will have a crude processing capacity of 300,000b/d and output capacity
of over 2mtpa for ethylene and aromatics. In October 2019, the JV awarded the basic engineering design and FEED contracts to
Spain’s Tecnicas Reunidas.
Bontang: In April 2019, Oman’s Overseas Oil & Gas signed an agreement to spearhead the development of a 300,000b/d oil
refinery in Bontang, East Kalimantan, for an estimated investment of up to USD14bn. Pertamina will have rights to supply 20% of the
refinery's future crude feedstock, while the remainder will be delivered from Oman. In December 2018, the engineering,
procurement and construction contracts for the project had earlier been awarded to a group of South Korean and domestic firms,
including Hyundai Engineering, SK E&C, PT Rekayasa Industri and PT PP. Completion is targeted by mid-2023.
Diesel Heavy Slate Suits Post-IMO 2020 Environment

Indonesia - % Share Of Refined Fuels Production
Source: MEMR, Fitch Solutions
Fuel Slate
Indonesia’s refining output slate is heavily geared towards diesel, which accounts for about 34% of total fuels production. The fuel is
mostly consumed in industrial processes and for fuelling the domestic vehicle fleet, about 40% of which run on diesel or biodiesel,
as per the B30 biodiesel mandate – highest biofuels mandate in the world - that was rolled out nationwide in December 2019.
The enforcement of IMO 2020 shipping rules from January 2020 is set to drive a modest surge in diesel demand in shipping,
although cost-competitive lower-sulphur fuel oil (LSFO) and very-low sulphur fuel oil are set to provide competition in a price elastic
domestic market.
Indeed, the government had already ordered Pertamina to stock up on LSFO across its Balikpapan, Balongan, Plaju and Tanjung
Priok refining facilities ahead of IMO 2020 implementation. In spite of stricter rules, fully moving away from high-sulphur fuel
oil would prove difficult to achieve, given anticipated challenges in enforcement and as more ships are retrofitted with exhaust gas
cleaning systems or scrubbers over time.
About a quarter of the refining slate is gasoline, comprising of subsidised brands Premium (RON 88), Pertalite (RON 90) and non-
subsidised brands Pertamax (RON 92, 95) and Pertamax Turbo (RON 98). Government efforts to curb the fuel subsidy bill will
increasingly give more weight to the production of non-subsidised, higher-octane gasoline brands over the coming years.
REFINING CAPACITY AND REFINED PRODUCTS PRODUCTION (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Crude oil refining capacity, 000b/d 1,059.0 1,100.0 1,100.0 1,100.0 1,315.0 1,315.0
Crude oil refining capacity, % y-o-y 0.0 3.9 0.0 0.0 19.5 0.0
Crude oil refining capacity, utilisation, % 102.7 100.3 82.2 91.7 79.0 78.2
Refined products production, 000b/d 1,088.0 1,103.0 904.5 1,008.5 1,038.7 1,028.3
Refined products production, % y-o-y 2.5 1.4 -18.0 11.5 3.0 -1.0
Refined products production & ethanol, 000b/d 1,160.9 1,175.9 977.4 1,081.4 1,111.7 1,101.3
Refined products production & ethanol, % y-o-y 2.4 1.3 -16.9 10.6 2.8 -0.9
f = Fitch Solutions forecast. Source: JODI, MEMR, Fitch Solutions
REFINING CAPACITY AND REFINED PRODUCTS PRODUCTION (INDONESIA 2025-2030)
Crude oil refining capacity, 000b/d 1,367.0 1,367.0 1,367.0 1,367.0 1,367.0 1,367.0
Crude oil refining capacity, % y-o-y 4.0 0.0 0.0 0.0 0.0 0.0
Crude oil refining capacity, utilisation, % 78.2 79.8 80.6 81.4 82.2 83.0
Refined products production, 000b/d 1,069.5 1,090.9 1,101.8 1,112.8 1,123.9 1,135.2
Refined products production, % y-o-y 4.0 2.0 1.0 1.0 1.0 1.0
Refined products production & ethanol, 000b/d 1,142.4 1,163.8 1,174.7 1,185.7 1,196.9 1,208.1
Refined products production & ethanol, % y-o-y 3.7 1.9 0.9 0.9 0.9 0.9
f = Fitch Solutions forecast. Source: Company data, JODI, MEMR, Fitch Solutions
Refined Fuels Consumption

Key View: As with refining out, fuel demand in Indonesia is expected to stage a stronger recovery in 2022, next to the easing of
strict Covid-19 restrictions, although contingent on continued progress in vaccinations and no major relapse in new outbreaks. The
long-term outlook is less clear, as the government pursues ambitious decarbonisation goals including planning to reach net zero by
2060; this could result in significant fuel-switching in major fuel-consuming sectors including transport, where integration of
alternative fuels and fleet electrification are being pondered.
Latest Updates
• Indonesia’s fuel demand in 2021 is forecast to suffer a major dip due to Covid-related disruptions.
• A major surge in new infections between July and August 2021 led to stricter mobility curbs being put in place, leading to steep
drop-offs in demand particularly that for gasoline.
• The caseload has however has been in strong decline since then putting in place scope for a strong demand recovery in Q421
and into 2022.
• 2022 is likely to feature a strong rebound in demand from the low bases set in pandemic-hit 2020 and 2021, as improving
vaccine rate allows for rules easing.
• Latest trends in private consumption, retail sales and manufacturing activity already indicate signs of an ongoing recovery in
these segments, which should continue to manifest in 2022.
• However, short-term risks cannot be ruled out including rising inflation fears, owing to tax hikes and high global energy input
prices, and potential for another relapse in outbreaks.
• The long-term outlook has become more uncertain for fuel demand, as Indonesia works towards reaching carbon neutrality by
2060.
• As part of the plan to eliminate emissions from key pollutive sectors, Indonesia is expected to pursue a dramatic transformation
of its transport fuels mix in favor of biofuels and electric vehicles, at the expense of oil-based fuels and natural gas.
• The fleet electrification target calls for 20% of domestic car and motorbike production to consist of electric models by 2025. All
motorbikes sold will need to be electric models by 2040, followed by all cars by 2050, as per state-set targets.
• Indonesia’s low-carbon scenario also calls for biofuels to account for 46% of the road transport fuels mix by 2050. The domestic
biofuels mandate has been raised to B30 (30% palm-oil based fuel) in 2019, but a move up to B40 is being mulled within
government ranks.
Structural Trends
Indonesia's demand for refined fuels will continue to outstrip its refining capacity and output, averaging annual growth of about 3%
over the next decade, alongside continued expansion of the economy and car fleet. Though the short-term outlook remains
downbeat as Indonesia continues to be among the worst affected in the region by the Covid-19 pandemic. The government has
broadly resisted calls to implement national lockdowns and has instead opted to implement restrictions at the provincial level and
micro-lockdowns at the district, or smaller levels. However, measures so far have had limited success in curbing the spread of the
coronavirus with added threat of the more contagious Delta variants posing further risks to the downside for economic recovery
and fuel demand in the months ahead.
The first round of vaccinations began in January 2021, using 1.5mn doses of Sinovac vaccine from China, starting off with medical
workers, public officials and other higher-risk groups. In the same month, the Indonesian government also said it would allow private
firms to procure and distribute their own Covid-19 vaccines, in order to reduce the burden on the state and accelerate pace of
vaccinations across industries. In February 2021, the government announced that Covid-19 vaccines will be made compulsory for
all eligible citizens, with penalties for those that fail to comply. However, in spite of ambitious aims to administer 2.5mn vaccine
doses daily by September and as much as 5mn doses thereafter, the pace of vaccination has been slow at about 1mn doses
administered per day. In addition, the government is aiming to inoculate 181.5mn people, equal to about two-thirds of the
population of about 270mn by the end 2021, although at the time of writing in August, only about 12% of the population were
considered to be fully vaccinated.
Delayed Recovery From Covid-19 To Drive Growth In 2022

Indonesia - Refined Products Production & Consumption Forecast (2019-2030)
Fuel Subsidies To Be Lowered, But Continue
Fuel price regulation and subsidisation continues to be a prominent feature of the Indonesian fuel market. The ‘One Fuel Price
Policy’ continues to be implemented in phases, led by state-owned Pertamina. Introduced in October 2016, the policy is aimed
at providing equal access to subsidised ‘solar’ and ‘premium’ brand diesel and gasoline across the Indonesian archipelago at
standardised rates, by reinforcing lagging distribution and storage infrastructure across remote, frontier areas. By 2019, Pertamina
had established ‘one price policy distribution agencies’ or gas stations across 170 locales, and a further 83 in 2020.
Fuel subsidies remain a highly sensitive issue in Indonesia, and have proven difficult to eradicate, due to potential for political
and consumer backlash. In 2019, the initially reform-minded President Joko Widodo appeared to reverse his stance towards fuel
subsidies. After scrapping subsidies on gasoline and diesel upon taking office in July 2014, he implemented a series of populist
measures in 2018 in the lead up to his re-election in April 2019, including generous fuel subsidies and freezing of electricity rates.
• In March 2018, Indonesia announced the decision to keep pump prices of subsidised fuel (Premium gasoline, Solar diesel) and
electricity rates ‘frozen’ until the end of 2019, in a bid to maintain national purchasing power and shield consumers from rising
international oil prices.
• In April 2018, the government took its policy one step further, announcing that prices for non-subsidised fuels (excluding
aviation fuels, industrial fuels), such as those retailed by Shell, Total and Pertamina, will also be regulated by the government, in
a move to keep inflation under control and keep energy costs low.
These fuel subsidies will be lowered, although not removed, under the President’s second term, as he attempts to redirect subsidy
spending to other areas, such as spending on development, social security, defence and police. Indonesia’s 2021 budget, which was
passed in September 2020, will cut diesel the subsidy by a further 50% to IDR500 per litre, made under the assumption that crude
oil prices will remain low in 2021. The reduction in diesel subsidies is expected to result in government savings of about USD884mn.
The prices of ‘Premium’ brand gasoline (RON 88) will be retained, aiding consumption among lower-income group motorists who
still rely on the grade’s lower rates. Although efforts are being made to boost sales of non-subsidised gasoline, including Pertalite
(RON 90), Pertamax (RON 92) and Pertamax Turbo (RON 98). Pertamina has imposed multiple price discounts for non-subsidised
fuels, in line with the government’s broader goal of reducing fuel subsidies and steering the domestic consumer base towards
cleaner fuels. The government has set a target to phase-out use of Euro-II standard fuels by 2027, and make the transition to the
Euro-V standard.
Transport Fuels Dominate Mix

Indonesia - % Share Of Refined Fuels Consumption
Source: Pertamina, Fitch Solutions
Fuel Transition Underway
Indonesia is forecast to be among the fastest expanding economies in Asia with real GDP growth set to average 4.7% per annum
over the next decade. However, underlying fundamentals are gradually turning away from oil-based fuel consumption, as Indonesia,
like many of its regional peers, also looks towards cleaner energy sources and prepares to make a long-term transition away from
oil-based fuels.
Indonesia has pledged to peak GHG emissions by 2030 and reach carbon neutrality by or before 2060. Efforts to meet these targets
would require substantial efforts across industries and sectors given their fuel-intensive nature with more-pollutive fuels such as
coal and refined fuels set to make way for greater integration of natural gas, renewable sources and biofuel blends.
The automotive sector accounts for the largest share of fuel consumption at present, although in the long-term, the domestic car
fleet is prescribed to evolve to favor biofuels and EVs. The current aim is for EVs to make up about 20% of the domestically
manufactured car fleet by 2025 and for all motorbikes and cars sold within the country to be electric models from 2040 and 2050,
respectively. In addition, biofuel blends are expected to come to account for as much as 46% of the road transport fuels mix by
2050; in comparison, the domestic biofuels mandate currently stands at B30, which is expected to be raised to B40 from late-2022.
These targets are highly ambitious and require significant cooperation and investments across the value chain although does signal
the intention to diversify away from gasoline and diesel in the road transport sector.
In contrast, the outlook for diesel is comparatively more positive than gasoline, given its broad usage across industries and
construction. The Indonesian government has vowed to invest about USD430bn over 2020-2024, an increase from USD359.2bn
spent in 2015-2019, in infrastructure programmes throughout the country, with a particularly focus on transport-related
infrastructure such as roads, rails and ports. Legal, regulatory barriers standing in the way of private sector participation continues to
raise alarm bells and raise the risk of delays and cost overruns for potential investors, although signs of improving investment
overtures from the likes of China, Taiwan and the UAE, is a net positive for the sector.
REFINED PRODUCTS CONSUMPTION (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Refined products consumption, 000b/d 1,797.5 1,571.0 1,523.9 1,645.8 1,728.1 1,788.6
Refined products consumption, % y-o-y 2.6 -12.6 -3.0 8.0 5.0 3.5
REFINED PRODUCTS CONSUMPTION (INDONESIA 2025-2030)
Refined products consumption, 000b/d 1,835.1 1,882.8 1,939.2 1,968.3 1,988.0 2,007.9
Refined products consumption, % y-o-y 2.6 2.6 3.0 1.5 1.0 1.0
Gas Consumption
Key View: As with refined fuels, Indonesia's gas demand is expected to see a solid post-pandemic recovery in 2022 as strict
restrictions are alleviated across the archipelago, allowing for resumption of daily activities. The power sector is forecast to be the
main driver of gas demand growth over the forecast period, although gas looks set to face increasing competition from renewables
sources such as solar and wind, as Indonesia strives towards its net zero 2060 ambitions.
Latest Updates
• Indonesia has committed to stringent climate targets at COP21 including the pledge to reach carbon neutrality by 2060. At the
centerpiece of the long-term plan is to transition away from coal-fired generation, into renewables.
• Indonesia has promised to decommission a quarter of its existing coal capacity by 2030 (about 9.2GW) prior to phasing out coal
altogether in 2040.
• That said, Indonesia’s targets are highly conditional in nature and realisation depends on the ability to secure sufficient foreign
funding to enable the switch away from coal and move into renewables.
• The planned phasing out of coal, as per the government’s decarbonisation scenario, is estimated to require some USD48bn to
retire coal plants, and another USD23bn, to help subsidise oncoming new renewables capacities.
• In addition, the plan to phase out coal also creates a significant mismatch in the current power projects pipeline, where there are
about 13.8GW of new coal capacities that are being prepared to come online during this period.
• There is room for natural gas-based power projects to thrive at least in the initial stages in the place of other renewables such as
solar and wind as investors await clearer and more favorable policies.
• For instance, the government has carved out a place for gas to play a role in moving away from coal, by introducing incentives to
convert old coal and diesel plants to run on gas, and encourage coal gasification.
• The government has also been quick to label several coal gasification plans a ‘national strategic project’ making them eligible for
preferential treatments during permit applications and various tax waivers.
Structural Trends
Consumption of natural gas in Indonesia will increase at an average annual rate of about 3-4% over our 10-year forecast period,
driven by economic growth, continued heavy reliance on gas-fired power generation and rapid expansion of the domestic gas
network for households. For instance, state-owned gas distributor PT PGN has revealed plans to set aside about USD865mn to
connect 4.5mn households to the national gas network by 2025, from about 650,000 households in 2019.
As with fuels consumption, the forecast recovery in gas demand over the course of 2021 and beyond hinges on the shape and
pace of national vaccinations against Covid-19. The ambitious state-set aim is to inoculate two-thirds of the population by the end
of 2021, although efforts have been held back by logistics, bureaucratic headwinds. Only about 12% of the population were
considered to be fully-vaccinated at the time in August 2021, and while the figure is likely set to improve into H2 2021 as more
vaccines are made available, the domestic Covid-19 situation faces a new threat from community spreads of the more contagious
Delta variant of the coronavirus.
The easing of strict restrictions and demand disruptions caused by the pandemic once it is able to, should see energy demand
return to an uptrend relatively quickly, as halted economic activities are permitted to resume. Industrial demand will be driven by the
fertiliser and cement sectors, while a gradual recovery in investment inflows and private consumption should support growth in the
construction and food processing segments. Gas used as inputs for LNG liquefaction processes looks secure, as most of Indonesia's
exports are secured on long-term contracts. Gas as a transport fuel remains negligible, and room for further growth looks to be
limited as biofuels and EVs take up a greater percentage of the transport fuels mix.
Growth To Taper Off After Post-Pandemic Rebound

Indonesia - Gas Production & Consumption Forecast (2019-2030)
The power sector will also be a key driver of gas demand going forward, although gas’ long-term fate has become more uncertain in
light of Indonesia’s zero emissions goals. The sector is already the third largest gas consuming sector in Indonesia after LNG
liquefaction and industry. Coal remains the dominant power source but plans are expected to be made to curb power generation
from the pollutive fuel, as Indonesia strives towards peak GHG emissions by 2030 and reach carbon neutrality by or before the 2060
deadline. However, as phasing out the fuel looks set to prove immensely difficult given the current large dependence on it for power
generation and the sheer volume of already-approved coal-fired power projects in the pipeline, Indonesia’s is likely to require a
greater lean on carbon capture tech and for lagging developments across the renewables space to accelerate to compensate.
Indonesia’s long-term net zero roadmap places comparatively little emphasis on gas-fired generation in the future power mix and
only expects for it to account for 10% of the power mix by 2050, from the current 22%.
In the short to medium-term, gas use for power will be supported by aforementioned efforts to expand the domestic gas
distribution network, and plans to subsidise gas prices for certain industrial segments. In 2016, President Joko Widodo issued
Presidential Decree 40/2016 on natural gas price determination. The decree allows for gas prices to be lowered by a maximum of
USD2 per 1mnBTU, if gas prices are higher than USD6/mnBTU. Seven sectors were selected to benefit from the decree, namely
ceramics, fertiliser, glassmaking, oleo-chemical, petrochemicals, rubber glove and steel, although by early 2019, only the fertiliser,
petrochemicals and steel sectors were benefitting from lower gas prices. Several additional measures are being mulled by the
government to lower gas prices for the remaining sectors, including ordering domestic oil and gas producers to priortise supplying
gas to state-owned PGN, as in the manner of crude oil sales and state-owned Pertamina, or introducing a domestic market
obligation (DMO) policy, under which producers will be required to sell a percentage of their output to the domestic market at the
government’s benchmark prices.
LNG, Industrial Sectors Biggest Gas Consumers

Indonesia - % Share Of Natural Gas Consumption
Note: Excludes gas exports. Source: MEMR, Fitch Solutions
In addition, the government has rolled out incentives to encourage coal gasification. In 2020, the government lowered the royalty
rate for downstream coal producers to 0% on the condition that they process coal into dimethyl ether, a synthetic alternative to
diesel and LPG, and also a petrochemicals feedstock. In addition, value added tax exemptions will be offered for such coal
processing services and from local content requirements, to encourage private, foreign participation in the sector. The government
has also been quick to label several coal gasification plans a ‘national strategic project’ making them eligible for preferential
treatments during permit applications and various tax waivers.
GAS CONSUMPTION (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Dry natural gas consumption, bcm 35.5 32.8 33.5 34.6 35.7 36.9
Dry natural gas consumption, % y-o-y -5.3 -7.6 2.0 3.5 3.0 3.5
GAS CONSUMPTION (INDONESIA 2025-2030)
Dry natural gas consumption, bcm 38.3 39.8 41.2 42.5 43.3 43.8
Dry natural gas consumption, % y-o-y 3.8 4.0 3.5 3.0 2.0 1.0
Oil Trade
Key View: Indonesia will continue to be a net importer of crude oil and refined fuels throughout the duration of our forecast period
due to insufficient domestic production and rising demand. If realised, the ambitious expansion plans for the downstream sector
would go a long way towards alleviating the deficit in fuels, although at the expense of opening an even larger deficit in crude.
Crude Oil Trade Forecast
Latest Updates
• An expanding biofuels mandates poses a risk to future diesel imports.

• Indonesia has implemented the B30 biodiesel mandate in 2019, saving billions in import bill and creating sustainable demand for
domestic palm oil, as per the government’s statement.
• A higher B40 mandate had been mulled for 2021 or 2022 but now faces hurdles in the form of soaring palm oil prices.
• The current deficit in refined fuels is forecast to increase steadily over the next decade as refining output proves insufficient to
meet rising demand.
• This will provide added impetus for the government and Pertamina to deliver on the ambitious refining capacity expansion
plans, more so due to the lofty aim to stop importing fuels by 2030, although with domestic crude oil production in a perpetual
struggle this risk exacerbating the deficit in crude oil.
Structural Trends
Indonesia is a former member of the OPEC and a net exporter of crude oil, although declining production and waning exports have
led the country to suspend its membership in 2008. Indonesia reactivated its membership in 2015, while still being a net importer of
crude, only to freeze its membership once again at the end of 2016, citing inability to comply with coordinated output cuts by the
group. Indonesia's oil production is not expected to return to a sustained uptrend within our 10-year forecast period, as existing
assets mature and upstream investment slows, and this will ensure that the country remains dependent on crude imports, despite
state efforts to cut dependence on them. Efforts to push through large upgrades and capacity expansions in the downstream would
also increase the need for imported feedstock, absent a significant surge in domestic production.
Impor
Importt Dependenc
Dependencee Not Going Anywher
Anywheree
As mentioned, Indonesia has sought to trim imports of oil imports in recent quarters, both by asking domestic crude producers to
channel their supply to Pertamina and expanding the mandated biofuel content in diesel and jet fuel, so as to reduce fuel import
volumes. Earlier in 2018, Indonesia introduced Ministerial Regulation No.42/2018 (MR42/2018), which directed Pertamina to boost
crude purchases from domestic fields, and oil contractors operating in Indonesia to offer their crude output first to Pertamina,
before considering exports elsewhere. In 2020, the government slashed the SOE’s crude import quota to 50mn bbl, 30mn bbl lower
than what the firm had requested, although it appeared ready to move away from this strategy in 2021, with Pertamina announcing
the target to boost crude imports by some 50% in the year albeit from the low base set in 2020. This plan however has hit a snag
due to the severity of the Covid-19 outbreak in Indonesia, as well as continued struggles in regional markets that are also struggling
to contain local outbreaks and have seen recoveries in demand derailed from initial timelines
Crude Deficit Set To Expand, More Refineries Needed

Indonesia - Crude Oil Net Exports Forecast (2019-2030)
Note: Negative implies imports; f = Fitch Solutions forecast. Source: JODI, Fitch Solutions
The four of Saudi Arabia, Nigeria, Malaysia and Australia accounted for about 88% of Indonesia’s total crude imports in 2020 and
remain well-positioned to maintain market shares. Exports from OPEC+ look set to gradually rebound over subsequent quarters, as
concerted OPEC+ output cuts are pared back, allowing others in the group such as Angola, to provide competition. Pertamina has
also shown preference for lighter sweet grades, due to higher light distillate yields and blending purposes, and this could benefit
grades such as the US WTI. Pertamina purchased US WTI for the first time in 2018 and has increased purchases every year since,
accepting about 3.1mn bbl through to 2020 to be processed at its Cilacap refinery, and has not ruled out further ramping up
purchases should pricing, logistic conditions make sense.
Heavy Dependence On OPEC Crudes

Indonesia - % Share Of Crude Oil Imports
Source: Trade Map ITC, Fitch Solutions
Indonesia also exports crude and condensates primarily to Asia, namely to Japan, Singapore, South Korea and Australia, as
geographic distances between certain oil production sites and demand centres makes exports more economic versus internal
consumption. However, persistent production declines and rising demand will increasingly weigh on long-term exports. Greater
reliance on domestic crudes due to MR42/2018 will also decrease Indonesia’s crude exports, forcing major Asian buyers of
Indonesian crudes to find substitutes.
CRUDE OIL NET EXPORTS (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Crude & other liquids net export, 000b/d -186.0 -232.0 -100.2 -219.7 -273.4 -281.4
Crude & other liquids net export, % y-o-y 12.0 24.7 -56.8 119.2 24.4 2.9
CRUDE OIL NET EXPORTS (INDONESIA 2025-2030)
Crude & other liquids net export, 000b/d -338.6 -372.9 -396.4 -420.8 -444.1 -466.1
Crude & other liquids net export, % y-o-y 20.3 10.1 6.3 6.2 5.5 5.0
Refined Fuels Trade Forecast
Structural Trends
Indonesia suffers from a substantial deficit in refining capacity, and as such, remains reliant on imports for over 40% of total annual
fuel requirements. At the current projected rate of demand growth, this would climb to almost 50% by the end of our forecast
period in 2030, even after factoring in new output from new refining capacity additions down the line.
Full realisation of the government’s ambitious downstream capacity expansion plan envisions the construction of more than 1mn
b/d of new refining capacity by 2027, enough to enable Indonesia to be self-sufficient in refined fuels, although risk of delays and
cancellations remain high. According to our data, net imports of refined fuels are forecast to climb above the 900,000b/d mark by
2030, from about 468,000b/d in 2020. Government efforts to reduce imports and rein-in the current account deficit pose
downside risks to fuel imports, although as with crude oil, low prices may see this strategy take a backseat for the foreseeable future.
In April 2020, Pertamina was reported to be stockpiling fuels on floating tankers, to capitalise on low prices.
Fuel Deficit Set To Deepen As Demand Grows

Indonesia - Refined Products Net Exports Forecast (2019-2030)
Note: Negative implies imports; f = Fitch Solutions forecast. Source: JODI, Fitch Solutions
Indonesia’s fuel imports primarily comprise gasoline, due to insufficient refining output and growing demand from a large, growing
passenger car fleet. The domestic refining slate is oriented around lower-octane gasoline (RON 88), contributing to a slight deficit in
RON 90 gasoline – RON 90 is the most popularly consumed gasoline grade in Indonesia, according to MEMR statistics. The bulk of
gasoline imports originate from Singapore, and to a smaller extent Malaysia and South Korea.
Imports of diesel and jet fuel, although not large in volumes, have faced sporadic bans in previous months, as the government
sought to curtail imports. Sluggish demand, next to an expanded domestic biofuels mandate, paint a bearish near-term outlook,
although the outlook for the medium term is stronger, as industrial demand and infrastructure investments emerge from Covid-
related headwinds.
Plans to promote stronger LPG use across households and in petrochemical processes pose upside risks to future LPG imports,
notably as domestic production of the fuel remains small in volume terms. In July 2019, Pertamina agreed to collaborate with
UAE’s ADNOC to develop additional LPG storage sites in Indonesia, in anticipation of higher demand. Indonesia also imports
significant volumes from the US and Qatar. Traditional LPG volumes from Iran are likely to be diluted among other existing suppliers,
due to US sanctions in place.
Singapore Dominates Fuel Imports

Indonesia - % Share Of Refined Fuels Imports
Indonesia obtains most of its fuels imports from fellow Asian countries, led by Singapore, which controls an overwhelming
percentage of the market share. Malaysia and South Korea are also material contributors – the former’s market share should
strengthen, due to added output from the 300,000b/d RAPID refinery, which is expected to commence full commercial operations
by the start of 2020. A relentless surge in Chinese fuel exports have the potential to stifle the import mix, particularly as Beijing
insists on a policy of exporting the surplus, instead of run cuts, though imports from China currently only constitute a minor share.
REFINED FUELS NET EXPORTS (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Refined products net exports, 000b/d -709.5 -468.0 -619.4 -637.3 -689.3 -760.2
Refined products net exports, % y-o-y 2.7 -34.0 32.4 2.9 8.2 10.3
Refined products net exports, USDbn -17.5 -7.3 -16.7 -16.9 -18.5 -20.9
REFINED FUELS NET EXPORTS (INDONESIA 2025-2030)
Refined products net exports, 000b/d -765.6 -791.9 -837.5 -855.5 -864.1 -872.7
Refined products net exports, % y-o-y 0.7 3.4 5.8 2.2 1.0 1.0
Refined products net exports, USDbn -21.8 -22.8 -24.1 -24.6 -24.9 -25.1
Gas Trade
Key View: Indonesia’s natural gas balance is forecast to flip into a small deficit starting from 2030 as declining production lags
expanding gas use across industries, power generation and households. Pipeline gas exports to Singapore are currently scheduled
to end in 2023 with no plans for an extension, as the latter plots a full transition to LNG.
Latest Updates
• Indonesia’s pipeline exports in 2021 look set to be weighed down by output disruptions in gas fields in the West Natuna area,
which in turn, has affected sales to Singapore.
• The resolution of the issue could see near-term restoration in pipeline flows, although the longer-term outlook for pipeline sales
is still pessimistic, with contracts in place with Singapore set to begin to roll off from 2023, and the latter shifts to LNG.
• LNG export volumes are also due to come in lower in 2021 due to multitude of disruptions across feed gas fields.
• The Merakes field has been shut in from October 2021 due to sanding issues and is not expected to return to production until
mid-2022.
• This will affect exports through the Bontang LNG terminal which primarily serve customers in Japan.
• Tangguh LNG is also producing below optimal rate after a boiler leak in May 2021. The start-up of its third production train has
been delayed to Q2 2022 from September 2021 due to Covid-19 disruptions.
• Donggi Senoro LNG also only returned to normal production in October 2021, after undergoing a major maintenance
programme from September.
Structural Trends
LNG Exports
Indonesia has three operating LNG export terminals across East Kalimantan (11.5mpta, Bontang), West Papua (7.6mpta, Tangguh)
and Central Sulawesi (2.0mpta, Donggi Senoro), with a combined total annual export capacity of 21.1mtpa (28.7bcm). Output from
the eight-train Bontang LNG is operating below optimal capacity, due to output declines from its primary feed gas source, the
Mahakam block. Indonesia exported 17.5bcm of LNG in 2020, down 11% year on year, due to output declines and added
downsides from the pandemic, and this looks set to be an ongoing trend over subsequent years, as domestic production continues
to fall, and rising demand requires a greater percentage of output to be sold to the domestic market, at the expense of exports.
Post-FID Pipeline
The commissioning of BP’s third production train at its Tangguh LNG project in West Papua has been further delayed, after natural
disasters and financial issues led completion to be pushed back by a year to 2022, from 2021. Tangguh T3 will have maximum
processing capacity of 3.8mtpa or 5.2bcm. FID for the project was made in July 2016. 75% of T3's output will be consumed
domestically, as per the sales agreements with Kansai Electric and state-owned PLN.
LNG Imports
As LNG export volumes decline, Indonesia would need to step up LNG purchases to compensate. This is expected to see the
country become a net importer of LNG by 2027. As an archipelago, Indonesia requires and is in the process of developing several
LNG import facilities at strategic locations, to complement investments into gas pipelines for effective gas distribution. Indonesia
has in place LNG regasification facilities with combined capacity of 8.3mpta (11.3bcm) across four projects, in Bali, North Sumatra,
South Sumatra and West Java. A further 3.4mtpa worth of projects remain in the pipeline, targeting start-ups over 2021 and 2022,
although project deadlines are likely to have been altered in light of deteriorating market conditions.
Gas Surplus Diminishing Amid Declining Output, Rising Demand

Indonesia - Gas Net Exports Forecast (2019-2030)
Negative implies imports. f = Fitch Solutions forecast. Source: GIIGNL, JODI, Fitch Solutions
Pre-FID Projects
Indonesia’s continued inability to get major projects off the ground remains a major concern for Indonesia’s LNG sector, and limits
the scope for further expansions beyond Tangguh Train 3:
Abadi LNG
A case in point is the long-delayed approval process for the Masela PSC, which contains the Abadi gas field.
• 2010: SKK Migas approved operator Inpex’s first plan of development (POD) based off the use of a floating LNG technology.
• 2015: In September, Inpex submitted a revised POD to expand the project’s liquefaction capacity to 7.5mtpa from 2.5mtpa, after
drilling results confirmed total recoverable gas reserves of some 22tcf in place. Estimated project cost was deemed to be
USD16bn.
• 2016: In April, the Indonesia government requested Inpex to re-submit the POD for Abadi LNG to be developed as an onshore
project. The onshore option would cost some USD4bn more at USD20bn, and involve the construction of a 180km subsea
pipeline across the earthquake prone zone in the Indian Ocean, to transport gas from Abadi to Tanimbar.
• The onshore concept received heavy backing from then Minister for Maritime Affairs Rizal Ramli, who believed that an onshore
project would bring added benefits of spurring developments of ancillary industries, capable of generating an estimated
USD6.5bn in annual revenues, compared with USD2.5bn for offshore.
• 2018: In March, Inpex announced that it would look to commence pre-FEED works based on an onshore concept with annual
LNG production capacity of 9.5mtpa, in addition to drafting a revised POD for submission to authorities.
• 2019: In July, Inpex announced that it has secured approval from the Indonesian government for its revised development plan
for the long-delayed Abadi LNG project to progress as an onshore project. The firm also announced the extension of its current
PSC for the broader Masela block by 20 years to 2055.
• 2020: In February, two MoUs were signed to supply gas to PLN and PT Pupuk Indonesia in the future. PLN will off-take about
2-3mtpa of LNG, and PT Pupuk about 1.6bcm, mostly for domestic use. In March, Inpex secured a plot of land on the Nustual
Island from the Maluku provincial government, to be used for construction of onshore portion of Abadi LNG.
• 2021: In August, Inpex confirmed that FID for the project was likely to be delayed once again as Covid-19 had disrupted
necessary survey works and adjustments to the project design had to be made in light of tighter environmental regulations.
Sengkang LNG
In November 2018, Energy World Corporation (EWC) secured government approval to extend its Sengkang PSC for 20 years.
EWC’s 0.5mpta Sengkang LNG project in South Sulawesi is reportedly 80% complete and is preparing to come on stream once
ongoing supply negotiations with PLN is concluded.
Trade Partners
86% or 18.2mtpa of Indonesia’s LNG output is contracted to buyers on medium- to long-term contracts. A quarter of these or
4.6mpta are contracted to domestic firms, including Pertamina, PT Nusantara Regas and PLN, and these volumes are either
exported or retained for domestic consumption. Among international off-takers for Indonesia's LNG, Japan is the biggest trade
partner accounting for 37% of total exports. Japan’s JERA along with a host of utility firms have stakes in all three of Indonesia’s LNG
projects, in addition to numerous medium- to long-term contracts in place.
China and South Korea hold market shares of 33% and 20% each. US-based Sempra LNG has a 20-year agreement for 3.7
mtpa from BP’s Tangguh LNG, although 3.4mtpa of this is divertible. The bulk of Indonesia’s uncontracted volumes are sold on a
spot basis to Taiwan, Thailand and Singapore, while sporadic cargoes were seen heading to Mexico over 2019. Indonesia also signed
agreements to supply LNG to Bangladesh and Sinopec of China in October 2018 and November 2019 respectively.
As for LNG imports, Pertamina has four contracts in place to import about 3mtpa (4.1bcm) of LNG on an annual basis from
Mozambique LNG in Mozambique and Corpus Christi LNG in the US, and from the portfolios of Chevron and Woodside Petroleum,
and will not be short of options should the need arises.
Exports Dependent On Asia Markets

% Share Of LNG Imports & Exports
Pipeline Gas Exports
In addition to LNG exports, Indonesia also exports about 7.9mtpa (10.7bcm) natural gas annually via undersea pipelines to
Singapore and Malaysia from gas fields in South Sumatra and West Natuna.
GAS NET EXPORTS (INDONESIA 2019-2024)

Indicator 2019 2020 2021f 2022f 2023f 2024f
Dry natural gas net exports, bcm 30.3 25.9 21.7 19.7 17.1 14.2
Dry natural gas net exports, % y-o-y -12.9 -14.5 -16.1 -9.2 -13.5 -16.6
Dry natural gas net exports, USDbn 9.7 5.3 7.3 6.8 5.9 5.1
Pipeline gas net exports, bcm 6.9 7.6 6.2 6.0 6.0 0.0
Pipeline gas net exports, % y-o-y -6.8 10.1 -18.4 -3.2 0.0 -100.0
Pipeline gas net exports, % of total 0.2 0.3 0.3 0.3 0.4 0.0
LNG net exports, bcm 23.4 18.3 15.5 13.7 11.1 14.2
LNG net exports, % y-o-y -14.6 -21.8 -15.2 -11.6 -19.5 28.7
LNG net exports, % of total gas exports 0.8 0.7 0.7 0.7 0.6 1.0
f = Fitch Solutions forecast. Source: JODI, GIIGNL, Fitch Solutions
GAS NET EXPORTS (INDONESIA 2025-2030)
Dry natural gas net exports, bcm 11.3 8.3 5.4 2.8 0.6 -1.2
Dry natural gas net exports, % y-o-y -20.6 -26.8 -34.3 -48.6 -79.1 -300.3
Dry natural gas net exports, USDbn 4.2 3.1 2.0 1.0 0.2 -0.4
Pipeline gas net exports, bcm 0.0 0.0 0.0 0.0 0.0 0.0
Pipeline gas net exports, % of total 0.0 0.0 0.0 0.0 0.0 0.0
LNG net exports, bcm 11.3 8.3 5.4 2.8 0.6 -1.2
LNG net exports, % y-o-y -20.6 -26.8 -34.3 -48.6 -79.1 -300.3
LNG net exports, % of total gas exports 1.0 1.0 1.0 1.0 1.0 1.0
f = Fitch Solutions forecast. Source: GIIGNL, JODI, Fitch Solutions
Industry Risk/Reward Index

Asia Upstream Oil & Gas Risk/Reward Index
Key View: Upstream markets with significant oil and gas reserves in place and sizeable current hydrocarbon production continue
to outperform in the Asia Upstream Risk/Reward Index (RRI) this quarter, with Australia and China remaining atop the rankings for
consecutive quarters. The two are among few markets in the region still seeing meaningful progress and interest in the exploration
space, with development and investment trends in both showing preference for natural gas over crude oil, both due to more ample
below-ground availability of the former and growing decarbonisation efforts across the industry and region.
Large Reserves Underpin Outperformance

Asia - Upstream Risk/Reward Index Heat Map
Note: Scores out of 100; higher score = more attractive market. Source: Fitch Solutions
Main Regional Features And Latest Update
• As a region, Asia ranks fifth out of six regions in our global Upstream Risk/Reward Index (RRI), trailing Latin America and Central
and Eastern Europe, and outperforming Sub-Saharan Africa.
• Australia continues to be the top performing upstream market in Asia due to significant oil and gas reserves and still-ample
opportunities in mature offshore areas.
• However, the rising cost structure of projects and slowing investments into greenfields – amid preference for brownfield
developments – pose slight risks.
• China’s scores remain largely unchanged from the previous quarter, and it remains a formidable upstream market featuring
immense below-ground reserves and strong output growth potential, particularly in natural gas.
• The strong state mandate across the sector means it remains relatively closed off to foreign investors, although it also means
top-down state-led efforts – such as calls on SOEs to boost unconventional gas exploration and production – have higher
chances of bearing fruit.
• Pakistan climbs up materially in the rankings buoyed by ongoing state-led efforts to boost exploration via launching new
licensing rounds, although in order to attract more FDIs more improvements must be made to the regulatory landscape and
current licensing terms.
• Cambodia sees a major deterioration in its score as output activities at the offshore Apsara field – its first oil producing asset –
have seemingly come to an end, following poor well performance and the lead operator filing for liquidation.
Australia, China Ahead Of Chasing Pack

Asia - Upstream Risk/Reward Snapshot
Australia Retains Mantle, China Scores Stable
Australia continues to be the top performing upstream market in Asia despite slight drop-offs in Industry Rewards. The combined
size of below-ground oil and gas reserves remain among the largest in the region propping up its performance in the RRI, although
as exploration opportunities move out to deeper, costlier offshore areas, both the number of significant new discoveries and
exploration expenditure are seeing notable slowdowns.
There is potential for Australia’s hydrocarbon production to outperform expectations in the coming quarters with greater synergies
in the natural gas space helping to move projects forward. Leading oil and gas producers Woodside Petroleum and Santos have
each merged upstream operations with BHP Billiton and Oil Search respectively, and are expected to focus combined resources
and expertise into boosting natural gas production and LNG exports.
China’s scores remain largely unchanged from the previous quarter, although recent acute nationwide shortages in coal and gas
have again brought to light China’s chronic vulnerability to international supply chain disruptions and price swings. This is expected
drive its SOEs to double down even harder on ensuring domestic energy supply security, with heavy focus being given to boosting
supplies of natural gas, as per the central government’s aggressive decarbonisation plans.
As an upstream market, China continues to be a highly promising investment destination albeit relatively closed off from FDIs. A rule
change in 2020 means foreign firms are no longer required to form JVs with SOEs prior to engaging in oil and gas exploration and
production, although in practice, the new provision has been leveraged sparingly. The next wave of oil and gas output growth in
China will derive from unconventional gas sources such as shale gas and coal-bed methane (CBM). These still only make up a minor
percentage of the total output, despite China holding some of the largest below-ground reserves of either in the world, although
developments look poised to accelerate over the coming quarters next to national decarbonisation efforts.
Rewards Outweighing Risks

Deviation Of Risk & Reward Scores vs Asia Average Score
Pakistan Scores Strengthen, Offshore Developments In EMs Face Risks
Pakistan sees the most improvement in overall RRI scores due to a better reserves outlook. Exploration efforts are accelerating with
a new oil and gas licensing round being prepared for an end-year launch, following the recent launch of a previous one in 2020.
Though foreign investor interest continues to be subdued with domestic entities claiming most of the available open blocks. The
production outlook is not particularly attractive although there are some untapped opportunities in shale. The regulatory landscape
remains in a state of flux with measures being devised to reduce security costs for oil and gas firms and a new state-owned
upstream regulator having been approved to be set-up.
Papua New Guinea (PNG) and Thailand are others to rise in rankings, although the rise of both appears to have more to do with
declines in the scores for the likes of Vietnam and Indonesia rather than any major improvement in fundamentals. Indeed, the sharp
resurgence in Delta variant Covid-19 infections has triggered strict restrictions to be re-enacted across Asia’s emerging markets,
disrupting oil and gas operations and undermining sentiment. The offshore-focused nature of upstream opportunities in Vietnam
and Indonesia also led to a sharper decline in FDIs, as firms sought to reduce risks, exposing output to sharper decline rates.
Malaysia’s score remained largely intact, due to a strong offshore projects pipeline and improving working relations between
Petronas and Petros.
PNG’s output growth ceiling had been adjusted lower in the previous quarter due to stalled development of the P’nyang field, and
this remains unchanged. The planned development of Elk-Antelope, however, should still be enough to carry its LNG exports to
another leg higher in the coming decade. Nonetheless, PNG continues to be among the riskiest upstream markets in Asia, more so
due to the government’s hardline stance during natural resource project negotiations.
Thailand’s oil and gas output growth outlook along with that of many of its regional peers remains subdued in the near term as
pandemic challenges bite, next to more structural headwinds. Gas production from the large Erawan field continues to trend lower
amid an ongoing contractual dispute between PTT and operator Chevron prior to the former’s scheduled take-over of the mature
asset in April 2022. PTT has sought to counter this by raising output from other mature fields but has only attained partial success.
Laggards Struggle To Replace Decline Of Flagship Assets

Philippines, Cambodia & Timor-Leste vs Asia Average
Cambodia Oil Dr
Dream
eam Pr
Prooves Shor
Short-Liv
t-Lived
ed
Another to see a major deterioration in its score is Cambodia. The first oil dream from the offshore Apsara field has proved to be
short-lived as field performance has severely underperformed initial expectations and operator KrisEnergy has proceeded to file
for liquidation. It remains unclear whether field activities will continue, although sentiment within the sector is poor with the
Cambodian Prime Minister Hun Sen himself calling its first attempt at extracting oil a failure. In addition to this, the regulatory and
licensing landscape is far from ideal, requiring operators to take on significant project risks and cost burden at a time when risk
appetite among oil and gas firms is at a premium.
The Philippines’ scores come in slightly stronger this quarter due to stronger-than-anticipated output performance from the sole
producing Malampaya field. This follows new operator Santos’ recent infill drilling programme across the mature field. However, this
only provides a temporary reprieve for the struggling upstream sector - having no other major upstream asset to depend on besides
the declining Malampaya remains a concern for the Philippines, as it faces up to the prospect of a rising import bill and acute energy
supply shortages. The lifting of the exploration moratorium in the South China Sea (West Philippine Sea) has not yet resulted in any
material boost in offshore activities, likely due to continued opposition from China, although expressions of interest from domestic
firms to restart oil and gas prospecting works have been plentiful.,
Timor-Leste is struggling to replace rapidly depleting output from its sole producing Bayu-Undan gas and condensate field.
However, potential for successful commercialisation of the Greater Sunrise fields remains bleak amid lack of enthusiasm from either
of the remaining stakeholders Woodside and Osaka Gas. In addition, the appointment of Greater Sunrise/Tasi Mane critics to
key positions within the petroleum sector also does little to support the outlooks for either projects.
ASIA UPSTREAM RISK/REWARD INDEX

Industry Country Industry Country Regional Global
Rewards Risks RRI
Rewards Rewards Risks Risks Rank Rank
Australia 67.3 85.2 74.5 74.6 89.1 77.5 74.8 1 2
China 81.4 38.3 64.2 72.5 80.8 74.2 65.2 2 10
India 66.1 52.3 60.6 54.4 66.4 56.8 60.2 3 16
Malaysia 62.4 45.5 55.7 63.8 79.6 67.0 56.8 4 25
Papua New
40.8 72.1 53.3 34.8 16.7 31.2 51.1 5 33
Guinea
Thailand 37.0 66.0 48.6 60.3 65.3 61.3 49.9 6 35
Indonesia 56.6 36.6 48.6 56.3 67.7 58.6 49.6 7 37
Pakistan 39.9 64.8 49.8 48.3 28.9 44.4 49.3 8 40
Vietnam 52.8 43.2 49.0 41.5 69.5 47.1 48.8 9 41
New Zealand 17.6 82.6 43.6 72.7 96.0 77.3 47.0 10 46
Myanmar 26.8 61.7 40.8 31.8 11.3 27.7 39.4 11 57
Brunei 33.0 35.0 33.8 51.7 67.1 54.8 35.9 12 61
Philippines 14.1 58.7 31.9 61.3 60.8 61.2 34.8 13 62
Cambodia 4.4 55.4 24.8 18.6 39.9 22.9 24.6 14 64
Timor-Leste 6.2 44.4 21.5 36.3 27.8 34.6 22.8 15 71
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 50.0 ~ ~
Regional
40.4 56.1 46.7 51.9 57.8 53.1 47.3 ~ ~
Average
ASIA UPSTREAM INDUSTRY REWARDS

Oil Gas Discoveries Hydrocarbon Hydrocarbon Production Industry
Reserves Reserves Rate Production Growth Rewards
Australia 50.7 83.1 75.4 81.7 47.9 67.3
China 83.1 93.0 84.5 94.4 54.9 81.4
India 64.8 67.6 51.4 76.1 69.0 66.1
Malaysia 66.2 66.2 51.4 73.2 50.7 62.4
Papua New
67.6 59.2 41.5 49.3 63.4 40.8
Guinea
Thailand 29.6 28.2 41.5 59.2 25.4 37.0
Indonesia 52.1 71.8 75.4 71.8 11.3 56.6
Pakistan 25.4 33.8 75.4 28.2 22.5 39.9
Vietnam 33.8 54.9 36.6 54.9 15.5 52.8
New Zealand 8.5 19.7 33.1 21.1 5.6 17.6
Myanmar 16.9 57.7 15.5 32.4 8.5 26.8
Brunei 42.3 36.6 15.5 39.4 26.8 33.0
Philippines 18.3 25.4 15.5 11.3 1.4 14.1
Cambodia 2.8 3.5 15.5 1.4 87.3 4.4
Timor-Leste 2.8 0.0 15.5 8.5 0.0 6.2
Global Average 50.0 50.0 50.0 50.0 50.0 50.0
Regional
37.7 46.7 42.9 46.9 32.7 40.4
Average
ASIA UPSTREAM COUNTRY REWARDS

State Asset Ownership Competitive Landscape Infrastructure Integrity Country Rewards
Australia 95.1 64.8 95.8 85.2
China 14.1 15.5 85.2 38.3
India 20.4 62.0 73.2 52.3
Malaysia 14.1 49.3 73.2 45.5
Papua New Guinea 47.2 35.2 45.8 72.1
Thailand 47.2 77.5 73.2 66.0
Indonesia 7.7 56.3 45.8 36.6
Pakistan 78.2 73.2 63.4 64.8
Vietnam 78.2 70.4 45.8 43.2
New Zealand 95.1 94.4 58.5 82.6
Myanmar 78.2 84.5 21.1 61.7
Brunei 2.8 43.7 58.5 35.0
Philippines 47.2 83.1 45.8 58.7
Cambodia 47.2 97.9 21.1 55.4
Timor-Leste 14.1 97.9 21.1 44.4
Global Average 50.0 50.0 50.0 50.0
Regional Average 45.8 67.0 55.2 56.1
ASIA UPSTREAM INDUSTRY RISKS

Royalties Income Tax Licence Type Bureaucratic Environment Legal Environment Risk Industry Risks
Australia 56.3 38.0 84.5 97.2 97.2 74.6
China 77.5 93.0 28.9 87.3 76.1 72.5
India 60.6 18.3 84.5 53.5 54.9 54.4
Malaysia 43.7 56.3 50.0 80.3 88.7 63.8
Papua New Guinea 35.2 36.6 28.9 58.5 48.6 34.8
Thailand 50.7 19.7 84.5 81.7 64.8 60.3
Indonesia 90.8 77.5 12.7 48.6 52.1 56.3
Pakistan 79.6 26.8 28.9 22.5 16.2 48.3
Vietnam 43.7 33.8 84.5 48.6 31.0 41.5
New Zealand 28.9 51.4 84.5 100.0 98.6 72.7
Myanmar 28.9 66.9 12.7 45.1 5.6 31.8
Brunei 36.6 21.1 50.0 69.0 81.7 51.7
Philippines 90.8 99.3 28.9 42.3 45.1 61.3
Cambodia 28.9 26.8 12.7 14.8 9.9 18.6
Timor-Leste 69.0 76.1 12.7 9.9 14.1 36.3
Global Average 50.0 50.0 50.0 50.0 50.0 50.0
Regional Average 54.7 49.4 45.9 57.3 52.3 51.9
ASIA UPSTREAM COUNTRY RISKS

Long-Term Short-Term Long-Term Political Short-Term Political Operational Country
Economic Risk Index Economic Risk Index Risk Index Risk Index Risk Index Risks
Australia 88.7 87.3 93.0 78.9 91.5 89.1
China 94.4 93.0 73.2 87.3 69.0 80.8
India 67.6 85.2 67.6 70.4 60.6 66.4
Malaysia 83.1 95.8 66.2 67.6 88.7 79.6
Papua New
77.5 71.1 62.0 90.1 62.0 16.7
Guinea
Thailand 81.7 77.5 40.8 54.9 73.2 65.3
Indonesia 66.2 71.1 60.6 60.6 64.8 67.7
Pakistan 15.5 31.7 22.5 12.7 8.5 28.9
Vietnam 36.6 19.7 29.6 11.3 35.2 69.5
New
95.8 94.4 94.4 94.4 97.2 96.0
Zealand
Myanmar 11.3 8.5 5.6 2.8 21.1 11.3
Brunei 54.9 46.5 56.3 98.6 80.3 67.1
Philippines 78.9 81.7 57.7 62.0 49.3 60.8
Cambodia 18.3 28.9 47.9 59.2 36.6 39.9
Timor-Leste 14.1 54.2 19.7 33.8 22.5 27.8
Global
50.0 50.0 50.0 50.0 50.0 50.0
Average
Regional
59.0 63.1 53.1 59.0 57.4 57.8
Average
Please Note: Our Risk/Reward Indices are updated frequently; as a result, scores in this section may not match scores in the rest of
the report.
Asia Downstream Oil & Gas Risk/Reward Index

Key View: There is just one change in the upper rung of the Asia Downstream Risk/Reward Index (RRI) this quarter. India, Australia
and China maintain their places in the top three, joined by Malaysia which climbs above Taiwan to fourth. Asia’s overall score for
Industry Reward takes a hit this quarter, due to the persistent downside impact on demand from Delta variant infections and the
highly uneven shape of vaccinations and demand recoveries across markets. The number of refinery closures have also been rising
across the region, as smaller, less sophisticated facilities struggle to compete amid pandemic-related headwinds and competition
from larger, more modern plants elsewhere throughout the region.
Large Demand Markets Outperforming

Asia - Downstream Oil & Gas Risk/Reward Index Heat Map
Main Regional Features And Latest Updates
• As a region, Asia ranks second in our Downstream Risk/Reward Index (RRI), behind North America and Western Europe due to
lower Country Rewards and overall risk scores.
• Asia’s score for Industry Rewards of 55.9 this quarter marks a decline from 56.6 in the previous quarter, as persistent Delta variant
outbreaks and a slow pace of vaccinations weigh on demand recoveries across a number of markets.
• In addition, Industry Reward scores for several markets have seen downward revisions due to a slew of refinery closures brought
on by prolonged periods of weak demand amidst the pandemic and stiff competition from larger, more modern export-oriented
refineries being constructed across the region.
• Looking past the immediate downside risks posed by the pandemic, Asia continues to be an attractive downstream market for
potential investors, supported by large, populous emerging economies with strong fuel demand growth potential.
• Asia’s score of 50.3 for Country Rewards slightly outperforms the global average, although overall performance is held in check
by the dominance of SOEs in several large emerging markets and the out-sized influence of a few giant conglomerates in the
developed markets that limit room for new entrants.
• As with the upstream, there is significant disparity between the Risks scores of several highly developed refining powerhouses in
Asia, such as South Korea and Singapore, and those of the emerging markets.
• Australia’s strong performance in the RRI continues to be an anomaly, as excellent Risks scores continue to mask subpar rewards
on offer. The fuel market is large yet highly mature, offering little room for further incremental demand growth down the line.
• Malaysia climbs to fourth place above Taiwan, in anticipation of the return of strong runs as the newly commissioned RAPID
complex is due to return to full operation sometime in Q421 following prolonged outages over 2020.
• Myanmar takes massive hits to its Risks scores, in light of the coup that began in February 2021. Further downsides could be in
play, as a prolonged coup could inflict further damages onto the broader economy, level of demand and business operations.
• Ambitious refining capacity addition plans in the likes of Indonesia, Pakistan and Vietnam pose upside risks to Rewards scores in
the subsequent quarters, although realisation remains highly contingent on each government’s abilities to secure sufficient
foreign capital and reduce risks.
• Frontier markets with limited downstream capability remain the chronic underperformers in our Downstream RRI. Despite
reasonable untapped growth opportunities on offer, significant cost and regulatory hurdles stand in the way of progressing
major projects.
India, Australia In Front, China Close Behind

Asia - Downstream Risk/Reward Index
India Maintains Top Spot, Malaysia Climbs To Fourth
There is just one change in the upper rung of the Asia Downstream Risk/Reward Index (RRI) this quarter. India, Australia and China
maintain their places in the top three, joined by Malaysia which climbs above Taiwan to fourth. The improvement in Malaysia’s scores
in the RRI is based on anticipation of better refinery runs in the months ahead as the newly commissioned RAPID complex returns
to normal operation. RAPID, which came online at the end of 2019, has remained shut since a fire in March 2020, and missed the
initial restart deadline of Q121 due to tightening of nationwide Covid-19 restrictions in Malaysia.
RAPID is now expected to return to full operation by Q421 adding 300,000b/d to Malaysia’s crude oil refining capacity and
strengthening its net fuel exports. On the demand front, improving vaccination rates are allowing the Malaysian government to
begin to ease restrictions but our outlook for the sector continues to be cautious for the months ahead as new Delta variant
infections continue to be elevated. Petronas has made public its bearish view of near-term downstream fundamentals, due to its
expectation for the recovery in transport fuel demand to be fragile and volatile. Being a mature market, further refining capacity
additions do not appear likely, as Petronas begins to prioritise developments in petrochemicals and low-carbon energy areas, as part
of a long-term strategy to diversify away from oil and gas and reach net zero by 2050.
Top scoring market India’s downstream fundamentals remain strong. The number of new Covid-19 infections continues to follow a
rapid declining trend since recording new highs during Q221’s sharp surge, and is expected to stabilise further in the coming
months as vaccination rates improve. India continues to outpace regional peers in Industry Rewards boasting a large refining sector,
population and in turn, size of fuel demand, although this helps to mask higher risks for businesses to navigate.
It consistently scores poorly across a number of different risk categories including ‘logistics risk’ and ‘operational risk’ especially
when compared to developed market peers. In addition, the continued provision of fuel subsidies for LPG and kerosene, next to
regulations over prices of motor fuels, drag on the score for the ‘fuel subsidies’ metric, while the dominance of
SOEs Indian Oil, Hindustan Petroleum and Bharat Petroleum in the sector continues to see India having among the lowest
scores in the region for ‘state asset ownership’, rivalling other state-heavy markets such as China, Indonesia and Malaysia.
Strong Risk Scores Mask Limited Rewards In Australia
Australia maintains its second-place ranking above China despite seeing material drop-offs in its Rewards scores in the past few
quarters due to a series of recent refinery closures and the impact of persistent Delta variant outbreaks on demand. Australia’s
refining capacity has been halved from where it stood prior to the Covid-19 pandemic in 2019 leaving it that much more vulnerable
to import price swings and supply disruptions. Its strong performance in the Index continues to be an anomaly as its high ranking is
almost entirely due to excellent Risks scores that help to mask subpar rewards. Australia scores well above the regional average for
both Industry and Country Risks, a function of its stable economic and political risk outlooks and fully-liberalised downstream
market with no state intervention.
In contrast, sector fundamentals continue to underwhelm. The aforementioned downsizing of the refining sector aside, Australia’s
fuel market is large but highly mature and thus offers little room for further growth, while a sparse population distribution across a
large landmass makes transportation and distribution costly and logistically challenging.
Apart from Australia, Asia has seen a slew of refinery closures over 2020 and 2021, partly due to headwinds created by the Covid-19
pandemic and fresh threats from the Delta variant, but also as the region’s smaller and less-sophisticated refineries find it difficult to
compete with larger, more modern export-oriented refineries being brought online across the region. New Zealand and the
Philippines have suffered hits to their Reward scores due to refinery closures, while Singapore and Japan are also due to see scores
penalised in subsequent quarters amid plans for sector rationalisation and move towards alternative fuels.
Strong Risk Scores Helping To Mask Softer Rewards

Deviation Of Risk & Reward Scores vs Asia Average Score
China Fundamentals Strong Albeit Long-Term Risks To Downside
The opposite dynamic is in play in China, where we expect refining capacity additions over the next three to four years to be among
the most aggressive and robust in the region. This growth will be partly due to state-driven efforts to improve domestic fuel supply
security, but also efforts among the country’s SOEs and independents to move up the value chain and leverage export
opportunities out to the region. In spite of the current slower pace of economic growth amid the pursuit of a more sustainable,
gentler growth model, China’s fuel demand growth prospects over the next decade continue to be excellent, although downside
risks are forming from the clear intention within government ranks and among the SOEs to gradually integrate non-oil alternatives
into the national fuel mix amidst a broader energy transition.
EMs Still Struggling To Contain Delta Variant, But Expansion Plans Pose Upsides
Another to move up the rankings materially this quarter is Singapore, which moves to ninth from 11th. However, the move appears
to be borne of others seeing reductions in their scores than any positive improvements in downstream fundamentals in Singapore,
where persistent Covid-19 restrictions and planned capacity cuts and long-term decarbonisation initiatives charted away from oil
pose downside risks to future scores.
Allowing Singapore to move up higher is the drop-offs in scores for the likes of Indonesia, Pakistan and Vietnam, reflecting the heavy
impact of Delta variant infections in the respective markets on refining operations and pace of fuel demand recovery. However, all
three have ambitious refining capacity expansions into the next decade albeit realisation depends in large part on the governments'
abilities to attract sufficient investments. The adoption of a new refining sector law in the latter, next to stronger incentives for
investors and a supportive regime, paves the way for more FDIs and pose risks to the backlog of projects in the pipeline.
High Risks, Limited Rewards

Myanmar, Cambodia & Timor-Leste vs Asia Average
Myanmar Risks Undermine Expansion Ambition
There is no change at the bottom of our RRI this quarter where Myanmar, Cambodia and Timor-Leste continue to be the regional
downstream sector laggards. Myanmar’s score for Country Risks is by far the lowest in the region in light of the ongoing domestic
political turmoil, next to economic and social headwinds from Covid-19 and a slow pace of vaccinations. Myanmar previously
harbored plans to add several new refining facilities in the next few years, receiving investments from the Middle East and China, but
the outlook for these has darkened with foreign investors likely to be warier of the increased risks.
The construction of new refineries could help to shore up the scores of Cambodia and Timor-Leste in a similar manner although
the risks are immense. The start of first oil production for Cambodia in December 2020 could herald new investments into the
domestic oil and gas space in the coming years, although proposals for first refineries in either countries have yet to gain any real
traction despite being in the works for some time.
ASIA DOWNSTREAM RISK/REWARD INDEX

Industry Country Industry Country Regional Global
Rewards Risks RRI
Rewards Rewards Risks Risks Rank Rank
India 79.1 55.1 71.9 48.4 57.3 52.8 70.0 1 3
Australia 67.2 64.3 66.3 78.8 85.1 82.0 67.9 2 5
China 70.6 45.8 63.2 57.7 74.2 65.9 63.5 3 9
Malaysia 70.9 42.1 62.3 61.0 71.7 66.3 62.7 4 11
Taiwan 62.8 52.2 59.6 84.3 89.6 87.0 62.3 5 13
South Korea 64.5 42.7 58.0 88.7 90.1 89.4 61.1 6 17
Thailand 67.2 47.4 61.3 54.4 56.2 55.3 60.7 7 18
Japan 60.6 45.2 56.0 88.2 79.9 84.1 58.8 8 22
Singapore 57.1 50.7 55.2 89.8 90.5 90.2 58.7 9 23
Vietnam 61.1 54.8 59.2 45.6 62.2 53.9 58.6 10 24
Pakistan 53.6 79.9 61.5 37.9 24.2 31.0 58.4 11 26
Philippines 55.0 63.9 57.7 41.2 52.6 46.9 56.6 12 29
Indonesia 60.0 51.8 57.6 36.8 58.5 47.7 56.6 13 30
Papua New
53.1 57.9 54.5 35.7 13.9 24.8 51.5 14 42
Guinea
Hong Kong 41.2 50.4 44.0 87.6 82.2 84.9 48.1 15 52
New Zealand 41.7 47.1 43.3 81.6 93.2 87.4 47.7 16 54
Brunei 55.5 15.6 43.5 34.1 60.1 47.1 43.9 17 62
Myanmar 32.1 60.8 40.7 31.9 9.2 20.5 38.7 18 73
Cambodia 32.6 47.4 37.0 23.1 33.2 28.2 36.1 19 82
Timor-Leste 32.1 30.0 31.5 20.9 23.4 22.1 30.5 20 90
Global Average 50.0 50.0 50.0 50.0 50.0 50.0 49.9 ~ ~
Regional
55.9 50.3 54.2 56.4 60.4 58.4 54.6 ~ ~
Average
ASIA DOWNSTREAM INDUSTRY REWARDS

Fuel Regional
Refining Utilisation Domestic Life Span Of Theoretical Net Industry
Demand Fuel
Capacity Rates Fuel Demand Infrastructure Crude Exports Rewards
Growth Demand
India 96.7 96.7 97.8 95.6 87.4 78.6 1.1 79.1
Australia 46.2 69.2 76.9 38.5 87.4 78.6 73.6 67.2
China 98.9 65.9 98.9 52.7 87.4 90.7 0.0 70.6
Malaysia 71.4 89.0 72.5 70.3 87.4 86.8 18.7 70.9
Taiwan 74.7 63.7 79.1 56.0 87.4 69.8 8.8 62.8
South
95.6 74.7 94.5 10.4 87.4 86.8 2.2 64.5
Korea
Thailand 84.6 93.4 80.2 45.1 87.4 69.8 9.9 67.2
Japan 93.4 60.4 95.6 5.5 87.4 78.6 3.3 60.6
Singapore 76.9 48.4 82.4 3.3 87.4 90.7 11.0 57.1
Vietnam 59.3 39.6 64.8 69.2 87.4 78.6 28.6 61.1
Pakistan 56.0 25.3 62.6 79.1 87.4 34.1 30.8 53.6
Philippines 38.5 30.8 60.4 98.9 87.4 34.1 35.2 55.0
Indonesia 78.0 52.7 87.9 58.2 87.4 34.1 22.0 60.0
Papua New
22.0 46.2 8.8 60.4 87.4 90.7 56.0 53.1
Guinea
Hong Kong 4.9 5.5 56.0 14.3 87.4 69.8 50.5 41.2
New
17.6 39.6 10.4 87.4 48.9 46.2 41.7
Zealand
Brunei 52.7 47.3 11.0 100.0 87.4 63.7 26.4 55.5
Myanmar 25.3 12.1 35.2 1.6 87.4 6.0 57.1 32.1
Cambodia 4.9 5.5 20.9 34.6 87.4 20.9 53.8 32.6
Timor-
4.9 5.5 0.0 52.7 87.4 13.7 60.4 32.1
Leste
Global
50.0 49.5 50.0 50.0 50.0 50.0 50.0 50.0
Average
Regional
55.1 49.0 61.3 47.9 87.4 61.2 29.8 55.9
Average
ASIA DOWNSTREAM COUNTRY REWARDS

State Asset Ownership Population Population Growth Country Rewards
India 17.0 98.9 49.5 55.1
Australia 90.7 48.4 53.8 64.3
China 12.1 100.0 25.3 45.8
Malaysia 12.1 54.9 59.3 42.1
Taiwan 90.7 47.3 18.7 52.2
South Korea 40.1 71.4 16.5 42.7
Thailand 40.1 81.3 20.9 47.4
Japan 40.1 90.1 5.5 45.2
Singapore 90.7 20.9 40.7 50.7
Vietnam 40.1 85.7 38.5 54.8
Pakistan 69.2 95.6 74.7 79.9
Philippines 40.1 87.9 63.7 63.9
Indonesia 7.1 96.7 51.6 51.8
Papua New Guinea 69.2 27.5 76.9 57.9
Hong Kong 90.7 25.3 35.2 50.4
New Zealand 90.7 13.2 37.4 47.1
Brunei 2.7 0.0 44.0 15.6
Myanmar 69.2 73.6 39.6 60.8
Cambodia 40.1 39.6 62.6 47.4
Timor-Leste 12.1 2.2 75.8 30.0
Global Average 50.0 50.0 50.0 50.0
Regional Average 48.2 58.0 44.5 50.3
ASIA DOWNSTREAM INDUSTRY RISKS

Logistics Risk Fuel Subsidies Industry Risks
India 59.3 37.4 48.4
Australia 74.7 83.0 78.8
China 78.0 37.4 57.7
Malaysia 84.6 37.4 61.0
Taiwan 85.7 83.0 84.3
South Korea 94.5 83.0 88.7
Thailand 71.4 37.4 54.4
Japan 93.4 83.0 88.2
Singapore 96.7 83.0 89.8
Vietnam 53.8 37.4 45.6
Pakistan 38.5 37.4 37.9
Philippines 34.1 48.4 41.2
Indonesia 52.7 20.9 36.8
Papua New Guinea 12.1 59.3 35.7
Hong Kong 92.3 83.0 87.6
New Zealand 80.2 83.0 81.6
Brunei 60.4 7.7 34.1
Myanmar 15.4 48.4 31.9
Cambodia 25.3 20.9 23.1
Timor-Leste 4.4 37.4 20.9
Global Average 49.9 50.0 50.0
Regional Average 60.4 52.4 56.4
ASIA DOWNSTREAM COUNTRY RISKS

Long-Term Short-Term Long-Term Political Short-Term Political Operational Country
Economic Risk Index Economic Risk Index Risk Index Risk Index Risk Index Risks
India 51.6 69.2 59.3 64.8 49.5 57.3
Australia 86.8 84.1 89.0 72.5 89.0 85.1
China 87.9 90.1 63.7 86.8 58.2 74.2
Malaysia 75.8 76.4 58.2 59.3 80.2 71.7
Taiwan 98.9 100.0 76.9 81.3 90.1 89.6
South Korea 100.0 98.9 90.1 82.4 84.6 90.1
Thailand 74.7 63.7 34.1 41.8 61.5 56.2
Japan 69.2 57.1 93.4 88.5 85.7 79.9
Singapore 78.0 79.1 85.7 100.0 100.0 90.5
Vietnam 65.9 59.3 54.4 90.1 51.6 62.2
Pakistan 29.7 24.2 24.2 9.9 28.6 24.2
Philippines 63.7 74.7 50.5 49.5 38.5 52.6
Indonesia 71.4 68.1 52.7 51.1 53.8 58.5
Papua New
14.3 25.3 17.6 11.0 7.7 13.9
Guinea
Hong Kong 83.5 95.6 41.8 74.7 98.9 82.2
New
93.4 92.3 91.2 93.4 94.5 93.2
Zealand
Brunei 36.3 38.5 49.5 97.8 69.2 60.1
Myanmar 5.5 4.4 4.4 5.5 17.6 9.2
Cambodia 22.0 23.1 39.6 53.3 30.8 33.2
Timor-Leste 12.1 45.1 16.5 29.1 18.7 23.4
Global
50.0 50.0 50.0 50.0 50.0 50.0
Average
Regional
61.0 63.5 54.6 62.1 60.4 60.4
Average
Please Note: Our Risk/Reward Indices are updated frequently; as a result, scores in this section may not match scores in the rest of
the report.
Indonesia Upstream Oil & Gas Risk/Reward Index

Key View: Indonesia boasts a sizeable proven hydrocarbon reserves base and production, although these are overshadowed by
myriad above-ground risks, stemming from a complex regulatory environment, multi-layered bureaucracy, red tape and operational
risks. The upstream sector is heavily dominated by state-owned Pertamina, while upstream policies continue to lean in favour of the
SOE, reducing competition and squeezing growth opportunities for new entrants.
RRI Matrix Breakdown

Indonesia & Asia Region - Upstream Risk/Reward Index By Component
Note: Scores out of 100, where a higher score = a more attractive market. Source: Fitch Solutions
Global And Regional Ranks
• Regional rank (out of 15): 7th

• Global rank (out of 72): 36th
Key Features And Latest Updates
• Indonesia boasts the fifth and second largest proven oil and gas reserves in Asia, and this is reflected in the country’s solid
performance under the Industry Rewards metric.
• The size of Indonesia’s current oil and gas production is large, relative to regional peers, although projected declines over our
forecast period significantly drags on its score for 'hydrocarbon production growth'.
• The upstream sector is heavily dominated by state-owned Pertamina, while upstream policies continue to lean in favour of the
SOE, reducing competition and squeezing growth opportunities for new entrants.
• Upstream contracts in Indonesia now have added flexibility to choose between the new gross-split production sharing contract,
introduced in 2017, and the previous cost-recovery regime, as part of government efforts to lure more investors into the sector.
• The upstream investment climate continues to be high-risk, as reflected by mediocre scores for 'bureaucratic environment',
'legal environment risk' and Operational Risk.
Significant Risks Undermine Below-Ground Rewards

Country & Industry Risks & Rewards
Note: Scores out of 100, where a higher score = a more attractive market. Source: Fitch Solutions
Indonesia Downstream Oil & Gas Risk/Reward Index

Key View: Indonesia’s refining sector is large and benefits from direct access to a growing consumer market for refined fuels and
petrochemical products, although existing refineries are old and remain in dire need of upgrades. As with the upstream, the
dominance of Pertamina reduces competition and limits opportunities for new market entrants, unless as part of a JV with the state-
owned enterprise.
RRI Matrix Breakdown

Indonesia & Asia Region - Downstream Risk/Reward Index By Component
Note: Scores out of 100, where a higher score = a more attractive market. Source: Fitch Solutions Downstream Risk/Reward Index
Global and Regional Ranks
• Regional rank (out of 20): 13th

• Global rank (out of 92): 30th
Key Features And Latest Updates
• Indonesia’s refining sector is large and benefits from direct access to a growing consumer market for refined fuels and
petrochemical products.
• However, existing refineries are old – on average over four decades old – and this weighs on its score for 'life span of
infrastructure'.
• As with the upstream, the dominance of state-owned Pertamina and its subsidiaries in the downstream limits competition and
detracts from the sector's overall investment appeal.
• While the government will continue to trim fuel subsidies over the coming years, budgeting for a 50% reduction in diesel
subsidies in the 2021 budget, fuel price controls in Indonesia are unlikely to subside anytime soon, given its political sensitivity.
• Fuel subsidies on 'premium' brand gasoline and 'solar' brand diesel will be maintained, next to reinforced subsidies on LPG. This
informs the underwhelming score for Fuel Subsidies.
• Indonesia's downstream sector is high-risk, and this is indicated by below-average scores for Logistics Risk, Short- and Long-
Term Political Risks and Operational Risk.
State Dominance, Fuel Price Controls Weigh On Scores

Country & Industry Risks & Rewards
Note: Scores out of 100, where a higher score = a more attractive market. Source: Fitch Solutions Downstream Risk/Reward Index
Market Overview
Energy Market Overview
The Ministry of Energy and Mineral Resources is responsible for policy formation and implementation in the field of energy and
mineral resources, including oil and gas. The Special Task Force for Upstream Oil and Gas Business Activities is an institution
established by the Government of the Republic of Indonesia in 2013 to manage the upstream oil and gas business activities.
NOC Pertamina maintains a dominant position over all oil and gas up activities in the country, holds operatorship of all of Indonesia's
refineries, and is the sole buyer of crude oil in Indonesia.
Regulatory Structure
Key Legislation
Indonesia's oil and gas sector is regulated by Oil and Gas Law No.22/2001. The objective of the law is as follows:
• Ensure effective, efficient, competitive and sustainable oil and gas exploration and exploitation
• Ensure fair, transparent business competition in processing, transportation, storage and trading activities
• Ensure effective, efficient supply of oil and gas as an energy source, and to meet domestic demand
• Support and promote national capacity to be more competitive at the regional, international levels
• Increase state revenue
• Create jobs, enhance public welfare in a fair, equitable manner, while maintaining the conservation of the environment.
Relevant Government Ministries
The Ministry of Energy and Mineral Resources is responsible for policy formation and implementation in the field of energy and
mineral resources, including oil and gas.
Regulatory Bodies
Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) is an institution established by the Presidential
Regulation No. 9/2013 to control upstream activities and manage oil and gas contractors on behalf of the Indonesian government
through joint cooperation contracts, predominantly production sharing contracts.
BPH Migas was established in December 2002 to assume downstream regulatory duties from state-owned PT Pertamina, and is
responsible for ensuring sufficient natural gas and refined fuel supplies for domestic consumption, and the safe operation of
refining storage, transportation and distribution of gas and petroleum activities via business licenses.
National Oil Company
Pertamina is a state-owned integrated energy supply company, with extensive influence across the domestic upstream,
midstream and downstream markets. As the owner of all of Indonesia's refineries, the NOC is the sole buyer of crude oil in Indonesia.
Pertamina also has upstream operations in Vietnam, Malaysia, Sudan, Qatar and Libya, and has expanded its scope to include
renewables and geothermal operations.
Plans are underway to transform Pertamina into a state-owned oil and gas holding company. President Joko Widodo is expected to
sign the relevant regulations to formalise the plan. Pertamina will lead the resulting holding company, which will have the following
four sub-holdings:
• Natural gas - Pertamina's natural gas unit PT Pertamina Gas (Pertagas) will be merged with state-owned gas distributor PT
Perusahaan Gas Negara (PGN), creating an entity controlling more than 9,500km of gas pipelines nationwide.
• Marketing
• Upstream - PGN's upstream arm PT Saka Energi Indonesia will operate under the supervision of the upstream sub-holding,
along with Pertamina's upsteram subsidiaries PT Pertamina Hulu Energi and PT Pertamina EP.
• Downstream
Fiscal Regime
UPSTREAM TAX REGIME

Corporate Income Tax Royalties Fees And Bonuses Branch Profit Tax Export Duties Import Duties
25% None Depend on PSC terms 20% None None
Source: EY
Oil And Gas Exports
Under legislation introduced in 2011, companies are to conduct the sale of oil and gas output via Indonesian banks, regardless of
where the transaction takes place or what currency sales are conducted in. Jakarta gave an ultimatum to firms to comply by June
2013, or risk their right to oil and gas exports.
Licensing Regime
LICENSING REGIME
Main Contract State Local Content Domestic Supply Stabilisation Arbitration Other Key
Type Participation Requirement Requirement Clause Licensing Terms
PSC Yes 35-90% 25% Yes ICSID -
Source: EY
Licensing
The government holds the power to issue licence rights. Blocks are awarded on a PSC basis and generally conform to the following
rules:
• Contract valid for a maximum of 30 years, extendable to a maximum of 20 years.

• Validity period includes both exploration and production.
• Exploration period to last for six years; can be lengthened up to another four years.
• Licences to be returned to the government if firms fail to meet stated target in development plan five years after exploration.
• Seismic and other details obtained to be state property.
• Up to 25% of total production to be set aside for domestic needs.
Local Content Requirement
In May 2013, stricter local content requirements were introduced. They will raise local content criteria from about 35% on average
to a range of 35-90%.
NEW LOCAL CONTENT REQUIREMENT

Activity Type Previous New Implementation
Drilling Land 35% 70% After 2016
Sea 35% 40% After 2016
Offshore Engineering, Procurement, Construction and Installation Sea 35% 45% After 2016
Shipping Services - 35% 75% 2013
Survey, Seismic and Geology Studies Land 35% 90% After 2020
Sea 35% 35% After 2020
Other services - 35% 75% After 2020
Source: Baker McKenzie
New Gross-Split PSC
Introduced in January 2017 under Ministerial Regulation No.8/2017, and made compulsory for new contracts and contract
extensions, Indonesia’s new gross-split PSC for oil and gas contracts are in use across 37 concessions, albeit most are operated
by Pertamina and its upstream subsidiaries.
Initial industry response to the new PSC was lukewarm, amid belief that the proposed production splits and adjustment
components were less favourable to investors than the previous cost-recovery model, and did not include sufficient incentives for
the development of marginal fields, mature fields, EOR projects, fields located in remote, frontier zones and natural gas projects.
After consultation with industry stakeholders, the government issued amendments to its new PSC in September 2017 under
Ministerial Regulation No.52/2017, focusing on bolstering incentives for the contractors.
The key trait of the revised gross-split PSC is the removal of the traditional ‘cost-recovery mechanism’, often a source of
disagreement between contractors and upstream regulator SKKMigas. Previously, upstream contractors were entitled to recover all
allowable costs (including production costs, amortised exploration and capital costs), after deduction of 20% ‘first tranche
petroleum’.
Instead, the new gross-split PSC provides for a variable percentage production share on a field-by-field basis. The base production
split between the government and contractor is: 57:43 for oil and 52:48 for gas, which may then be adjusted by taking into account
several different factors:
• Commercial Evaluation: The split can be revised if a certain ‘economic value’ is not met for a field, for which a plan of
development (POD) has already been approved, although the method for which to compute the ‘economic value’ is not clear.
The adjustment allowed is at the discretion of the Minister of Energy and Mineral Resources (MEMR) and has no limit.
• Field Characteristics: Field characteristics include but are not limited to 1) location, 2) reservoir depth, 3) reservoir type and 4)
CO2/H2S content. Contractors are rewarded for developing more challenging, higher-priority fields.
• International Oil & Gas Price: Monthly adjustments will be made to the production split calculation based on a formula using
the Indonesian Crude Price (ICP). The ICP in turn, is based on a moving average of a basket of eight international crude grades.
Formula: Adjustment = (85 – ICP) * 0.25%.
• Cumulative Production: contractors are entitled to a lower split, as more oil and gas is produced.
2001 Oil & Gas Law Under Review
Indonesia is planning revisions of its outdated oil and gas law (2001), as the country seeks a long-term solution to stemming the
decline in its hydrocarbon production, and attract more private, foreign investment into domestic oil and gas.
In response to the parliament’s December 2018 call for a new draft law, President Joko Widodo remarked that the forthcoming
revisions would seek to make the oil and gas sector more ‘efficient, transparent, straightforward, sustainable and provide added
value to the national economy.’
A separate statement from the country’s cabinet secretary also noted that in addition to reviving oil and gas production, the new law
would seek to:
• Support the strengthening of national capacities

• Strengthen domestic industries
• Promote investment in human resources in the oil and industry
Among the change proposed by the parliament is the creation of a new oil and gas regulatory entity called BUKMigas, to assume
the functions of current regulators SKKMigas and BPHMigas. BUKMigas will regulate activities in the upstream and downstream,
while also being able to partake in E&P projects, while BPHMigas will retain oversight over pipelines and the gas transportation
business. Another proposal calls for the creation of Indonesia’s first ‘State Petroleum Fund’, to be bankrolled by a combination of
revenues from oil and gas, levies and bonuses. The government is currently compiling a list of problems with the draft law for further
discussion with parliament over subsequent months.
Licensing Rounds
Indonesia launched its 2018 oil and gas bidding round in February 19 2018, offering 26 oil and gas blocks (14 offshore, 12 onshore)
to potential investors. Firms will have until April 2018 to submit bids for seven of the blocks offered under direct proposal tenders,
and June 2018 for 19 blocks offered under regular tenders.
The combination of high regulatory risk and uncompetitive licensing terms are likely to arrest significant IOC interest in Indonesia’s
exploration acreages, even as oil prices rebound over the coming quarters. However, Indonesia’s proven below-ground potential
and access to a large consumer market could offer opportunities for firms looking to leverage stronger prices to expand into new
markets,and which are willing to bear higher risks, namely UAE’s Mubadala Petroleum and China’s Petrochina.
INDONESIA OIL AND GAS BIDDING ROUND 2018

Block Type Region Water Depth, m Total Area, sq km
Air Komering Onshore South Sumatra - 2,672.7
Banyumas Onshore Cetral, West Java - 3,612.0
Batu Gajah Dua Onshore Jambi - 646.0
Belayan Onshore East Kalimantan - 5,882.7
Citarum Onshore West Java - 3,924.8
East Papua Onshore Papua - 5,447.3
GMB Sumbagsel Onshore South Sumatra - 1,568.0
MNK Sumut Tenggara Onshore North Sumatra - 2,888.4
Nibung Onshore Riau-Jambi - 3,958.9
South CPP Onshore Riau - 2,672.5
Southeast Jambi Onshore Jambi - 1,121.2
West Sanga-Sanga Onshore East Kalimantan - 5,414.1
Andika Bumi Kita Offshore East Java 0-200 8,340.0
Bukit Barat Offshore Natuna 0-100 2,436.0
Cendrawasih Bay II Offshore Papua 0-1,500 5,072.8
East Ganal Offshore Makassar Strait 100-2,500 5,080.2
East Muriah Offshore East Java 0-100 5,000.0
East Sokang Offshore Natuna 0-100 6,586.0
Ebuny Offshore Southeast Sulawesi 0-3,500 7,460.0
Manakarra Mamuju Offshore Makassar Strait 0-2,500 1,525.9
North Kangean Offshore East Java 0-100 4,679.3
Southeast Mahakam Offshore East Kalimantan 0-100 1,525.9
Suremana I Offshore Makassar Strait 500-2,500 2,899.0
West Berau Offshore West Papua 0-100 8,208.8
East Seram Onshore, Offshore Maluku 0-500 6,504.3
Karaeng Onshore, Offshore South Sulawesi 0-500 6,959.8
Source: MEMR
Oil & Gas Infrastructure

Indonesia has total refining capacity of about 1.1mn b/d, although proposed and planned refinery projects in the pipeline could
push this figure beyond 2.1mn b/d come the end of our forecast period in 2030. Indonesia remains a sizable LNG exporter with
total liquefaction capacity of 28.6bcm across three projects, although LNG exports are expected to dwindle over the coming years,
next to declining production and rising demand.
Oil Refineries
REFINERIES IN INDONESIA
Location Project Name Capacity, b/d Status Construction- Main Owner(s)
Completion
East Kalimantan Balikpapan 260,000 Active 1922 Pertamina

[Operator] (100%)
Java (Central) Cepu 3,800 Active 2008 Tri Wahana

Universal [Operator]
(100%)
Java (Central) Cilacap 348,000 Active 1974 Pertamina

[Operator] (100%)
Java (West) Balongan 125,000 Active 1994 Pertamina

[Operator] (100%)
Sumatra (Palembang) Sungai Pakning 50,000 Active 1957 Pertamina

[Operator] (100%)
Sumatra (Palembang) Plaju 133,700 Active 1930 Pertamina

[Operator] (100%)
Sumatra (Riau) Dumai 170,000 Active 1973 Pertamina

[Operator] (100%)
West Papua Kasim 10,000 Active 1997 Pertamina

[Operator] (100%)
Sumatra (Riau) Dumai 200,000 Expansion 2026 Pertamina, PT

Nindya Karya, DH
Global Holdings
East Kalimantan Balikpapan 100,000 Expansion 2023-2025 Pertamina
Java (Central) Cilacap 52,000 Expansion 2027 Pertamina
Java (West) Balongan I & II 25,000 Expansion 2022-2025 Pertamina
Java (West) Balongan III 90,000 Expansion 2026-2027 Pertamina, CPC
Sumatra (Palembang) Plaju 20,000 Expansion 2023 Pertamina
East Kalimantan Bontang 300,000 Greenfield - Pertamina
Java (North) Tuban 300,000 Greenfield 2026 Pertamina, Rosneft
Source: Company data, Fitch Solutions
LNG Liquefaction Terminals
INDONESIA LNG LIQUEFACTION TERMINALS

Location Project Capacity, Capacity, Trains Status Companies Start
mtpa bcm Date
Central Donggi- 2.0 2.7 1 Active Mitsubishi (45%), Pertamina (29%), KOGAS (15%) and 2015
Sulawesi Senoro Medco (11%)
East Bontang 11.5 15.6 4 Active Pertamina (55%), VICO (20%), JILCO (15%) and Total (10%) 1990
Kalimantan
West Tangguh 7.6 10.3 2 Active BP (40.26%), CNOOC (13.9%), JX Nippon (13.5%), Mitsubishi 2009
Papua LNG (9.9%), Inpex (7.8%), LNG Japan (7.4%), KG Berau (5%) and
Mitsui (2.3%)
South Sengkang 0.5 0.7 1 Under Enery World Corporation -

Sulawesi LNG Construction
West Tangguh 3.8 5.2 1 Under Tangguh LNG Consortium 2022

Papua Train 3 Construction
Source: GIIGNL, Fitch Solutions
LNG Import Terminals
INDONESIA LNG REGASIFICATION TERMINALS

Capacity, Capacity,
Location Project Status Companies Start
mtpa bcm
Bali Benoa LNG 0.3 0.4 Active PT Pelindo Energi Logistik 2016
PT Perta Arun Gas (Pertamina, Aceh

North Sumatra Arun Regas 3.0 4.1 Active 2015
Government)
South Sumatra Lampung LNG 2.0 2.7 Active Hoegh LNG 2014
Nusantara Regas
West Java 3.0 4.1 Active PT Nusantara Regas (Pertamina, PGN) 2012
Satu
East Nusa Under

Flores LNG 0.1 0.2 PLN 2020
Tenggara Construction
Under Mitsui O.S.K Lines, Samsung Heavy

West Java Jawa-1 FSRU 2.3 3.1 2021
Construction Industries
Riau Batam LNG 1.0 1.4 Proposed JFE, Medco Energi 2022
Source: GIIGNL, Fitch Solutions
Domestic, Cross-Border Pipelines
Indonesia's domestic gas pipeline network comprises numerous fragmented, point-to-point grid systems, due to its island-heavy
nature. Two of the country's biggest pipeline operators are state-owned PT Pertamina Gas and PT Perusahaan Gas Negara.
The two firms will be merged, under the government's plan to establish an oil and gas holding company, which will create an
enormous government-owned entity controlling more than 9,500km of gas pipelines across South & North Sumatra, West & East
Java, Banten, North Aceh and East Kalimantan. Pertamina also operates a cross-border pipeline to Malaysia (West Natuna-
Duyong) with Petronas and ConocoPhillips. Private transmission company Trans Gas Indonesia operates the 654.0km cross-
border gas pipeline with Singapore, from West Natuna and South Sumatra to Jurong.
Crude Oil, Products Storage
Indonesia has over 25 major crude oil storage sites (onshore, floating) with an estimated combined storage capacity of 10.0mn bbl.
In July 2016, Pertamina announced that it is planning to build a strategic petroleum reserves of about 25.0mn bbl, implying about
21-22 days of forward-day cover, based on estimated 2017 consumption levels.
The country has eight oil product storage facilities nationwide (mostly in the Java-Bali region), with total storage capacity of about
30.3mn bbl. Pertamina-owned storage accounts for about 73.0% of this, with the rest contributed by private firms and floating
facilities.
Competitive Landscape
Competitive Landscape Summary
Crude Oil
The transfer of the Rokan oil block to state-owned Pertamina from the hands of Chevron results in a significant reorientation of
the ordering between Indonesia’s crude oil producers. The SOE firmyl resides in the top spot after factoring output, albeit depressed
from its peak, from the newly acquired Rokan block, followed by ExxonMobil.
Pertamina Takes Over Rokan

Indonesia - % Share Of Crude Oil Production
Natural Gas
NOC Pertamina is the top natural gas producer in Indonesia, after taking over the Mahakam block from Total and Inpex from
January 1 2018. BP and ConocoPhillips are the other major players in the Indonesian gas sector, owing to their significant stakes
in the Tangguh LNG production and Corridor PSC, although Pertamina has signed an agreement to take over the Corridor PSC from
2026.
Mahakam Takeover Propels Pertamina Top

Indonesia - % Share Of Natural Gas Production
Company Profile
Pertamina
Latest Update
• In November 2021, Pertamina confirmed that it signed a memorandum of understanding with ExxonMobil to study the potential
for large-scale deployment of low carbon technologies in Indonesia including identifying geological formations suitable for
carbon capture, utilisation and storage and low-carbon hydrogen.
• In October 2021, Pertamina revised up its planned investment into the recently taken over Rokan oil block to USD3bn (from
USD2bn) through to 2025, equivalent to about USD750mn per annum. The NOC is also looking for partners for joint enhanced
oil recovery at the block to improve its production rate.
• Pertamina confirmed that ongoing efforts to increase the capacity of the Balikpapan refinery to 360,000b/d from the current
260,000b/d is about 40% complete, and will be completed by the end of 2024. The works will also enable the production of Euro
5 quality fuels and improve crude feedstock flexibility.
SWOT Analysis
Strengths • Extensive influence across the entire value chain, including upstream, downstream, fuel retailing and LNG.
• Partnership with various IOCs.
• Substantial exploration interests.
Weaknesses • Limited financial or operational freedom.

• Cost and efficiency disadvantages.
• Need for ongoing, high-level investment.
Opportunities • Considerable untapped gas export potential.

• Scheduled takeover of Rokan (2021) and Corridor PSC (2026) would further boost Pertamina's share of
domestic oil and gas output.
Threats • Competition in fuels market.

• Changes in national energy policy.
Company Overview
Pertamina is the national oil and gas company of Indonesia. Established in December 1957, Pertamina’s influence extends across
the entire oil and gas value chain. Upstream operations focus on the exploration, production and distribution of oil and gas,
provision of oilfield services, and the exploration and exploitation of geothermal energy and coal-bed methane.
Pertamina also holds exploration and production assets across strategic overseas markets, including Algeria, Libya, Iraq, Malaysia
and Vietnam, via JVs and cooperation agreements. Pertamina operates seven oil refineries in Indonesia, where it is responsible for
the processing of crude oil (indigenous, imported), marketing and trading of refined fuels and petrochemical products as well as
shipping and distribution activities. The SOE also handles LNG liquefaction via its two export terminals Bontang and Donggi-Senoro,
and regasification via Arun LNG.
MAJOR UPSTREAM ASSETS IN INDONESIA

Name Status Type Onshore/ Offshore Est. Peak Oil/Liquids Range (b/d) Est. Peak Gas Output (bcm)
Banyu Urip Production Oil Onshore 205,000 -
Mahakam Production Gas & Condensates Offshore 31,000 10.0
Rokan Production Oil Offshore 160-160,000 -
Source: Company data
MAJOR DOWNSTREAM ASSETS IN INDONESIA

Name Type Nameplate Capacity (b/d)
Cilacap Refinery 348,000
Balikpapan Refinery 260,000
Dumai Refinery 170,000
Plaju Refinery 133,700
Balongan Refinery 125,000
Kasim Refinery 10,000
Source: Fitch Solutions Global Refineries Database
KEY FINANCIAL DATA, USDBN

2015 2016 2017 2018 2019e 2020e 2021g
Revenues 41.8 36.5 46.0 57.9 52.4 30.7
EBITDA 5.6 8.5 6.9
Capex 4.4 6.9 3.6 4.4 4.3 4.7 10.7
e/g = estimate/guidance. Source: Pertamina, Fitch Solutions
Regional Overview
Asia Oil & Gas Regional Overview
Key View: Asia’s oil and gas sector remains on track to see a broad-based recovery in 2021 next to a rebound in global crude oil
prices and easing Covid-19-restrictions, although downside risks persist amid the continued spread of the more contagious Delta
variant of the coronavirus and uneven shape and progress of national vaccination programmes across the region. Trends in both the
upstream and the downstream segments will continue to lean in favor of natural gas over crude oil, in line with a growing regional
penchant for lower-carbon fuels and broader energy transition initiatives among economies.
To highlight the key themes across our Asia oil and gas forecasts, we have assessed countries based on the following indicators:
• Oil production
• Gas production
• LNG exports
• Refining capacity
• Oil consumption
• Gas consumption
Our Asia coverage includes Australia, Bangladesh, Brunei, Cambodia, China, Hong Kong, India, Indonesia, Japan, Malaysia, Myanmar,
New Zealand, Pakistan, Papua New Guinea (PNG), Philippines, Singapore, South Korea, Taiwan, Thailand, Timor-Leste and Vietnam.
Structural Downtrend To Resume Despite Near-Term Growth In China

Asia - Crude Oil Production (2018-2030)
f = Fitch Solutions forecast. Source: EIA, JODI, Fitch Solutions
Crude Oil Production
Global crude oil prices fared stronger in 2021 compared to 2020’s low base but this failed to break the long-term structural decline
in Asia’s oil production as Covid-19 restrictions disrupted field operations, next to natural declines across mature fields. 2021’s crude
oil production is forecast to come in slightly above 8.3mn b/d down 0.2% from output levels in 2020, with declines across most of
the region’s mature oil producers such as Australia, India, Indonesia, Malaysia, Thailand and Vietnam offset by a strong state push to
boost domestic production in China.
Calls on China’s SOEs to focus on ensuring domestic energy supply are expected to intensify in 2021 as sharp international price
swings and acute supply disruptions bring to focus the unwanted exposure to external market events. This looks set to allow China’s
crude production to register another year of annual growth in 2021, although this will be difficult to sustain over a longer stretch of
time, as national policies and above-ground conditions continue to incentivise more funds to be allocated to the natural gas,
renewables and new energies businesses.
Asia’s oil and gas companies, based on guidance figures announced to date, look prepared to raise capex after a downtrodden 2020
although significant new investments into crude oil do not look likely bar the lowest-cost and risk proven assets amid growing
industry and consumer aversion to traditional fossil fuel developments.
A persistent pullback in investments by the IOCs looks set to remain an ongoing theme in the sector. This will be highly negative for
many of Asia’s mature emerging market (EM) producers, due to their high dependency on foreign capital to fund exploration and
produce from existing assets. Consequently, the onus will fall on the region’s NOCs to fill any resulting investment gaps to drive
domestic oil and gas activities forward. However, this will not prove straightforward as the NOCs’ own finances continue to be
stretched to support various investment obligations across the value chain as per national priorities.
Gas Growth Firmly In Play

Asia - Natural Gas Production (2018-2030)
Natural Gas Production
The upstream sector narrative in Asia will continue to be tilted in favour of natural gas, pushed further forward by accelerating
decarbonisation efforts across the region. The region’s below-ground reserves profile is also predominantly natural gas, with strong
offshore and unconventional finds in several markets indicating potential for stronger output growth down the line, while that for
conventional crude oil declines.
Gas production is forecast to return to an uptrend in 2021 following a brief setback in 2020, with total output coming in at
669.1bcm, an increase of almost 2% compared to 2020. Fundamentals in the region’s two largest gas producing markets, China and
Australia, continue to be positive. The policy backdrop for gas in China remains favorable with the government keen to boost the
share of natural gas in the national energy mix from the current 7-8% to about 15% by 2030 as part of a clean fuels push.
China alone is forecast to account for over 70% of the total increase in Asia’s gas production growth over the next five years
(2021-2026), on the back of robust state-led gasification across industries and accelerating SOE investments into the
unconventional gas space. The acute gas shortage being experienced in the winter of 2021 is only set to harden the government’s
resolve to strengthen investments into boosting domestic gas supplies both to hedge against external market risks and also to
safeguard own consumption. The country’s new 14th Five-Year Plan (14FYP) places emphasis on cutting emissions and
decarbonisation of the economy, and prescribes for natural gas and other renewables energy sources to play leading roles in
attaining these targets.
Leading domestic gas producers in Australia such as Santos and Woodside Petroleum are expected to double down on planned
investments into brownfield opportunities, more so after recent mergers strengthening upstream proficiencies, in order to unlock
additional gas resources to feed existing LNG export projects. In addition, efforts are ongoing to ease stringent onshore drilling
regulations and unlock plentiful onshore coal-seam gas (coal-bed methane) reserves in some states although these face opposition
from environmentalists and local inhabitants.
The outlooks for Asia’s other mature gas producers are mixed with more favorable projections for India, Malaysia and Vietnam, on
the back of robust offshore pipelines. In contrast, the likes of Indonesia, Pakistan and Thailand appear set for continuous output
declines into the next decade as existing assets mature and pervasive resource nationalism weighs on investor sentiment.
Outlook Bullish Even As Export Growth Projections Tempered

Selected Markets - Net LNG Exports, bcm (2018-2030)
f = Fitch Solutions forecast. Source: GIIGNL, JODI, Fitch Solutions
LNG Exports
Even as reopening plans in key markets continue to struggle amid fresh threats from Delta variant Covid-19 restrictions, demand for
LNG across the region is on track to register a solid recovery in 2021 than from 2020’s low levels. Overall net LNG exports are
forecast to come in at 167.5bcm in 2021, 3.3% higher than exports in 2020, with ample long-term contracts in place and nascent
efforts to decarbonise ensuring solid uptake in spite of uneven shape of demand recoveries and vaccinations through the region. A
late surge in spot LNG demand, due to seasonal stocking up ahead of winter and strong competition for cargoes from reopening
markets in Europe, poses upside risk to LNG exports for the full year, although an excessive surge in spot rates could also see
purchases from more price-sensitive buyers soften in favor of cheaper alternatives.
The supply picture for LNG in the coming years is generally positive amid a backdrop of accelerating and expanding gasification
across the region, albeit growth expectations for Australia and PNG have been tempered as developments shift to brownfields in the
former and a hawkish government stance during resource project negotiations threatens to stall progress of new projects in the
latter. Malaysia and Indonesia’s ability to raise LNG exports from current levels will be constrained by the need to meet rising
demand, although the signing of a gas sales agreement for gas produced from Inpex’s much-delayed Abadi LNG project poses a
distant, long-term upside risk.
Capacity Expansion To Force Smaller Facilities Out Of Market

Asia - Refining Capacity & Refined Fuels Production (2018-2030)
f = Fitch Solutions forecast. Source: EIA, JODI, Fitch Solutions
Refining Capacity And Refined Fuels Production
Asia’s refined fuels production is set to recover in 2021 although the pace of restrictions being eased and fuel demand normalising
is being slowed by the spread of the more contagious Delta variant. Fuel output is expected to see an increase of 2.1% in 2021 from
2020’s levels, an improvement from the sharp decline in 2020, but still a substantial downward revision from the previous forecast
of about 4% as Covid-19 headwinds persist, disrupting refinery operations.
Asia’s total refining capacity, meanwhile, will continue to expand in 2021 and over the next few years on the back of major planned
additions expected in China, India and Malaysia. Ambitious state-driven downstream expansion plans in Indonesia and Pakistan pose
further upside to current forecasts albeit project risks are still high. In contrast, the region’s less-efficient refineries or facilities
located in smaller, remote markets will continue to find it challenging to stay relevant, driving closures and downsizing measures
across the likes of Australia, New Zealand, the Philippines and Singapore. Those maintaining operations will be more inclined to find
new, competitive edges including expanding petrochemicals and specialty products offerings. In addition, plant designs are likely to
become more modular, as flexibility to respond to different market conditions becomes more important than absolute capacity
additions.
Delta Slowing Recoveries Across Asia, Though Long-Term Outlook Positive

Asia - Refined Fuels Consumption (2018-2030)
Refined Fuels Consumption
As is the case for refining output, the pace of fuel demand recovery across Asia is facing headwinds from fresh threats posed by the
Delta variant of the coronavirus, next to a slow pace of vaccinations across several markets. The forecast recovery in demand has
been adjusted lower to 4.8% in 2021, from the previous forecast of 5.5%, to reflect these risks. The short-term outlook continues to
feature plenty of uncertainties, although the general expectation is for conditions to improve in the coming months, and for virus
management efforts to bear fruit. That said, the average percentage of fully-vaccinated members of the public stood at about
37.6% at the time of writing in October 2021, far below the 70-90% believed to be needed to potentially reach herd immunity
against Covid-19 infections, indicating the recovery in Asia has further to go.
The lagging pace of vaccinations across the region’s emerging markets could see the strong post-pandemic demand rebound
continue into 2022, with risks to the downside from potential relapses in infections and emergence of new variants. Some of the
new demand patterns that emerged during the pandemic could prove longer lasting including increased flexibility to work from
remote locations. Halted cross-border leisure travels are expected to be among the slowest industry segments to see a
normalisation in activities, and these look set to continue to weigh on demand even after pandemic threats begin to dissipate.
In addition, the collapse in fossil fuel demand during the pandemic has accelerated pro-climate, decarbonisation initiatives in more
regional governments. China, Japan and South Korea have been among the first in the region to pledge net-zero emissions targets,
and many others are also facing added pressure to follow in their footsteps. Most in the region have acknowledged the need for
more climate action and as a first step, appear to be making a concerted push to increase gas and renewables adoption in the
power mix. That said, Asia’s fuels markets remain in vastly different stages of preparedness to make the transition to fossil fuel
alternatives and so any short-term impact on fuel demand is expected to be limited. Fuel efficiency gains and early moves to phase
out diesel cars on the roads do pose downside risks to demand growth projections in several large markets such as China, India and
South Korea, although policy deadlines are set far out into the next decade.
Decarbonisation Initiatives To Drive Gas Demand

Asia - Natural Gas Consumption & Net LNG Exports (2018-2030)
Note: Negative implies imports. * Includes Bangladesh, China, Hong Kong, India, Indonesia, Japan, Myanmar, Pakistan, Philippines, Singapore, South Korea, Taiwan, Thailand and
Vietnam; f = Fitch Solutions forecast. Source: GIIGNL, JODI, Fitch Solution
Natural Gas Consumption And LNG Imports
The growing regional demand shift towards natural gas, as part of a widespread push to cut emissions and convert to using cleaner
fuels, will drive natural gas demand growth in Asia over the forecast period. After slowing down in 2020 during the height of the
global pandemic, the growth in gas demand is expected to rebound to 3.6% as strict restrictions are eased in phases, in spite of
headwinds from the more contagious Delta variant infections and acute price and supply disruptions impacting consumption
across most markets ahead of the winter months.
Higher price points of LNG, compared to cheaper albeit more-pollutive coal in particular, continues to be a sticking point for many
EMs from considering the fuel as an option, even more so in light of the significant run up in prices ahead of the winter months in
2021. However, this is expected to change as markets become more receptive towards LNG as part of broader decarbonisation and
energy transition efforts as planned developments in renewables take time to manifest, and as the global supply picture begins to
catch up with that of demand, as new developments across Africa, the Middle East and North America gradually fill the supply deficit
created by the sudden, strong rebound in demand from post-pandemic reopening efforts in key markets.
China’s LNG demand is anticipated to see strong expansion over the coming years, particularly with the decarbonisation of the
economy pinned as a long-term policy aim in the new 14FYP, although capacity to absorb additional LNG volumes could face some
risk due to efforts among SOEs to ramp up domestic production of natural gas and an influx of pipeline gas from Russia, Central Asia
and Myanmar. Planned investments into the domestic midstream and LNG space, coupled with ambitious state energy mix targets
sufficiently support our current bullish view.
The outlooks across the rest of Asia’s EMs are bullish, with many already in the process of expanding LNG import capacity or moving
towards kickstarting first LNG imports in the next five years or so. LNG demand growth in developed markets, such as Japan,
Singapore and South Korea, is also forecast to prove resilient next to growing power, shipping and petrochemicals sectors uses,
although fundamentals in the former remain more uncertain in light of the government’s embracing of hydrogen as a primary
power generation fuel. The number of LNG import projects across Asia’s EMs is expected to soar over the coming years, fueled by
global investors looking to capitalise on the region’s strong demand growth potential for gas.
In addition to Bangladesh, which first started LNG imports in 2017, no less than seven new markets - including Australia, Cambodia,
Hong Kong, Myanmar, Philippines, Sri Lanka and Vietnam - are aiming to start importing LNG in the next two to three years. South
and South East Asia in particular, are expected to become key battlegrounds for investors from the US, China and the Middle East
not only as a means to expand geopolitical reach in key strategic areas but also as a stubborn glut in the LNG market, making
securing new sales outlets that much more important.
Oil & Gas Glossary

Term Description Term Description
AOR additional oil recovery IOC international oil company
APA awards for predefined areas IPO initial public offering
API American Petroleum Institute JOC joint operating company
bbl barrel JODI joint organisations data initiative
bcm billion cubic metres JPDA joint petroleum development area
b/d barrels per day LAB linear alkyl benzene
boe barrels of oil equivalent LDPE low density polypropylene
BTU British thermal unit LNG liquefied natural gas
capex capital expenditure LPG liquefied petroleum gas
CBM coal bed methane mcm million cubic metres
CEE Central and Eastern Europe MENA Middle East and North Africa
CSG coal seam gas MoU memorandum of understanding
DoE US Department of Energy mt metric tonne
DM developed markets mtpa million tons per annum
EBRD European Bank for Reconstruction & Development NGL natural gas liquids
EEZ exclusive economic zone NGV natural gas vehicle(s)
EIA US Energy Information Administration NOC national oil company
EM emerging markets opex operating expenditure
EOR enhanced oil recovery PE polyethylene
E&P exploration and production PP polypropylene
EPSA exploration and production sharing agreement PSA production sharing agreement
EV electric vehicle(s) PSC production sharing contract
FID final investment decision R&D research and development
FDI foreign direct investment R/P reserves/production
FEED front end engineering and design RPR reserves to production ratio
FLNG floating liquefied natural gas SGI strategic gas initiative
FPSO floating production, storage and offloading SoI statement of intent
FSRU floating storage and regasification unit SPA sale and purchase agreement
FTA free trade agreement SPR strategic petroleum reserve
FTZ free trade zone SSA Sub-Saharan Africa
GCC Gulf Cooperation Council tcm trillion cubic metres
G&G geological and geophysical t/d tonnes per day
GS geological survey toe tonnes of oil equivalent
GTL gas to liquids tpa tonnes per annum
GWh gigawatt hours TRIPS Trade-Related Aspects of Intellectual Property Rights
Term Description Term Description
HDPE high density polyethylene TWh terawatt hours
HoA heads of agreement USGS US Geological Survey
IEA International Energy Agency WIPO World Intellectual Property Organization
IGCC integrated gasification combined cycle WTI West Texas Intermediate
Oil & Gas Methodology

Connected Thinking
We use a simple and transparent forecasting model as a base for our industry forecasts, but rely heavily on our analysts' expert
judgment to ensure our forecasts capture all of the insights we derive using our unique Connected Thinking approach. We believe
analyst expertise and judgement are the best ways to provide the most accurate, up-to-date and comprehensive insight to our
customers.
Our Connected Thinking approach to forecasting and analysis integrates macroeconomic variables from Fitch Solutions Country
Risk to provide our customers with unique and valuable insight on all relevant macroeconomic, political and industry risk factors
that will impact their operations and revenue-generating potential in the industry/industries they operate in.
Oil & Gas Methodology
For the Oil & Gas industry, we have historical data and 10-year forecasts for 45 core industry variables, including oil & gas production,
refined fuels production and consumption, refining capacity, refined fuels production, and trade of oil and natural gas. We also have
historical data and 10-year forecasts for 36 energy price indicators.
Our forecasts are a combination of analyst expert judgment and a market's own historical time series.
Our Oil & Gas analysts interact with other analytical teams in Fitch Solutions, including Country Risk, Commodities, Power,
Renewables, Autos and Infrastructure. This ensures that they have a comprehensive understanding of external factors that may
impact the oil & gas industry outlook on either a market, regional or global level. In addition, our oil & gas forecasts draw on
assessments of political risk, regulatory outlook and outlook for capital expenditure by the industry.
There is a constant rolling cycle of data monitoring, with databases being updated on a quarterly basis. Analysts will use their
judgement outside of these cycles to implement forecast changes when necessary.
Sector-Specific Methodology
Our approach to forecasting combines both bottom-up and top-down analyses, drawing data from a wide range of corporate,
governmental and multilateral sources. The forecasts also leverage proprietary data and analysis from across our 125 markets and
25 industry verticals.
Upstream Production
Our supply-side forecasts are bottom up, aggregating individual projects (both greenfield and brownfield) up to the market level to
derive a total number.
We define oil production as crude oil, NGLs and lease condensates.
We define natural gas as dry natural gas, and exclude NGLs, which is captured under oil production.
The data are mostly sourced from companies active in the market and the relevant regulatory agencies such as the EIA and JODI.
We factor in the production capacity as reported by the given company or agency, but will make informed assumptions as to the
project start-up date and commissioning periods.
In general, we include only those projects that are post-FID. However, pre-FID projects that we view to have a high probability of
progressing will also be included. The likelihood of a project progressing will be decided on a number of factors, including:
• The economics of a given project

• The prevailing oil or natural gas price
• The political and regulatory environment
• Assumptions as to the capital allocation process of the equity partners
Legacy production (production beginning in any year prior to the forecast period) is forecast out, as per historical trends. However,
we make adjustments to the assumed decline rate, based on historical decline rates, forecast investment into enhanced oil recovery
or legacy field redevelopment, technological developments and other relevant factors.
Production is expressed in b/d for oil and cubic meters for natural gas.
Refining Capacity
Our refining capacity forecasts are bottom up, aggregating individual projects (both greenfield and brownfield) up to the market
level and consider nameplate capacity.
The data are mostly sourced from companies active in the market and the relevant regulatory agencies.
We factor in the crude throughput capacity as reported by the given company or agency, but will make informed assumptions as to
the project start-up date and commissioning periods. The capacity forecasts cover crude distillation units (otherwise known as
atmospheric distillation units). They do not cover secondary processing capacity.
In general, we include only those projects that are post- FID. However, pre-FID projects that we view to have a high probability of
progressing will also be included.
It is expressed in b/d.
Refining Capacity Utilisation
This is a derived indicator. The value is calculated as refined fuels production as a proportion of nameplate refining capacity. Given
the lower density of refined fuels, a refinery running at 100.0% of its nameplate (crude) capacity will operate at above 100.0%,
according to this indicator. Process optimisation and debottlenecking, which will increase the crude throughput at a given facility
but will not be reflected in our headline refining capacity forecast, can also lead to over-utilisation. In general, new and more
complex facilities will run at higher utilisation rates than legacy facilities.
Refined Products Production
Headline refined fuels production is a function of a market’s refining capacity and its forecast utilisation rates. We further break
down production into gas oil/diesel, gasoline, jet fuel, kerosene, fuel oil, LPG and other products. The breakdown of production is
modelled out based on historical trends.
Refined Products and Natural Gas Consumption
Our refined products as well as natural gas consumption forecasts are top-down and leverage a range of market-level forecasts
from other analytical teams in Fitch Solutions, in addition to a market's own historical time series. Common drivers of fuels demand
include the domestic economic and political environment, demographic trends and developments in energy-intensive sectors of
the economy, as well as infrastructure build out and availability.
As with refined fuels production, we further break down refined products consumption into gas oil/diesel, gasoline, jet fuel,
kerosene, fuel oil, LPG and other products.
It is expressed in b/d for oil and cubic meters for natural gas.
Oil Trade
This is a derived indicator.
We calculate crude and other liquids net exports as crude, NGPL and other liquids production, plus refining capacity gains, less
refined products production.
For refined products net exports, the value is calculated as refined products production less refined products consumption. As with
our production and consumption forecasts, we further break down trade into gas oil/diesel, gasoline, jet fuel, kerosene, fuel oil, LPG
and other products. For total net oil exports (crude, plus, products), the value is calculated as crude, NGPL and other liquids
production, plus refining capacity gains, less refined products consumption.
As derived indicators, our net export forecasts do not take account of annual stock change. This can lead to some small
discrepancies between our historical data set and observed trade flows.
Gas Forecasts
Gas Trade
As derived indicators, our net export forecast do not take account of annual stock change. This can lead to some small
discrepancies between our historical data set and observed trade flows.
Dry Natural Gas Net Exports
This is a derived indicator. It is calculated as dry natural gas production less dry natural gas consumption.
Of which, LNG Net Exports
LNG net exports are derived based on gross LNG exports, less gross LNG imports.
Gross Export and Import forecasts are bottom up, aggregating individual liquefaction and regasification projects (both greenfield
and brownfield) up to the market level. We rely on our LNG Projects database a comprehensive catalogue of liquefaction,
regasification facilities in each market.
Of which Pipeline Net Exports
This is a derived indicator. It is calculated as theoretical natural gas net exports less LNG net exports. Given that stock changes are
implicitly captured in the pipeline net export forecast, there may be small discrepancies between our historical data set and
observed trade flows.
Risk/Reward Index Methodology
Matrix Categories
The RRI matrix is divided into two distinct categories:
• Rewards: Evaluation of an industry's size and growth potential (Industry Rewards), and also macro industry and/or country
characteristics that directly affect the size of business opportunities in a specific sector (Country Rewards).
• Risks: Evaluation of micro, industry-specific characteristics, crucial for an industry to develop to its potential (Industry Risks)
and a quantifiable assessment of a country's political, economic and operational profile (Country Risks).
Benefits Of Using Our Oil & Gas RRIs
• Global Index: A global table, ranking all the countries in Fitch Solutions’ universe for upstream oil & gas from least (closest to
zero) to most (closest to 100) attractive.
• Accessibility: Easily accessible, top-down view of the global, regional or sub-regional risk/reward profiles.
• Comparability: Identical methodology across 68 countries for oil & gas allows users to build lists of countries they wish to
compare, beyond the confines of a global or regional grouping.
• Scoring: Scores out of 100 with a wide distribution provide nuanced investment comparisons. The higher the score, the more
favourable the country profile.
• Quantifiable: Quantifies the rewards and risks of doing business in the upstream and downstream sectors in different countries
around the world and helps identify flashpoints in the overall business environment.
• Comprehensive: Comprehensive set of indicators assessing industry-specific risks and rewards alongside political, economic
and operating risks.
• Entry Point: A starting point to assess the outlook for the upstream and downstream oil and gas sectors, from which users can
dive into more granular forecasts and analysis to gain a deeper understanding of the market.
• Balanced: Multi-indicator structure prevents outliers and extremes from distorting final scores and rankings.
• Methodology: It is a combination of proprietary Fitch Solutions forecasts, analyst insights and globally acceptable benchmark
indicators (for example, World Bank’s Doing Business Scores, Transparency International’s Corruption Perceptions Index).
Upstream Oil & Gas Risk/Reward Index Methodology
Our Upstream Oil & Gas Risk/Reward Index (RRI) quantifies and ranks a country's attractiveness within the context of the oil industry,
based on the balance between the risks and rewards of entering and operating in different countries.
We combine industry-specific characteristics with broader economic, political and operational market characteristics. We weight
these inputs in terms of their importance to investor decision-making in a given industry. The result is a nuanced and accurate
reflection of the realities facing investors in terms of the balance between opportunities and risks, and between sector-specific and
broader market traits. This enables users of the index to assess a market's attractiveness in a regional and global context.
The index combines our proprietary forecasts and analyst assessment of the regulatory climate. As regulations and forecasts
change, so the index scores change, providing a dynamic and forward-looking result.
The Upstream Oil & Gas Risk Reward Index comprises 72 countries.
Weightings Of Categories And Indicators

Upstream Risk/Reward Index
Assessing Our Weightings
Our matrix is deliberately overweight on Rewards (90% of the final RRI score for a market) and within that, the Industry Rewards
segment (60% of final Rewards score). This is to reflect the fact that when it comes to long term investment potential, industry size
and growth potential carry the most weight in indicating opportunities, with other structural factors (demographic, labour statistics
and infrastructure quality) weighing in, but to a slightly lesser extent. In addition, our focus and expertise in Emerging and Frontier
Markets has dictated this bias towards industry size and growth to ensure we are able to identify opportunities in countries where
regulatory frameworks are not as developed and industry sizes not as big as in developed markets, but where we know there is a
strong desire to invest.
INDICATORS - EXPLANATION AND SOURCES - UPSTREAM RRI

Indicator Rationale Source
Oil Reserves (bn Indicates size of the opportunity for oil developments. Data is for the current year. National source, our
bbl) data
Gas Reserves Indicates size of the opportunity for gas developments. Data is for the current year. National sources, our
(bcm) data
Discoveries Rate - Outlines the prospectivity and potential of the upstream. Our calculation
Industry
last five years
Rewards
Hydrocarbon Five year forward looking indication of production volumes. Our forecast
Production (boe)
Hydrocarbon Five year forward looking indication of production growth. Our forecast
Production
Growth (boe, %)
State asset Total share NOCs control. Demonstrates the potential access and restrictions to Our calculation
ownership (%) resources.
Country Competitive Divides resource base by the approximate number of companies operating to indicate Our calculation
RewardsLandscape the level of competition.
Infrastructure Calculates the extent and quality of oil and gas infrastructure, indicating ease of Our calculation
Integrity access and level of maintenance investment needed.
License Type Outlines a country score based on whether oil and gas licenses are offered as Our calculation
concessions, production sharing agreements or service contracts.
Income Tax Outlines the relative tax rate incurred by oil and gas companies. Government sources
Royalties & Special Indicates further required payments (and supplementary taxes) beyond income tax. Government sources
Industry
Taxes
Risks
Bureaucratic Outlines the ease of business processes, with a particular emphasis on mitigating the Our Operational Risk
Environment risk of delay to project timelines. score
Legal A second ease of business indicator, highlighting potential challenges with the Our Operational Risk
Environment Risk transparency and effectiveness of rule of law. score
Long-Term The Long-Term Economic Risk Index takes into account the structural characteristics Our Country Risk
Economic Risk of economic growth, the labour market, price stability, exchange rate stability and the Index
Index sustainability of the balance of payments, as well as fiscal and external debt outlooks
for the coming decade
Short-Term The Short-Term Economic Risk Index seeks to define current vulnerabilities and Our Country Risk
Economic Risk assess real GDP growth, inflation, unemployment, exchange rate fluctuation, BOP Index
Index dynamics, as well as fiscal and external debt credentials over the coming 2 years.
Country
Long-Term The Long-Term Political Risk Index assesses a country's structural political Our Country Risk
Risks
Political Risk Index characteristics based on our assumption that liberal, democratic states with no Index
sectarian tensions and broad-based income equality exhibit the strongest
characteristics in favour of political stability, over a multiyear time frame.
Short Term The Short-Term Political Risk Index assesses pertinent political risks to investment Our Country Risk
Political Risk Index climate stability over a shorter time frame, up to 24 months forward. Index
Operational Risk Our Operational Risk Index focuses on existing conditions relating to four main risk Our Operational Risk
Index areas: Labour Market, Trade and Investment, Logistics, and Crime and Security. Index
Downstream Oil & Gas Risk/Reward Methodology
Our Downstream Oil & Gas Risk/Reward Index (RRI) quantifies and ranks a country's attractiveness within the context of the
downstream industry, based on the balance between the risks and rewards of entering and operating in different countries.
We combine industry-specific characteristics with broader economic, political and operational market characteristics. We weight
these inputs in terms of their importance to investor decision-making in a given industry. The result is a nuanced and accurate
reflection of the realities facing investors in terms of the balance between opportunities and risks and between sector-specific and
broader market traits. This enables users of the index to assess a market's attractiveness in a regional and global context.
The index combines our proprietary forecasts and analyst assessment of the regulatory regime. As regulations and forecasts
change, so the scores change providing a dynamic and forward-looking result.
The Downstream Oil & Gas Risk/Reward Index comprises 92 countries.
Weightings Of Categories And Indicators

Downstream Risk/Reward Index
Assessing Our Weightings
Our matrix is deliberately overweight on Rewards (90% of the final RRI score for a market) and within that, the Industry Rewards
segment (70% of final Rewards score). This is to reflect the fact that when it comes to long-term investment potential, industry size
and growth potential carry the most weight in indicating opportunities, with other structural factors (demographic, labour statistics
and infrastructure quality) weighing in, but to a slightly lesser extent. In addition, our focus and expertise in Emerging and Frontier
Markets has dictated this bias towards industry size and growth to ensure we are able to identify opportunities in countries where
regulatory frameworks are not as developed and industry sizes not as big as in developed markets, but where we know there is a
strong desire to invest.
INDICATORS - EXPLANATION AND SOURCES - DOWNSTREAM RRI

Indicator Rationale Source
Refining Capacity Quantifies the current size of the refining sector as a comparison to peer Our forecast
('000b/d) - 5-year ave markets.
Utilisation Rates (%) - Outlines the efficiency of the existing facilities, identifying over or under capacity. Our calculation
5-year ave
Domestic Fuels Demand Shows the size of the domestic market demand as a comparison to peer markets. Our forecast
('000b/d) - 5-year ave
Fuel Demand (% growth) Identifies the domestic demand opportunity and trend in consumption patterns. Our forecast
Industry
- 5-year ave
Rewards
Regional Fuel Demand - Shows the regional export market size to represent the opportunity for exports. Our forecast
5-year ave
Life Span Of Approximate calculation of the life span of infrastructure to identify the Our calculation
Infrastructure remaining operating life
Theoretical Net Crude Identifies spare capacity of domestic oil supply as a potential feedstock. Our calculation
Exports ('000b/d) -
5-year ave
State asset ownership Indicates how much of the given market is open for private investment. Our calculation
Country (%)
RewardsPopulation Assesses market size based on total population size. Our calculation
Population Growth (%) Assesses potential market size based on the population growth rate over 5 years Our calculation
Logistics Risk Offers a comparative indicator on ease of transport for feedstock supply, fuels Our Operational Risk
Industry
distribution and import/export flexibility. Index
Risks
Fuel Subsidies Penalises a markets’ score if fuels prices are sold at below market costs. Our calculation
Long-Term Economic The Long-Term Economic Risk Index takes into account the structural Our Country Risk
Risk Index characteristics of economic growth, the labour market, price stability, exchange Index
rate stability and the sustainability of the balance of payments, as well as fiscal
and external debt outlooks for the coming decade
Short-Term Economic The Short-Term Economic Risk Index seeks to define current vulnerabilities and Our Country Risk
Risk Index assess real GDP growth, inflation, unemployment, exchange rate fluctuation, Index
balance of payments dynamics, as well as fiscal and external debt credentials over
Country the coming two years.
Risks Long-Term Political Risk The Long-Term Political Risk Index assesses a country’s structural political Our Country Risk
Index characteristics based on our assumption that liberal, democratic states with no Index
sectarian tensions and broad-based income equality exhibit the strongest
characteristics in favour of political stability, over a multi-year time frame.
Short Term Political Risk The Short-Term Political Risk Index assesses pertinent political risks to Our Country Risk
Index investment climate stability over a shorter time frame, up to 24 months forward. Index
Operational Risk Index Our Operational Risk Index focuses on existing conditions relating to four main Our Operational Risk
risk areas: Labour Market, Trade and Investment, Logistics, and Crime & Security. Index
Fit
Fitch
ch Solutions, 30 North C
Colonnade
olonnade,, Canary W
Wharf
harf,, L
London.
ondon. E14 5GN, UK
Tel: +44 (0)20 7248 0468
Fax: +44 (0)20 7248 0467
Web: www.fitchsolutions.com
IS SN: 1748-4014
ISSN:
Copy Deadline: November 2021

opy
© 20
2021
21 Fit
Fitch
ch Solutions Gr
Group
oup Limit
Limited.
ed. All rights rreserv
eserved.
ed.
All information, analysis, forecasts and data provided by Fitch Solutions Group Limited is for the exclusive use of subscribing persons or organisations (including those
using the service on a trial basis). All such content is copyrighted in the name of Fitch Solutions Group Limited and as such no part of this content may be reproduced,
repackaged, copied or redistributed without the express consent of Fitch Solutions Group Limited.
All content, including forecasts, analysis and opinion, has been based on information and sources believed to be accurate and reliable at the time of publishing. Fitch
Solutions Group Limited makes no representation of warranty of any kind as to the accuracy or completeness of any information provided, and accepts no liability
whatsoever for any loss or damage resulting from opinion, errors, inaccuracies or omissions affecting any part of the content.
This report from Fitch Solutions Country Risk & Industry Research is a product of Fitch Solutions Group Ltd, UK Company registration number 08789939 (‘FSG’). FSG is an
affiliate of Fitch Ratings Inc. (‘Fitch Ratings’). FSG is solely responsible for the content of this report, without any input from Fitch Ratings. Copyright © 2021 Fitch Solutions
Group Limited.

Indonesia Oil & Gas Report Q1 22 - Fitch

Uploaded by

Copyright:

Available Formats

Indonesia Oil & Gas Report Q1 22 - Fitch

Uploaded by

Document Information

Original Title

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Indonesia Oil & Gas Report Q1 22 - Fitch

Uploaded by

Copyright:

Available Formats

Q1 2022

Industry Risk/Reward Index ....................................................................................................................................................59

Oil & Gas Glossary..................................................................................................................................................................... 101

Oil & Gas Methodology............................................................................................................................................................ 102

HEADLINE FORECASTS (INDONESIA 2019-2025)

Brent, USD/bbl 64.16 43.21 71.50 72.00 73.00 75.00 78.00

Latest Updates And Key Forecasts

Sumatra Holds Significant Oil And Gas Reserves

Source: SKK Migas, Fitch Solutions

Indonesia Backtracks On Mandatory Gross-Split Plan

Amended Gross-Split PSC

Reserves Growth To Slow Investment Slows

f = Fitch Solutions forecast. Source: EIA, Fitch Solutions

2001 Oil & Gas Law Under Review

1. Support the strengthening of national capacities

DISTRIBUTION OF UNCONVENTIONAL GAS RESOURCES IN INDONESIA

Basin Area Type Resources, tcf

Jatibarang Java CBM 1

Barito Kalimantan CBM 102

Berau Kalimantan CBM 8

Kutei Kalimantan CBM 80

North Tarakan Kalimantan CBM 18

Pasir & Asem Asem Kalimantan CBM 3

Southwest Sulawesi Sulawesi CBM 2

Bengkulu Sumatra CBM 4

Central Sumatra Sumatra CBM 53

Ombilin Sumatra CBM 1

South Sumatra Sumatra CBM 183

Basin Area Type Resources, tcf

Northeast Java Java Shale Gas 42

Northwest Java Java Shale Gas 6

Barito Kalimantan Shale Gas 75

Ketungau Kalimantan Shale Gas 20

Kutei Kalimantan Shale Gas 81

Melawi Kalimantan Shale Gas 12

Tarakan Kalimantan Shale Gas 7

Akimeugah Papua Shale Gas 63

Bintuni Papua Shale Gas 31

Sengkang Sulawesi Shale Gas 5

North Sumatra Sumatra Shale Gas 65

Central Sumatra Sumatra Shale Gas 87

Ombilin Sumatra Shale Gas 25

South Sumatra Sumatra Shale Gas 56

Source: Indonesia Ministry Of Energy And Mineral Resources

PROVEN OIL AND GAS RESERVES (INDONESIA 2019-2024)

Ande Ande Lumut,

Block Bengara South Sebuku MedcoEnergi (100%) Appraisal Gas

Block Kampar Block Kampar Pertamina (100%) Appraisal Oil

Ophir Energy (45%), Cue

Block Sangatta I, Block Sangatta I Ephindo (48%),

Block Sangatta II, PT Visi Multi Artha (60%),

Block Tanjung NuEnergy Gas (45%), PT

HyOil (42.5%), Satria

Central Mahakam PT Percie Mahakam

PTT Exploration and

East Sepinggan Pertamina (15%), Eni

CBM Asia (18%), Ephindo

Mandala Energy (35%),

Royal Dutch Shell (35%),