Gas Development Master Plan

1. Gas Development Master Plan Overview of the GDMP Model Capacity Building Workshop Bali, 1-2 July 2013

2. Presentation Outline Introducing components of the GDMP Model: • Demand and Supply Scenarios (DASS) • Transport Infrastructure Model (TIM) Demand and Supply Scenarios (DASS) overview: • Objective and key questions • Key outputs Transport Infrastructure Model (TIM) overview: • Objective and key questions • Key outputs Key Results from the GDMP Model

3. Typical phases of a gas producing country Medium and long term planning perspective Economic cost of gas is (at least) current production cost + component (depletion premium) to reflect long run cost of substitute fuel (backstop fuel)

4. Changing perspectives … “Looks good” “OK so far” “Oh dear” “I hope we made good use of that gas”

5. The GDMP modelling framework 2 key task areas • … optimizing the expansion of gas supply and transmission infrastructure in the medium to long term • … policy framework for supporting long-term gas sector development 2 timeframes • 20 years (2040) |50 years (2070) 2 methodologies • Scenarios |Least cost optimisation 2 models • DASS | TIM

6. Components of the GDMP Model DASS TIM Results Demand scenarios Optimisation for infrastructure Supply scenarios New infrastructure to meet domestic demand Export scenarios Cost of new infrastructure Price scenarios Adjusted export Unmet demand Excess supply Government revenues Revenue calculation Infrastructure costs

7. Demand and Supply Scenarios (DASS) – Overview INPUT DATA SCENARIOS CALCULATION OUTPUTS Demand calculation sheet Demand by region and by sector Demand input sheet Supply input sheet Supply calculation sheet Supply-demand graph (initial) TIM Global parameter sheet Annual production by region CONTROL PANEL Export input sheet Price calculation sheet Price input sheet Revenue calculation sheet Government revenue PSC terms input sheet Adjustments sheet Supply-demand graph (adjusted) Input from TIM

8. Objective of DASS and key questions Key issues: selecting parameters to simulate different demand scenarios, different policy options, and different price scenarios. Objective of DASS: Estimate domestic demand, export, and supply projections up to 2070 based on selected scenario parameters Calculate estimated government revenue based on selected scenario and cost of selected infrastructure (from TIM) Key questions: What are the factors and how will they effect demand and export? How will price of gas (domestic and export) change over time? What are the policies that will effect demand? How are these policies effect demand? How will government revenue be effected by the different demand scenarios? How will the cost of infrastructure (from TIM) effect government revenue?

9. Key outputs of DASS Initial output projections Domestic demand projections for major industries, electricity generation, domestic distribution (households and small commercial), and transport by region Export projections based on existing contracted volumes Supply projections based on production volumes of each region Adjusted outputs based on results from TIM Estimated government revenue based on selected demand and supply scenario and cost of new infrastructure from TIM New demand and supply balance

10. DASS initial outputs: demand and supply projections

11. Transport Infrastructure Model Overview SCENARIOS RESULTS INPUT DATA Infrastructure cost and timing requirements by region DASS inputs Demand data Supply data Export data CONTROL PANEL S/D balances, exports, and unmet demand byregion Connection Concepts Run minimisation Interregional LNG and pipeline flows Transport costs used in minimisation

12. Key issue for Gas Infrastructure Policy: supply centres removed from major demand centres Objective of TIM: identify set of least cost infrastructure options to balance supply and demand across regions until 2040 Key questions What is the last cost infrastructure portfolio to balance regional supply and demand? What are optimized interregional LNG and pipeline flows? What are the liquefaction, regasification and interregional pipeline capacity requirements in each region? What is the volume of unmet demand/imports in each region? What is volume of excess supply, i.e. gas not consumed domestically or exported? What is the cost of delivered gas in each region? Objective of TIM and key questions

13. Key outputs of TIM Infrastructure planning Liquefaction, regasification and pipeline capacity needed to supply gas into each region Optimized pipeline and LNG flows across regions Earliest year gas transport infrastructure in each region is needed Export and production policy Level of unmet demand, i.e. domestic demand that cannot be covered by domestic production Volume of excess production, i.e. scheduled production that is neither exported nor domestically consumed Investment requirements Total cost of infrastructure requirements to balance supply and demand

14. Output: Regional S/D balances, unmet demand, exports and interregional flows

15. Output: Interregional flows by connection concept

16. Output: Costs, capacity requirements and throughputs

17. Key results of the GDMP Model Infrastructure planning List of infrastructure needed to meet domestic demand, earliest year needed and cost of infrastructure Adjusted demand-supply balance Government revenue Estimated government revenue based on selected demand and supply scenario and cost of new infrastructure from TIM

18. GDMP Model Key Results – list of infrastructure plan If it is an existing infrastructure, what is the existing capacity What is the total cost and unit cost to build the additional capacity What is the additional capacity needed Which locations are being connected by the new infrastructure What is the connection types

19. GDMP Model Key Results – new demand supply balance If transfers exceed production, could mean that this region imports gas and then transfer to other region(s) Example from Central and South Sumatera After running TIM, excess supply is now transferred (purple bars) to other region(s) Grey area shows excess supply from this region TIM only runs to 2040

20. GDMP Model Key Results – Estimated government revenue and economic value Discounted costs, to 2050 Undiscounted costs, to 2070 – very large unmet demand (depends on scenario)