BIOFUEL - PROGRESS IN INDONESIA

2nd INDONESIA INTERNATIONAL FUEL AND LUBESCONFERENCE AND EXHIBITION

Jakarta, 19 November 2007

Dr.-Ing. Evita H. Legowo1st Secretary of National Team for Biofuel Development

OUTLINEOUTLINE

Background Background Target Of Target Of BiofuelBiofuel Share In Share In 20102010BiofuelBiofuel ProgramProgramChallengesChallengesProgress of Progress of BiofuelBiofuelDevelopmentDevelopment

BACKGROUND

Natural Gas, 28.57%

Coal, 15.34%

Oil51.66%

Geothermal, 1.32%

Hydro Power, 3.11%

CURRENT ENERGI MIX (1 billion BOE)National (Primary) Energy Mix

Coal , 33%

Gas, 30%

Oil,

20%

Biofuel, 5%

Geothermal, 5%

Biomass, Nuclear, HydroSolar Energy, Wind Power, 5%

Coal Liquefaction

2%

RE,17%

National Energy Mix 2025 (3 billion BOE)(Presidential Decree No. 5/2006)

NATIONAL ENERGY POLICY(PRESIDENTIAL DECREE NO. 5 YEAR 2006)

LAW NO 30/2007 ON ENERGY

• Central and Regional Government have an obligation to increase supply and utilization of new energy and renewable energy, in their scope of authority.

• Energy supply from new energy and renewable energy resources that is carried out by corporate, and private may gain facilities and/or incentives from Central Government and/or Regional Government in their scope of authorizations for specific period of time until it meets its economical value.

ENER

GY

DIV

ERSI

VIC

ATI

ON

1. High bio-diversity in Indonesia, including biofuel feedstock

2. Land availability for biofuel development

3. Proven biofuel technology by local potential (Engineering, Research and Development)

4. Biofuel industry allows community participations, including farmer

5. High number of unemployment (40 million people) that could be employed in biofuel industry

6. Opportunity in exporting biofuel product

7. Biofuel is renewable energy.

BACKGROUND OF INDONESIAN BIOFUEL DEVELOPMENT

TARGET OF BIOFUEL SHARE IN 2010

Briquet Coal1.2%

BIOFUELS (Biooil)3.7%

Electricity40.1%

LPG19.0%

NG6.4%

CNG1.5%

Oil28.1%

Briquet Coal0.1%

BIOFUELS (Biooil)0.0%

Electricity36.1%

OIl53.1%

LPG10.6%NG

0.1%

CNG0.0%

TARGET OF BIOFUEL SHARE 2010

Household and Commercial 2010Household and Commercial 2006

Transportation 2006 Transportation 2010

Gasoline54.0%

Automotive Diesel Oil45.9%

BIOFUELS (Bio-Diesel)0.0%

NG0.0%

Electricity0.0%

BIOFUELS (Bio-Oil)0.0% BIOFUELS (Bio-

Ethanol)0.0%

Automotive

Gasoline46.5%

Diesel Oil42.3%

BIOFUELS (Bio-Ethanol)

7.6% BIOFUELS (Bio-Oil)1.9%

BIOFUELS (Bio-Diesel)0.4%

NG1.4%

Electricity0.0%

Electricity13.1%

Oil43.8%

LPG1.1%

Coal22.5%

Gas19.6%

TARGET OF BIOFUEL SHARE 2010 (continuation)

Power Plant 2006 Power Plant 2010

Industry 2010Industry 2006

Coal46.2%

Gas14.3%

Oil23.7%

Coal-Hybrid0.0%

BIOFUELS0.9%

Geothermal5.3%

Hydro9.6%

Coal71.4%

Oil2.7%

Gas8.3%

Coal-Hybrid2.2%

BIOFUELS0.8%

Geothermal6.8%Hydro

7.8%

Electricity12.4%

Oil27.8%

Biofuel3.1%

LPG1.4%

Coal34.9%

Gas20.4%

BIOFUEL PROGRAM

BIOFUEL DEVELOPMENT STRATEGY

Fast TrackEach Region

Developing its Biofuel Potential

SPECIAL BIOFUEL ZONE

Create Job

Poverty Alleviation

Energy

SHORT RUN LONG RUNEnergy Self Sufficient

Village

• Infrastructure• Demplot• On time schedule• Explicit investment

employment ratio

TARGET 2010

1. Job creation for 3.5 million unemployment

2. Increasing income for On-Farm and Off-Farm workers in biofuel sector up to the Regional Minimum Payment

3. Development of biofuel plantation in 5.25 million ha unused land

4. 1000 Energy Self Sufficient Villages and 12 Special biofuel Zone

5. Reducing Fossil Fuel for transportation up to 10%

BIOFUEL FEEDSTOCKPalm Oil

Jatropha curcas

Cassava

BIOOILBIODIESEL

BIOETHANOLSugar cane

MA

IN F

EED

STO

CK

BIOOILBIODIESEL

BIOETHANOL

UN

DER

DEV

ELO

PMEN

T

Coconut

Micro algae

Seed of Hevea braziliancis

Aleurites molucana

Waste

Sweet sorghumSugar palm

SagoCorn

Waste

BIOFUEL PRODUCT

Bioethanol

B I

O F

U E

L

Gasoline Substitute

Biodiesel Diesel Fuel Substitute

Bio-oil or Pure Plantation Oil Fuel Oil

SubstituteIDO

Substitute

ADOSubstitute

Kerosene Substitute

CHALLENGES

CHALLENGES 1. Land availability for Biofuel Development

Land availability inventory, synchronizing data

2. High price of biodiesel feedstock, especially CPOFeedstock diversification is needed

3. Improving quality of Biofuel commoditiesAgricultural research on biofuel commodities sector

4. Improving national technological capabilities on biofuel processingResearch and Development, technology transfer on biofuel processing with more experienced parties

5. The price of biofuel that has not yet competitive in compare with fossil fuelFeedstock diversification and effective technology will decrease the price of biofuel

6. Issues fuel versus food

PROGRESS OF BIOFUEL DEVELOPMENT

Availability of biofuel Development Blue Print and Road MapAvailability of biofuel Development Regulations and StandardsBiodiesel (B-2.5), has been sold in 202 gas stations in Jakarta, 11 gas stations in Surabaya, and 10 gas stations in Bali.Bioethanol (E-3), biopremium is available in 1 gas station in Malang. Bio-Pertamax has been sold in 14 gas stations in Jakarta, 7 gas stations in Surabaya, 4 gas stations in Malang, and 10 gas stations in Bali.Starting of Energy Self Sufficient Village (ESSV) using biofuel, this month will be launched 132 ESSV.Commitments of Investor to develop biofuel (17M US$)Biofuel production has been started in Indonesia

BIOFUEL DEVELOPMENT PROGRESS

REGULATIONS related to BIOFUEL DEVELOPMENT

1. Presidential Regulation No. 5/2006 on National Energy Policy

2. Presidential Instruction No. 1/2006 on Supply and Utilization of Biofuel as Alternative Fuel

3. Presidential Decree No. 10/2006 on The Establishment of National Team for Biofuel Development

4. Estate Crop Law No. 18/2004

5. Government Regulation No. 1/2007 on Income Tax Facilities for Investment Activities in Specific Industries and/or Particular Region

6. Government Regulation No. 8/2007 on The Government Investment

7. Law No. 22/2001 on Oil and Natural Gas

8. Presidential Regulation No. 36/2004 on Oil and Natural Gas Downstream Activities

9. Minister of Energy and Mineral Resources Decree No. 051/2006 on Guideline and Procedure for Biofuel Businesses

10. Minister of Finance Decree No. 117/PMK.06/2006 on Credit for the Development of Biofuel Energy and Plantation Revitalization

11. National Standard (SNI) for Biodiesel No. 04 – 7182 – 2006

12. National Standard (SNI) for Bioethanol No. DT27 – 0001 – 2006

13. Director General for Oil and Gas Decree No. 3674K/24/DJM/2006 on Gasoline Specification for Domestic Market

14. Director General for Oil and Gas Decree No. 3675K/24/DJM/2006 on Diesel Fuel Specification for Domestic Market

15. Director General for Oil and Gas Decree No. 13483K/24/DJM/2006 Biodiesel Specification for Domestic Market

REGULATIONS related to BIOFUEL DEVELOPMENT (continuation)

• Governmental Regulation No. 1 / 2007on Income Tax for Investment in Certain Businesses and/or Certain Area

Biofuel development is included in certain businesses which is given income tax facility in form of net income reduction, 30% from the total investment.

• Governmental Regulation No. 8 / 2007Set up of Indonesia Biofuel Fund

• Seed Capital for Indonesia Biofuel Fund: US$ 220 million.

FACILITIES AND INCENTIVES FOR BIOFUEL DEVELOPMENT

JatrophaJatropha NURSERY NURSERY

Center Center PakuwonPakuwon-- West JavaWest Java

• Minister of Finance Regulation No. 117/PMK.06/2006

on Credit for Bio-energy Development and Plantation Revitalization

Credit for bio-energy development and plantation revitalization is prepared in order to support funding for biofuel feedstock development program and plantation revitalization.

Plantation development that could be funded by credit for bio-energy development and plantation rehabilitation includes plantation expansion, rehabilitation and rejuvenation.

FACILITIES AND INCENTIVES FOR BIOFUEL DEVELOPMENT (Continuation)

Biofuel for Community Developments

Biofuel for Rural CommunitiesSmall-Scale Bio-Energy Project:

Bio-Briquette: Jatropha Seeds.PPO: a blend of Straight Jatropha Oil with

Diesel-Fuel for Rural Tractor, Water Pump & Transportation or Fishing Boat Engine.Bio-Fertilizer: from organic waste.Bio-kerosene for cookingBio-soap: from Jatropha Oil.

Government Grant for Superior seedling/ Nursery, Small-scale Plant, Pilot Projects, Irrigation

Energy Self Sufficient Village

PRODUCTION OF FUEL GRADE BIOETHANOL – April 2007: 82.500 KL

BPPT Lampung2,500 kl/yr(cassava)

SUGAR GROUPLampung

70,000 kl/yrMolindo RayaMalang, Jatim

10,000 kl/yr

ADDITIONAL PRODUCTION OF FG BIOETHANOL:2 million up to 2,7 million kL/year (1,1 million ha): 2007 – 2010

Sugar caneCassava

SALIMGROUPSumsel

70,000 kl/yr70,000 ha

MITSUIPETROBRAS

Papua, Kalimantan,500,000 kl/yr200,000 ha

ANGELPRODUCT

Sultra10,000 kl/yr

8,000 ha

WILMAR GROUPLampung, Sumsel

70,000 kl/yr70,000 ha

SUGAR GROUPLampung,

Sumsel,Kalimantan

500,000 kl/yr200,000 ha

SUNGAI BUDILampung

120,000 kl/yr25,000 ha

MOLINDOLampung,

Kediri, Pacitan100,000 kl/yr

25,000 ha

SAMPURNAMadiun,

Pawonsari375,000 kl/yr100,000 ha

SORINI TbkSultra,

200,000 kl/yr150,000 ha RNI, PTPN

2,8,8,9,10,11,14Sumut, Lampung, Sulsel, Jawa, NTT

200,000 kl/yr60,000 + 40,000 ha

MEDCOLampung,

Jabar,Kalimantan

270,000 kl/yr50,000 ha

EN3 KoreaSulsel,

180,000 kl/yr45,000 ha

PRODUCTION OF BIODIESEL – October 2007: 840.000 Ton/Year

WILMARGROUP Dumai350,000 ton/yr

(CPO)

ETERINDOGresik &

Tanggerang120,000 ton/yr

(CPO)

BPPTSerpong

300,000 ton/yr(CPO)

RAPBintaro

1,650 ton/yr(CPO)

PTPN 4 & GANESHA

ENERGI Medan4,000 ton/yr

(CPO)

SUMIASIHBekasi

40,000 ton/yr(CPO)

EAI Jakarta500 ton/yr

(CPO)

DHARMA4,000 ton/yr

(CPO)

PT. INDOBIOFUELSENERGY

20.000 ton/yr(CPO)

ADDITIONAL PRODUCTION OF BIODIESEL : 7 million kL/year (3,6 million ha): 2007 – 2011

SawitJatrophaWILMAR

GROUPSumatra, Borneo

1,000,000 kl/yr180,000 ha

SINARMASDumai

400,000 kl/yr

BAKRIE,INDOFOOD,ASIANAGRO

SUMIASIHSumatra, Jawa

600,000 kl/yr

TOLARAMKalbar

110,000 ha

BPNTT, Papua,Kalimantan100,000 ha

SWEDENBIOENERGY

NTT 350,000 kl/yr100,000 ha

APROBIGROUP

Kalimantan100,000 ha

INDOMALSula &

Merauke300,000 ha

GENTINGGROUPMerauke

400,000 ha9 BADANUSAHAMerauke

340,000 ha

SINARMASKalbar,

Merauke440,000 ha

MUTING GROUPMerauke

290,000 ha

CLEANBIOFUELGorontalo50,000 ha

ASIATIC GROUPKalbar

80,000 haBUMN AGRORiau, Jambi,

Sumsel,Kalimantan, Papua

Inti 220,000 haPlasma 880,000 ha

INDOMAL+PTPNMedan, Banten,

Pekanbaru1,500,000 kl/yr

PERTAMINADumai,

Balongan,Balikpapan500,000 kl/yr

LEMIGASJawa, 3000 kl/yr

PT. INDO BIOFUELS

ENERGYMerak,

160.000 kl/yr

BIOFUEL POWER GENERATOR 2007

No. Location Numbers of Power Generator

Total Capacity (MW)

1 North Sumatera 1 4.5

2 Maluku 7 4.0

3 Riau and The Islands of Riau 2 14.1

4 Lampung 1 11.0

5 Bali 1 1.5

6 South Kalimantan 5 19.8

7 East Kalimantan 7 16.0

TOTAL 24 70.9