Day 2 Tuesday 16 October 2007 Session 6: Coal Supply Outlook

Speech 6 Indonesia

Indonesian Coal Development

Mr. Hadi Nursarya Head of Affiliation Division

Head Agency for Research and Development

Ministry of Energy and Mineral Resources (MEMR) Indonesia

Agency of R & D For Energy and Mineral Resources Ministry of Energy and Mineral ResourcesXi’an, PRC October 15– 17, 2007

1

COAL DEVELOPMENTS COAL DEVELOPMENTS IN INDONESIAIN INDONESIA

OUTLINEOUTLINE

6. Concluding remark

1. BACKGROUND- Energy Resources- Targeted Energy Mix by 2025

2. Coal Mining Status (Coal Deposit, Mining Contractor, Production and Policy)

4. New Coal Power Plant (Fast track 10,000MW)5. Coal Utilization R&D

TYPE OF FOSSIL ENERGY

RESOURCES RESERVES PRODUCTION R/P(YEARS)

Oil 86.9 billion bbl 9.1 387 million bbl 23

Gas 384.7 TSCF 185.8 2.95 TSCF 62

CBM (Gas) 400 TSCF - - -

Coal 61.3 billion Ton 19,3 132 Million Ton 146

NON FOSSIL ENERGY RESOURCES EQUIVALENT UTILIZATION INSTALLED

CAPACITY

Hydro 845 Million BOE 75,670 MW 6,851,000 MWh 4,200 MW

Geothermal 219 Million BOE 27,000 MW 2,593,500 MWh 807 MW

Mini/Micro hydro 458.75 MW 458.75 MW 54 MW

Biomass 49,810 MW 302.4 MW

Solar 4.8 kWh/m2/day 5 MW

Wind 9,287 MW 0.5 MW

Uranium 24.112 Tons* 3 GW

*) only in Kalan region, West Kalimantan 3

Gas , 28.57%

Oil 51.66%

Geothermal, 1.32%

Hydro 3.11%

2005

Coal, 15.34%

2025

Coal, 33%

Gas , 30%

Oil, 20 %

Others, 17%

LEGAL ASPECTPresidential Decree No. 5/ 2006Presidential Instruction No. 2/2006

Bio-fuels, 5% Geothermal, 5%Solar, Wind, etc , 5%Coal liquid, 2%

Others

KALIMANTAN

PAPUA

SULAWESI

JAWA

4.07%

28.37%

1.58%

17.7%

SUMATERA

7.58%

40.13%

Resources : 61.3 billion tonsLRC : 70 %

Lignite 58.7%

Bituminous 14.3%

Sub Bituminous26.7%

Anthracite0.3%

10.000 MW

667836724101Total 605616722101GEN. III (1997-2000)61210-2--GEN. II (1994)-1010----GEN. I (1981-1990)

Sub TotalPRODCONSFSEXPLGS Termination

StageType of Enterprises

STATUS OF COAL CONTRACT STATUS OF COAL CONTRACT OF WORK (OF WORK (CCoWCCoW))(December 2006)(December 2006)

2006 2010 2015 2020 2025

1. Electricity *) 35.5 65.0 93.0 103.0 123.0

2. Cement **) 7.0 10.0 11.0 13.0 17.0

3. Metallurgy Industry and Pulp/Paper 3.0 7.0 9.0 11.0 12.0

4. Small Industries 2.5 5.0 7.0 9.0 10.0

5. UBC - 3.0 7.0 20.0 30.0

6. Liquefaction - - 3.0 14.0 28.0

Total 48.0 90.0 130.0 170.0 220.0

*) Growth of 2 % after 2010 (Data compilation of KBN and PLN, 2006)**) Average growth of 12 % after 2010 (Data compilation of KBN and Indonesia Cement Association, 2005)

in million tons

8

Some Important Issues

In the year 2006/2007, a number of uncertainties continue to affect the level of new investment in the mining industry -regional autonomy, delay in finalization of new mining law, illegal mining, environment, fiscal policy, and over lapping with forestry law.

BASIC PRINCIPLE OF NEW LAW OF MINERAL AND COAL MINING

• Clarification of Central Government, Provincial and District Authority;

• Establishing of Mining Zone; Mining Estate

• Establishing “State Reserve” for the special national interest.

• Mining license system, no more direct contract applied between mining company and the government;

• Foreign mining company may have an agreement with the State Owned Mining Company/Representative Agency to develop “state reserve”;

• Simplification of Licensing Permit; Exploration and Exploitation;

• Determination of mining areas through bidding and self reservation;

• Community development is focused for local people welfare;

• Processing and refinery producing metal must be establish in Indonesia;

• The Existing of License Authority and Agreement will be honored.

FAST TRACK 10,000 MW PROGRAM

Objective:Objective:• To replace Oil Based Power Plants with Coal Power

Plan and to deal with electricity crises

Expected Impacts:Expected Impacts:• Reduce Domestic Oil Consumption• Reduce Fuel Cost for Power Generation• Reduce Electricity Production Cost• Reduce Subsidy Level • Overcome the Electricity Shortages

11

12

Bengkulu

Bangka

Sumsel-Lampung

Pontianak

Banjarmasin

Mahakam

Tarakan

Minahasa

Kotamobagu

Palu Sorong

B-Aceh

Medan

Padang

Bima Sumbawa

Kupang

Ambon

Serui

Gorontalo

Jayapura

PLTU Jatim Selatan2x300 MW

PLTU Bone2x50 MW

PLTU Meulaboh2x100 MW

PLTU Asam-asam2x65 MW

PLTU Jabar Utara2x300 MWPLTU Tarahan Baru

2x100 MW

PLTU Pontianak2x25 MW

PLTU Kendari2x10 MW

PLTU Labuan1x300 MW

PLTU Palangkaraya2x65 MW

PLTU Sulut Baru2x25 MW

PLTU Gorontalo Baru2x25 MW

PLTU Bima2x7 MW

PLTU Jayapura Baru2x10 MW

PLTU Sibolga Baru2x100 MW

PLTU Sumbar PesisirSelatan 2x100 MW

PLTU Mantung2x10 MW

PLTU Bengkalis2x7 MW

PLTU TanjungBalai KarimunBaru 2x7 MW

PLTU Rembang2x300 MW

PLTU Ende2x7 MW

PLTU Ambon Baru2x7 MW

PLTU Ternate Baru2x7 MW

PLTU Suralaya Baru2x660 MW

PLTU Teluk Naga2x300 MW

PLTU Tj Jati Baru1x600 MW

PLTU Jabar Selatan1x300 MW

PLTU Paiton Baru2x660 MW

PLTU Singkawang2x50 MW

PLTU Sampit Baru2x7 MW

PLTU Medan Baru2x100 MW

PLTU Air Anyer2x10 MW

PLTU Bangka Baru2x25 MW

PLTU Belitung Baru2x15 MW

PLTU Selat Panjang2x5 MW

PLTU Amurang Baru2x25 MW

PLTU LombokBaru 2x25 MW

PLTU Kupang Baru2x15 MW

PLTU Timika2x7 MW

LOCATIONS OF COAL PP PROJECTS LOCATIONS OF COAL PP PROJECTS (BASED ON THE ANNEX OF PERPRES NO.71/2006)(BASED ON THE ANNEX OF PERPRES NO.71/2006)

12

Coal Research and Development

1. Upgraded Brown Coal (UBC)

2. Coal Liquefaction

3. Dual Fuel Power Generator

UBC process reduces moisture content of LRC (up to 80%) or increases CV of LRC (<5,000 kcal/kg) up to 6,000 kcal/kg (similar to HRC) based on slurry dewatering process

UBC

Feed Stabilizer(Black box)

• Coal Fired PowerGeneration

• Industry

•• Coal Fired PowerGeneration

• Industry

Premium Coal(added value) Export

14

UPGRADED BROWN COALUPGRADED BROWN COALCharacteristic of UBC Process

Goal:To gather engineering data for construction commercial scale UBC plant

Results: Various of LRCs have been tested successfully in

the plantPerformance of UBC process was successfully

improved and engineering data was collected to be used forconstruction of semi commercial scale

In Progress:Construction of 1,000 ton/day coal feed or 600 ton/day product UBC semi commercial plant in South Kalimantan

15

STATUS OF 5 ton/day UBC PlantSTATUS OF 5 ton/day UBC Plant

GoalConstruction of Commercial Plant, 27,000 bbl/day

ResultsoPre-feasibility study (2002) of commercial plant construction in

3 locations (Cost US$ 29/bbl, 1 ton raw coal produces 1,8 bbl oiloGOI has issued the Presidential Decree No. 5/2006 and

Presidential Instruction No. 2/2006 related to the construction of coal to liquid

In ProgressEngineering Design of 1 ton/day Process Supporting Unite (PSU)Up dating F/S dataEstablishing Coal Liquefaction Implementation Body

16

Brown Coal Liquefaction (BCL)Process

13,500 bbl/day 27,000 bbl/day 189,000 bbl/day

13,500 bbl/day Semi-Commercial Plant（Investment: $1.3billion）

2005 2010 2015 2020 2025

27,000 bbl/day Commercial Plant X 6 Units （Total Investment: $9.6 billion）

27,000 bbl/day 1st Commercial Plant（Total Investment:$2.1billion）

2009 2013

2014 2017

Oil Demand 1.12 1.36 1.67 2.04 2.49 million bbl/day

Total Coal Demand 2.5 million 5 million 35 million ton/year

Share of Synthetic Oil 0.74% 1.27% 7.59%

Total Synthetic Oil

2018

Additional13,500 bbl/day Plant（Investment: $0.8billion）

17

123

4

5

1 Gasifier2 Tar Quenching

3 Wet ESP

4 Diesel Tank

5 Dual-fuel Power Generator

Coal Gasification For Dual Fuel Power GeneratorCoal Gasification For Dual Fuel Power Generator

• Coal is projected to be the main energy source in Indonesia by the year 2025

• The Coming Mineral and Coal Mining Law hopefully will create a better mining development in Indonesia in terms of good investment climate, clear of authority among Central Government, adopted the “sustainable development” principal and giving the maximum for the people welfare.

• R & D on coal as well as crash programs of coal fired power plant have been conducted to increase of coal for domestic use and to decrease dependency on oil.

19

20