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)

2. BACKGROUND SOLUTION Huge Fuel Subsidy (~USD 8.0 billion /year)
1,360
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)

3. THE FACT 2. LPG is cheaper and better
1. Kerosene subsidy increases eventhough the government reduce its volume significantly
(Cents USD)
Remarks
Kerosene
LPG
Volume based on calorific Value
1 liter
0.4 kg
Market Price 58 73
Retail Subsidized Price 25 42
Subsidized Price 33 31
Amount of subsidy
12.4
Conversion start
Volume (million KL)
Subsidy (Billion USD)
2001 02 03 04 05 06 07
Saving per liter
20.6
cents
Target Converted
8,000,000
KL/year
Potential Subsidy Saving
1.65
Billion USD
/year
2008 3

4. THE SWITCHING JOURNEY …. Before 2007 2007 - 2010 2011 ~ ….
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 Conversion Packages will be distributed to eligible households.
2 Million KL of Kerosene has been withdrawn and 19 Million of Packages has been distributed in 2008.
In 2009, 4.1 Million KL of Kerosene will be withdrawn and 23 Million of packages will be distributed.
LPG will be the main cooking fuel with estimated total volume 4.1 Million Ton/year.
8 Million KL of Kerosene will be withdrawn.
Non-PSO
(19 Mio)
(23 Mio)
(10 Mio)
No Conversion 4

5. THE KEY ACHIEVEMENTS (as of Oct 1st 2009)
786
THE KEY ACHIEVEMENTS (as of Oct 1st 2009)
# Households & SME Converted
Will be Converted
23,7
39 out of 52 Millions
Converted
5,6
2007 08 09
2010
Total
Replacement Factor:
Kerosene vs. LPG
Kerosene
LPG
1 liter Kero ~
0.3 kg LPG
2007 08 09
2009 Target
2010 Target
Gross Saving
Conversion Cost
State’s Gross Subsidy Saving
Nett Saving
Up to 1.7 Bio USD
2007 08 09
2009 Target
Total
1 USD = IDR 10,431

6. THE KEY BENEFITS 529 # of Trees saved *) 46.6 Mio Value of Investment
786
THE KEY BENEFITS
Indonesia
Government
Business
Environment
End
Users
Environment
CO2 Reduction
State’s Gross
Subsidy Saving
Up to 1.7 Bio
USD
# New Investor
529
Energy Cost
Saving)
42%
(4 USD/Month)
# of Trees
saved *)
46.6 Mio
Net Saving
884 Mio USD
Value of
Investment
1.4 Bio USD
% of program
Supporter *)
89.9 %
# of Cars taken
Equivalent *)
2.8 Mio
*) Modified from GreenworksAsia Report on Emission Reduction from Conversion Program, November 2008

7. 1. Strong Government Policy
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
Retailer
End
User
Retester
Workshop
LPG Bottle Producers

8. CONVERSION’s IMPACT TO THE LPG DEMAND-SUPPLY
(MT)
Demand - Supply
2009
2010
2011 A
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 B
Supply
Pertamina’s Refinery
952,740
1,020,816
907,024
Pertamina’s Upstream
47,000
Other Domestic Producers
918,847
1,292,787
1,292,085
Import *)
1,152,465
1,874,019
2,543,474
Total Supply
*) Import volume will decrease as production from domestic producers increase,

9. LPG BUSINESS GROWTH vs INFRASTRUCTURE
1,360
LPG BUSINESS GROWTH vs INFRASTRUCTURE
Post
Conversion
/hari
Pre Conversion
Conversion Periode
1995
1996
1997
2006
2007
2008
2009
2010
2011
2012
Infrastructure
Pre Conversion
(Before 2007)
Conversion Periode
( )
Post Conversion
(After 2010)
Storage *
136,000 Mton
267,000 Mton
345,000 Mton
Vessel
6 Vessels
1,800 Mton
5 Vessels
10,000 MT
3 FSO Vessels
45,000 MT
6-8 Vessels
10 Vessels
1 FSO Vessels
Filling Station Filling Capacity
5,000 Mton/day
9,000 Mton/day
17,000 Mton/day
Skid Tank
Transport Capacity
5,000 Mton 1 2 3 4
* As per Government’s Requirement : LPG Stockpile 7.5 days for NPSO, 11 days for PSO

10. INFRASTRUCTURE DEVELOPMENT OUTLINE
Pre Conversion
Present
Post Conversion
LPG Depo/
LPG Terminal/
Floating Storage
Tank Capacity :
On Shore Tank : 136,000 MT
Throughput :
3,700 MT/day
On Shore Tank 147,000 MT*
Floating Storage 120,000 MT
Total ,000 MT
Throughput : 9,000 MT/day
Pressurized Storage Construction Progress :
1, Semarang 10,000 MT: ~90%, Onstream Okt’09
2, Gresik ,000 MT: ~90%, Onstream Okt’09
On Shore Tank 205,000 MT
Refrigerated Terminal:
- West Java ,000 MT
- East Java ,000 MT
Total ,000 MT
Throughput : 17,000 MT/day
Pressurized Storage Development :
Tg, Sekong, Bali, Medan, Makassar, Lampung
total capacity 38,000 MT on progress, Onstream
Semarang & Gresik LPG Pressurized Mton Development Progress Tg. Priok LPG Depo Mton

11. INFRASTRUCTURE DEVELOPMENT OUTLINE
Pre Conversion
Present
Post Conversion
LPG Vessels
6 Vessels LPG MT
6 Vessels LPG MT
5 Vessels LPG Semiref @11,400 MT
3 Vessels VLGC (FSO) @45,000 MT
10 Vessels LPG 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 Kg’s LPG Filling Station Kg LPG Skid Tank

12. CONCLUSION Reduce subsidy on fuel Improve quality of life
Reduce CO2 emission
Create more job and investment
Increase World LPG additional
demand

13. Abrigado !
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.
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