Transcript Slide 1

Switching from Kerosene to LP Gas :
Lessons from Indonesia
22nd World LP Gas Forum
October, 7th-9th 2009
Hanung Budya - SVP Marketing
PT. Pertamina (Persero)
BACKGROUND
 Huge Fuel Subsidy (~USD 8.0 billion /year)
• Transportation : Mogas & Gasoil (~30% subsidy)
• Residential
: Kerosene (~70% subsidy)
Huge Kerosene Consumption (10~12 Mio KL /year)
 Environment Issue
+
+
SOLUTION
Kerosene / LPG Conversion Program
 To Convert residential fuel from kerosene to LPG
by distributing intial package (3 kg LPG Bottle,
stove, and regulator set) for free
 Withdraw kerosene to replace by LPG (both
subsidized)
THE FACT
2. LPG is cheaper and better
1. Kerosene subsidy increases
eventhough the government reduce
its volume significantly
Remarks
Conversion start
14 12,3
11,7 11,8 11,9 11,4
12
10,0 9,9
Volume (million KL)
10
7,9
Subsidy (Billion USD)
8
6
5,0
4,2
3,8
4
2,0
2 1,3 0,7 1,5 1,6
0
2001
02
03
04
05
06
07
(Cents USD)
2008
Volume based on
calorific Value
Kerosene
1 liter
LPG
0.4 kg
Market Price
58
73
Retail Subsidized
Price
25
42
Subsidized Price
33
31
Amount of
subsidy
33
12.4
Saving per liter
20.6
Target Converted
8,000,000
Potential Subsidy Saving
1.65
cents
KL/year
Billion USD
/year
THE SWITCHING JOURNEY
…. Before 2007
2011 ~ ….
2007 - 2010
• Kerosene is widely used by 90% of
Indonesian Household (9.9 Million KL)
and heavily subsidized by Govt, ( 4.2
billion USD/year).
• LPG only 10%, more expensive than
subsidized kero at retail price.
• Govt, Program: 52 Million LPG
• LPG will be the main cooking fuel
Conversion Packages will be distributed
with estimated total volume 4.1
to eligible households.
Million Ton/year.
• 2 Million KL of Kerosene has been
• 8 Million KL of Kerosene will be
withdrawn and 19 Million of Packages has
withdrawn.
been distributed in 2008.
• In 2009, 4.1 Million KL of Kerosene will be
withdrawn and 23 Million of packages will
be distributed.
Non-PSO
2007-2008 (19 Mio)
Nanggroe Aceh Darussalam
Sumatera Utara
Riau
Sumatera Barat
Jambi
Bengkulu
Kalimantan Timur
Sulawesi Utara
Maluku Utara
Gorontalo
Kalimantan Barat
Kepulauan Riau
Sulawesi
Barat
Maluku
Banten
Bali
Jawa Barat
D.I. YogyakartaJawa Timur
Nusa Tenggara Barat
Nusa Tenggara Timur
2010
(10 Mio)
No Conversion
Irian Jaya Barat
Bangka Belitung
Sulawesi Tenggara
(23 Mio)
Papua
Sulawesi Tengah
Sumatera Selatan
Kalimantan Tengah
Lampung
Kalimantan Selatan
DKI Jakarta
Sulawesi Selatan
Jawa Tengah
2009
THE KEY ACHIEVEMENTS (as of Oct 1st 2009)
52,0
# Households &
SME Converted
Will be Converted
39 out of 52
Millions
23,7
5,6
15,1
3,9
18,1
2007
08
09
Replacement
Factor:
Kerosene vs. LPG
1 liter Kero
~
0.3 kg LPG
Converted
9,3
2010
Total
8.000
Kerosene
LPG
4.168
3.261
2.973
2.116
121
33
2007
1.682
1.056
593
08
09
2009 Target
2010 Target
Gross Saving
1.727
1.218
State’s Gross
Subsidy Saving
Up to 1.7 Bio
USD
877
Nett Saving
792
347
530
419 373
527
690
842 884
58 77
-19
2007
1 USD = IDR 10,431
Conversion Cost
08
09
2009 Target
Total
THE KEY BENEFITS
Indonesia
Government
Business
Environment
End
Users
Environment
CO2 Reduction
State’s Gross
Subsidy Saving
# New Investor
Energy Cost
Saving)
# of Trees
saved *)
Up to 1.7 Bio
USD
529
42%
(4 USD/Month)
46.6 Mio
Net Saving
Value of
Investment
% of program
Supporter *)
# of Cars taken
Equivalent *)
884 Mio USD
1.4 Bio USD
89.9 %
2.8 Mio
*) Modified from GreenworksAsia Report on Emission Reduction from Conversion Program, November 2008
KEY SUCCESS FACTORS
1. Strong Government Policy
2. Strong & Effective Implementation
3. Readiness of Logistic & Infrastructures
LPG
Producers
Terminal LPG
Refrigerated
• Land
Terminal
(Tg Uban)
• Floating
Storage
Offloading
(FSO)
LPG Pressurized
Depot
Filling
Station
Agent
Sub
Agent
Retailer
LPG Bottle
Producers
Retester
Workshop
End
User
CONVERSION’s IMPACT TO THE LPG DEMAND-SUPPLY
(MT)
Demand - Supply
A
B
2009
2010
2011
Demand
PSO (3 kg) /Conversion Program
1,682,234
2,973,342
3,484,159
non PSO
1,388,818
1,261,280
1,305,424
Total Demand
3,071,052
4,234,622
4,789,584
952,740
1,020,816
907,024
47,000
47,000
47,000
918,847
1,292,787
1,292,085
Import *)
1,152,465
1,874,019
2,543,474
Total Supply
3,071,052
4,234,622
4,789,584
Supply
Pertamina’s Refinery
Pertamina’s Upstream
Other Domestic Producers
*) Import volume will decrease as production from domestic producers increase,
LPG BUSINESS GROWTH VS INFRASTRUCTURE
Post
Conversion
/hari
Pre Conversion
Conversion Periode
2007
Infrastructure
1
Storage *
Pre Conversion
(Before 2007)
3
Filling Station
Filling Capacity
4
Skid Tank
Transport Capacity
Conversion Periode
(2007-2010)
2009
Post Conversion
(After 2010)
136,000 Mton
267,000 Mton
345,000 Mton
6 Vessels
Pressurized @ 1,800
Mton
5 Vessels
Semiref @ 10,000 MT
6 Vessels
Pressurized @ 1,800 Mton
3 FSO Vessels
Refrigerated @ 45,000 MT
6-8 Vessels
Semiref @ 10,000 MT
10 Vessels
Pressurized @ 1,800 Mton
1 FSO Vessels
Refrigerated @ 45,000 MT
5,000 Mton/day
9,000 Mton/day
17,000 Mton/day
5,000 Mton
9,000 Mton/day
17,000 Mton/day
2
Vessel
2008
* As per Government’s Requirement : LPG Stockpile 7.5 days for NPSO, 11 days for PSO
INFRASTRUCTURE DEVELOPMENT OUTLINE
Infrastructure
LPG Depo/
LPG Terminal/
Floating
Storage
Pre Conversion
Present
Tank Capacity :
On Shore Tank :
136,000 MT
Tank Capacity :
On Shore Tank 147,000 MT*
Floating Storage 120,000 MT
Total
267,000 MT
Throughput :
3,700 MT/day
Throughput : 9,000 MT/day
Pressurized Storage Construction
Progress :
1, Semarang 10,000 MT: ~90%,
Onstream Okt’09
2, Gresik
10,000 MT: ~90%,
Onstream Okt’09
Semarang & Gresik LPG Pressurized Terminal @ 10.000 Mton Development Progress
Post Conversion
Tank Capacity :
On Shore Tank 205,000 MT
Refrigerated Terminal:
- West Java
60,000 MT
- East Java
80,000 MT
Total
345,000 MT
Throughput : 17,000 MT/day
Pressurized Storage Development :
Tg, Sekong, Bali, Medan, Makassar,
Lampung
total capacity 38,000 MT on progress,
Onstream 2011-2012
Tg. Priok LPG Depo 9.900 Mton
INFRASTRUCTURE DEVELOPMENT OUTLINE
Infrastructure
Pre Conversion
Present
Post Conversion
LPG Vessels
6 Vessels LPG
Pressurized @1800
MT
6 Vessels LPG Pressurized @1800 MT
5 Vessels LPG Semiref @11,400 MT
3 Vessels VLGC (FSO) @45,000 MT
10 Vessels LPG Pressurized @1800 MT
6-8 Vessels LPG Semiref @11,400 MT
1 Vessels VLGC (FSO)
@45,000 MT
Filling Station
66 stations (12 kg)
Capacity  6,000 MT
127 stations :
Total Capacity  9,300 MT
439 stations:
total capacity 21,900 MT/day
Skid Tank
5,000 Mt/day
9,000 Mt/day.
17,000 MT/day
Mill Reef VLGC
3 Kg’s LPG Filling Station
15.000 Kg LPG Skid Tank
CONCLUSION
1. Reduce subsidy on fuel
2. Improve quality of life
3. Reduce CO2 emission
4. Create more job and investment
5. Increase World LPG additional
demand
DISCLAIMER :
The information in this presentation is general in nature and it is not intended to be relied upon for any specific purpose.
All information provided by Pertamina in connection to this material, whether oral or written, represents the current view of
Pertamina, and will be subject to change, completion or amendment without notice.
No part of it may be circulated, quoted, or reproduced for distribution outside Pertamina without prior written approval from
Pertamina. None of Pertamina or any of its employees can be held directly or indirectly liable for any consequences of
reliance upon or use of the information herein.