Gas Development Master PlanSteering Committee Meeting – 28 March 2012Draft Policy Note 3 : Identification of Policy Gaps andRecommendations for Policy Action
2Outline• Available documentation• Current roles and responsibilities• Exports and domestic use• PSC extension issue• Co-ordination and implementation plans• Recommendations
3Available documentation – National GasBalanceKEMENTERIAN ENERGI DAN SUMBER DAYA MINERALNERACA GAS BUMI INDONESIA2012-2025REPUBLIK INDONESIA
4Available documentation – National MasterPlan for Gas Pipelines
5Current roles and responsibilitiesGASSUPPLYCHAINMEMR/MIGASBPH MIGASSKK MIGASBAPPENASNATIONALENERGY COUNCILMINISTRY OFPUBLIC WORKSMINISTRY OFHOME AFFAIRSMINISTRY OFTRANSPORTATIONMINISTRY OFAGRICULTUREMINISTRY OFFORESTRYMINISTRY OFENVIRONMENTMINISTRY OFLAW AND HRMINISTRY OFSOESCHAIRMAN OFNATIONAL LAND BOARDGOVERNORSREGENTS/MAYORSMINISTRY OFFINANCECOORD MINISTERECONOMYMINISTRY OFINDUSTRYBased on Presidential Decree No. 2 of 2012
6Domestic and export volumesSource: Ministry of Energy and Mineral Resources
7Options for switching export to domesticmarket•Recent past: Gap between gas volume exported and solddomestically has narrowed over past 10 years. Today gasexports and domestic almost in balance.•Future challenge: Domestic demand for gas likely tocontinue growing (but may be impacted by higherdomestic gas price). Should gas exports be reduced andpossibly eliminated in order to meet this demand?•GDMP model analysis: Model being developed willquantify value to be derived from nation’s gas reservesand resources when used domestically and exported
8Domestic and export benefitsEXPORT BENEFITS DOMESTIC BENEFITS• Foreign exchange/highprices• High credit-rated buyers• Leverage/geo-politicaladvantage• Value added for industries• Increased certainty gassupply for infrastructuredevelopers• Lower GHG emissions• Substituting gas for oil intransport reduces oilsubsidy
9PSC extension issue•Uncertainty is constraining both investment and gasproduction• 40% of operating PSC’s expire over next 11 years• No clear deadline by which Government must decide ifextension approved (and if any conditions)• Should local Governments (BUMD’s) seek to extendshare beyond 10%, who will decide this and what areimplications for future project funding
10GAS FOR TRANSPORTATIONInvestors need to know howcommitted GOI is to ensuring gas isavailable and targets set for eachtransportation sector (public,commercial, private, etc)Co-ordination and implementation plansLNG REGASIFICATION TERMINALSFSRU projects: Jakarta, Medan,Lampung, Semarang, East JavaNeed more co-ordination indecision-making across supplychain and identification of who isaccountable for meeting targets,deadlines, etc
11Policy Recommendations• Government (MIGAS) to share information on sources ofdata and assumptions behind forecasts. This will assistinvestors to formulate business cases for new projects toencourage:• New supplies of gas to be brought on stream• New gas infrastructure to be built• End users of gas to locate new facilities close to where gas isaccessible, where possible• Issue regulation clarifying PSC extension process• Prepare road map for increased use of gas in transportsector (milestones, target)• Establish a new GOI body to formulate a fully integratedgas supply chain development plan• Land access and permitting – Enable projects of strategicimportance to access support from GOI unit which canfacilitate this process with local communities
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