Industry Profie: Oil Industry in Indonesia

MARKET INTELLIGENCE REPORT ON

UPSTREAM OIL INDUSTRY IN INDONESIA

July 2009

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Profile of Major producers

Chevron Pacific Indonesia

Chevron started oil business in the country around 80 years ago or in 1924 with the name of Standard Oil Co of California (SOCAL).

In 1936, Standard Oil was merged with N.V. Nederlandsche Pacific Petroleum later became Chevron Pacific Indonesia, a joint venture between The Texas Co. (Texaco) and Socal. In 1941, the company drilled for oil in the Duri oil field. The steam flood technology was first used in 1985. In 1944, Chevron found oil in the village of Minas , which started production in 1952. The oil field became the largest in southeast Asia.

In 1990, Chevron expanded operation to development of geothermal power and other renewable energy sources. The Darajat III power plant was named in 2007 the largest project in the world under the clean development mechanism of the United Nations.

Chevron Pacific Indonesia is wholly owned by ChevronTexaco Corporation.

PT Medco Energi Internasional Tbk (Medco)

Medco started business as a provider of oil drilling rig service and as a drilling service contractor with the name of PT. Meta Epsi. The operation of MedcoEnergi in the upstream oil and gas business began by taking over an oil and gas E&P contract of Tesoro in East Kalimantan (Sanga-Sanga Block /Samboja/Tarakan TAC and Tarakan PSC Block) in 1992.

Medco launched Initial Public Offering (IPO) in 1994. Late 1995 Medco acquired PT Stanvac Indonesia which had oil and gas E&P contract (PSC) in South Sumatra, from Exxon and Mobil Oil .

MedcoEnergi entred the business in the downstream sector through Joint Operation Agreement with PT Pertamina (Persero) (Pertamina) for 20 years to operate the methanol plant of Pertamina on the island of Bunyu, East Kalimantan in 1997. The plant uses gas supplied from the Tarakan Block under a 10-year agreement signed with Pertamina in 1997.

The company expanded business later such as by acquiring 25% stake in the Tuban block, which was already operational. Medco began to build Liquefied Petroleum Gas (LPG) plant in the middle of 2003 and it started operation in 2004.

Late 2004, in cooperation with PT PLN (PLN), MedcoEnergi build and operated a gas fired power plant, Panaran 1, on the island of Batam. In the same year, Medco wholly took over Novus Petroleum Ltd, a publicly listed Australian based oil and gas company.

MedcoEnergi started business in bio fuel industry by building its first bio ethanol plant in 2006 in Lampung that came on line in 2008. The company has also acquired a fuel storage facility in North Jakarta and started business in the storage of High Speed Diesel (HSD) fuel in 2007.

Proven oil reserves of Medco reached 74.9 (MMBO) in 2008 down from 99.1 MMBO in 2007. The largest reserves it held totaled 117 million barrels (MMBO) in 2005.

The assets of Medco grew from year to year in the 2004-2008 period. In 2004 its assets were valued at US$500.1 million including 7 exploration blocks and 8 production blocks in the United States, 1 exploration block in Libya, 2 explorations blocks in Yemen, production management service in Oman, 1 development block in Tunisia and 2 explorations blocks in Cambodia.

In Indonesia Medco has 6 explorations blocks, 1 development block, 9 production blocks, other than non oil energy production facilities including 1 LPG plant, 1 oil fuel storage and distribution facility, 1 methanol plant, 1 ethanol plant, 1 gas fired power plant, 1 reserve power plant, and 1 steam powered electric plant.

Capital spending in 2008 of Medco for explorations and production totaled US$284.3 million , downstream industries US$4,1 million, electric power US$2,1 million, other US$4.9 million totaling US$295.4 million. The spending was smaller than earlier planned at US$532.1 million .

In December 2008, most or 50.7% of the shares of Medco were owned by Encore Energy Pte.Ltd., 11.72% by PT Medco Energi Internasional Tbk and 32.62% by investing public.

Petrochina

The company was established in 1999 as part of the restructuring program of China National Petroleum Corporation. The business of Petrochina covers explorations , refining-transport, storage and marketing of crude oil, production and sales of petrochemicals and transmission of natural gas and crude oil.

Petrochina entered Indonesia through US company Trend International Limited (later renamed Santa Fe Energy Resources) holding joint venture with a number of multinational companies and secured its first production-sharing contract with Pertamina.

In 2000, Santa Fe Energy Resources was acquired by Devon Energy and in June 2002, Petrochina acquired Devon Energy.

The first explorations by Petrochina were in the Jabung oil field in Jambi; Irian Jaya; and East Java. The three oil fields turn out 63,000 barrels of crude oil per day.

Petrochina won a 20-year contract to supply gas from Indonesia to Singapore in 2001.

Amerada Hess

Hess is a US oil and gas company operating in the United States, Britain, Norway, Denmark, Russia, Equatorial Guinea, Algeria, Libya, Gabon, Egypt, Ghana, and operates a number of development blocks in Malaysia-Thailand, Indonesia, Thailand, Azerbaijan, Australia, Brazil and St. Lucia.

In Indonesia Hess operates the Ujung Pangkah gas field. Ithas 75% stake in Pangkah , 25% stake in Jambi Merang and 23% stake in Natuna A .

Non gas production of Hess in 2007 reached 314,920 barrels all in condensate or 863 barrels per day. In 2008 its production of condensate reached 827,778 barrels or 2,262 barrels per day.

Hess is jointly owned by a number of oil and gas companies in the world . Its Indonesian unit is owned by Kufpec, Pertamina, Pacific Oil & Gas, Premier Oil, and Petronas.

Production of Hess globally reached 266,000 barrels per day in 2008, down from 275,000 barrels per day in 2007 . The assets of Hess in 2008 were valued at US$28,589 million up from US$26,131 million in 2007.

Santos

Santos, short for South Australia Northern Territory Oil Search, which was established in 1954.

The company started operation in Indonesia in the 1990s by acquiring oil and gas companies in the country.

Crude oil and condensate production of Santos in 2008 rose to 2,311,735 barrels or a daily output of 6,316 barrels from 719,357 barrels or a daily output of 1,971 barrels per day in the previous year.

In the first quarter of 2009, crude oil and condensate production of Santos reached 391,203 barrels.

Santos is jointly owned by a number of world class oil companies including Chevron, ConocoPhillips, BP, Lapindo, Medco, Talisman, Total, Star Energy, Cue, SPC, Petronas and Carigali. Some of the companies operate in Indonesia.

Premier Oil

Premier Oil is a listed company in Britain in 1934 with the name of Caribbean Oil Company, conducting oil and gas explorations and production in Trinidad.

In Indonesia, Premier acquired Sumatra Gulf Oil Ltd in 1996 that it became the majority shareholder of the A Block in the Natuna Sea . Premier had also acquired Discovery Petroleum that it had share in the Kakap field.

In September 2002, Premier sold part of its stake in West Natuna to Petronas and Amerada Hess.

Premier was awarded the contract to develop the Tuna Block in the Natuna field in March 2007. Premier has a 65% stake in the block. According to plan, Premier will drill two wells in the Tuna Block in 2010. In April 2008, Premier signed a gas sales and purchase agreement with PLN. Under he agreement it supplied 15 Bbtud of gas to the state electricity company.

ConocoPhillips

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