PT Bayu Buana Gemilang

Remote Region LNG Supply Makassar Project

CONCEPTUAL STUDY

(DRAFT)

0 Jul -11 First Issue REV DATE DESCRIPTION Rico P

Table of Content

1. Introduction 1.1.Site Location Supply Locations (Jakarta Hub, Energy Equity Sengkang, Bontang, Tangguh) Offtake Locations 1.2.Study Background 1.3.Study Objective 2. Pre-screening Studies 2.1. Supply Location Selection 2.2. Offtake Location Selection (Pertamina Port, Pautere, Utea, etc) 2.3. Gas Demand Study (Tello PP – off take sizing, etc) 2.4. Transport Moda Selection (Type of ship/barge, Size, no. of ship, speed, indicative price, etc) 2.5. Regas Moda Selection (hybrid, land base, platform jetty, etc) 2.6. Storage Requirement Study (small scale FSRU, gravity base storage, onshore storage, etc) 2.7. Gas Transport to Customer (why pipeline is the only workable choice) 2.8. Barrier to Entry Study (existing players, market intelligent, existing energy price, etc) 3. Scenario Comparison 3.1. Qualification Criteria (Tello PP requirements, site location situation, social condition, whether condition, sea condition, etc) 3.2. Scenario Pre-selection (scoring table) 3.3 Scenario Evaluation (Technical, economic/financial pre-studies, etc)

4. Recommended Scheme 4.1. Technical Cost 4.2. Execution Plan 4.3 Summary 5. Follow up Actions / Outstanding Issues 5.1. Detail ship specification (ship particular) + charter rate 5.2. Barge option (particular requirements, mode cost, etc) 5.3. Power Plant Profile (Turbine specification, future development, existing pipe route, current energy supply, gas supply specification, PLN approach, etc) 5.4. Potential Pipeline Route 5.5. Potential Terminal Location 5.6. Source of Supply (detail of supply potential) 5.7. Permiting (Location permit – Pemda, Terminal location permit – Dep. Hub, etc)

Figure List Figure 1. Figure 2. Figure 3. Figure 4. Figure 5.

Attachments Attachment 1 - Attachment 2 - Attachment 3 - Attachment 4 - Attachment 5 -

1. Introduction 1.1 Site Location

In order to support The Indonesian Government to maintain and to keep the stage of Energy Sustainability especially in eastern part of Indonesia, BBG is pro-actively taking part in to the campaign, by providing an alternative solution as to give an answer of short energy supply in the East Indonesian areas nowadays. After resuming from The Jatim - Jateng Project, and it’s first Micro LNG Project, BBG plans to develop 2nd Micro LNG (“Remote region LNG Supply”) Business in some pre-targeted markets / areas, that is expected to be able to start delivering (supply) LNG for several local Power Plants in east Indonesia areas in the forthcoming 2015.

BBG intent to utilize necessary free cash flow for the operation research and competency development for the purpose stated above. BBG’s targeted delivery points will be Makassar, Pomalaa, Bali, Mataram, Kupang, Menado, Ternate and Ambon. Whilst several supply points indicated as Jakarta FSRU Hubs, Equity Energy Sengkang, Donggi Senoro, Bontang as well as Tangguh are taken in to consideration. The BBG objective in 2025 (or earlier) is to reach a state where the company can supply a demand of 400 Bbtud of LNG to islands of Indonesia for power generation and industries. However on its first stage of development, adopting Blue ocean strategy, BBG decided to focus only on certain markets where it’s relatively less developed by virtue of its less competition.

Of which as to initiate the Study, it’s decided to chose Makassar with the demand of abt. 32 mmscfd Natural gas, consumed for the Tello Power generation (State owned Power Plant / PLN Makassar) 1.2 Study Background The BBG strategy is to develop the most optimized solution that able to deliver an un-interruptible service of abt. 32 mmscfd gas supplies to The Tello Power Plant at Makassar, at a reasonable economic cost by constructing the most suitable infrastructures as well as utilizing the right assets that’s fit to its entirely logistic design calculation. Thus included but not limited to chartering and deploying an FSRU (Floating Storage & Regasification unit), developing small scale land-based Terminal, or gravity based Terminal, developing mooring Terminal, jetty & platforms, pipeline (sub-sea and onshore), onshore receiving facilities, chartering the right size & types of the transporting vehicles (i.e. Small scale LNG vessels, LNG barges), etc

1.3 Study Objective The conceptual study was aimed to propose the most optimized solutions to develop Makassar LNG terminal to be able to supply natural gas at 32 mmscfd to local power plants and Industries starting 2015 onwards.

2. Pre-screening Studies 2.1 Supply Location Selection

There are several sources of supply locations in Indonesia taken in to consideration, such as; - Jakarta FSRU Hub, distance abt. 600 NM away from Makassar - Energy Equity Sengkang, distance abt. 100 NM away - Donggi Senoro, distance abt. 300 NM away - Bontang Kaltim, distance abt. 500 NM away - Tangguh Papua, distance abt. 900 NM away The availability of all would be still subject to the firmed allocation from BP MIGAS Indonesia in regard to the Domestic market obligation 2.2 Off take Location Selection At this preliminary stage study, there are 3 proposed locations available for the off take Terminal at Makassar, i.e; a) In way of Pertamina Depot 7 UPMS Makassar Port

b) In way of Paotere Port c) In way of Untea Port All of them are having each advantages and disadvantages, further detailed as follows;

Pertamina Depot 7 UPMS Advantages Disadvantages

Crowded International Port Abt 10 km away from PLTG Tello High Potential social challenges Close to the existing UPMS 7 Depot facility supplying fuel oil (HSD) to PLTG Tello International navigational channel Too many interests involved Paotere

Advantages Disadvantages Abt 9 km away from PLTG Tello Crowded traditional boat terminal High Potential social challenges Untea

Advantages Disadvantages Abt 15 km away from PLTG Tello Green-field not developed yet Initially designed and planned for fisheries port

Figure 1. Map of Makassar Beside the above advantages and disadvantages as a preliminary study for location selection. Further, crossing to existing pipelines or cables, traffic, pipeline routing safety shall be put in to consideration on the further study. Last but not least The Latest updated and approved by Local Government Makassar City MasterPlan has to be put in to consideration for the location choices. As to summarize, at this preliminary stage, the location in between Paotere port and Untea Port is believed to be the most suitable for the purposes, considering all the aspects involved, however detailed proposed pipe route still need to be further defined in the next stages of study. 2.3. Gas Demand Study The preliminary data obtained from The PLN Power Plant Sector Tello Makassar, the following demand are figured out.

No Power Plant Unit

Type Existing Fuel

Installed Capacity (MW)

Capacity (MW)

Gas Demand (MMSCFD)

1. Westcan Gas Firing HSD 14.5 9 2.30 2. Alstom#1 Gas Firing HSD 21.4 12 3.07 3. Alstom#2 Gas Firing HSD 20.1 12 3.07 4. GE – 2 x 33,4 Gas Firing HSD 66.8 55 14.07 5. Mitsubishi 2 x 12,6 Diesel Firing MFO 25.2 18 4.61 6. SWD 2 x 12,4 Diesel Firing HSD 24.8 18 4.61 172.8 124 31.73

The above were calculated based on the requirement of both power plants which so far consumed diesel oil as well as those which are originally designed for gas consumed engines. From which at this preliminary stage, for the sake of Preliminary Study supply unit size was defined at abt. 32 MMSCFD.

Figure 2. Location of PLTD/PLTG PLN Sektor Tello Makassar

2.4. Transport Modal Selection There are several marine based modes of gas transportation put in to consideration as follows; 2.4.1. Mini / Small Scale Gas carrier

There are several ship’s (vessel’s based) designs which were developed from the originally conventional LNG carrier, with however small scale capacity (sizes) that is considered to be fit for the purposes. Those designs are as follows

a) MV. Pioneer Knutsen So far known to be the World smallest LNG Carrier that performs Norwegian west coastal service. It was designed by MARINTEK with the total cargo capacity of 1,100 CBM, consists of two each 550 CBM C Type Cargo Tanks. The vessel’s detailed particular are as follows; - LOA : 69 m - Beam : 11.8 m - Draft : 3.3 m - DWT : 640 T - Class : DNV Class

Figure 3. 1,100 CBM LNG Carrier MV. Pioneer Knutsen

b) MV. Shinju Maru No.1 She was performing Japanese coastal service since 2003. It was designed by one Japanese Ship Designer and Classed by NKK. The vessel total capacity is 2513 CBM, consists of two C Type Cargo Tanks. The vessel’s detailed particular are as follows; - LOA : 86.29 m - Beam : 15.10 m - Draft : 4.17 m - DWT : 1,781 T - Class : NKK Class

Figure 4. 2,513 CBM LNG Carrier MV. Shinju Maru No.1

c) MV. Coral Methane A 7500 CBM Coral Methane was the first multipurpose gas carrier built for Holland based company named Anthony Veder, who owned and operated fleet of LNG carriers of various size. This vessel was built at one Polish shipyard and delivered in the year of 2009. She is flying Dutch flag, and classed under BV Class. The cargo containment system is using IMO Type C Tank. The vessel under long time (15 years) chartered by Norwegian Gas Utility, Gasnor AS, and served LNG distribution along the rugged coast of Norway. Technology application & design wise pretty close and similar to those IM Skaugen SE / Norgas’s vessels.

Figure 5. 7,500 CBM Coral Methane with 2 x Azipull Thruster Total 5,000 kW

d) MV. Norgas Innovation & Norgas Creation Design was developed by I.M Skaugen SE; the design was developed in to two basic designs of each 10,000 CBM as well as 12,000 CBM Multigas Carriers. They’re using Type C cargo tank / containment systems. A DNV Classed vessel.

Figure 6. 10,000 & 12,000 CBM Multigas Carrier by IM. Skaugen SE

2.4.2. Mini / Small Scale LNG Barges Several designs of Small scale LNG Barges were taken in to consideration such as Waller marine designs as well as IM. Skaugen barge designs. The followings are typical of the barge designs.

Figure 7. Typical of abt. 4,000 to 5,500 CBM LNG Barge designs All above mentioned modes of transportation are having each advantage and disadvantages, further detailed as follows;

Mini / Small Scale LNG Carriers Advantages Disadvantages Navigationally safe for ocean going voyages Relatively more costly, and took longer time for fabrication

High speed more TRV’s Carry relatively less cargo tonnage Draft constraints Mini / Small Scale LNG Barges

Advantages Disadvantages Relatively cheaper, and faster to fabricate Not so safe for ocean going voyages due to stability issues, more fit for coastal sails only Carry relatively more cargo tonnage Having less speed, longer TRV days Able to reach area with less water depth due to minim draft

Beside the above advantages and disadvantages as a preliminary study for transportation modal selection, the cargo sizing vs the available vessel’s space / capacity for cargo would be the next crucial issues in the logistic service design and calculation.

The IM Skaugen SE design for the 10,000 CBM Multigas Carrier has been selected preliminary as the marine transportation modal, since it’s designed size was believed to be the most ultimate suits to deliver and perform an uninterruptable supply of 32 MMSCFD gas to the Plant. 2.5. Regas Modal Selection

There are several Regassification Technologies taken in to consideration as follows; 2.5.1. Land-based Regassification Plant

Figure 8. Typical Small Scale Receiving Terminal at Norwegian Coast 2.5.2. Mini Scale Regassification Plant on top of Jetty Platform/Barge

Figure 9. SBM Offshore solution for Mini Scale Regassification Plant on top of Jetty Platform/Barge complete with Cryonom inset

2.5.3. Hybrid Floating Storage and Re-gasification Vessel

Figure 10. TGE Concept Design for Hybrid LNG-FSRU

Land Based Re-gasification Plants Advantages Disadvantages Cheaper to construct Land Acquisition to meet safety criteria will be difficult to get

Easier to construct Land acquisition will be pricy More difficult to get permit Small Scale Re-gasification on Barges

Advantages Disadvantages Quicker to implement Location selection in relation with permit to be considered as a barrier Cost relatively moderate No land acquisition is required Hybrid Floating Storage & Regas Vessel

Advantages Disadvantages Compact / Sophisticated design The most expensive Longest time to build

2.6. Storage Requirement Study

At this preliminary stage, selection was made toward the available options of the LNG storage system on the basis of the most suitable choices to the requirement (fit for purposes) The available options are detailed as follows; 2.6.1. Small Scale FSRU

Figure 11. IM Skaugen SE Small Scale FSRU

This concept was first introduced and developed by Waller Marine of US and IM Skaugen SE, with the LNG capacity ranged from 6,000 CBM up to 10,000 CBM. 2.6.2. Gravity Based Floating Storage

Figure 12. BW Terminal Gravifloat

Concept first introduced and developed by BW Group, offering stage of flexibility in sizing and relocation after decommissioning. Flexible in handling due to its

modular forms, construction on shipyard, towed, installed and commissioned on site. 2.6.3. On-Shore / Land-based Storage

Figure 13. IM Skaugen SE Small Scale Land based Terminal using Modular Tanks

The concept is offering advantages such as flexibility in sizing and relocating the assets due to its modular forms, relatively cheaper and faster to build, in fact is a solution that is more endurable to the bad weather compare to any typical floating assets.

Small Scale FSRU Advantages Disadvantages Compact / Sophisticated design Longer time needed to design and build

Flexible in deployment Relatively costly to build No land acquisition involved and away from public, less potential social cost Vulnerable to Bad weather Existing LNGC convertible Gravity Based Floating Storages

Advantages Disadvantages Quicker to implement Location selection in relation with permit to be considered as a barrier Cost relatively moderate Vulnerable to Bad weather No land acquisition is required, away from public, less potential social cost Flexible in re-deployment Land based Storages

Advantages Disadvantages Lower Capital cost Land acquisition involved, within range to the nearest public Less time required to build Tank modules could be relocated, possible for truck transporting Location selection in relation with permit to be considered as a barrier Bad weather endurable Maintain relatively long cryogenic LNG pipe could be costly

2.7. Gas Transport to Customer

At this preliminary stage of study, it’s defined that the gas transport modal to the customer would be through pipeline network. The choice was made on the basis of the followings: Distance from re-gasification terminal to power plant is considered short. Range

distance between 10-15km. Topographic from re-gasification terminal to power plants relatively flat. No hydraulic issue to supply using pipeline. Continuous gas supply to power plant is expected – supply using pipeline will have a reliability on continues supply Supply volume is expected to be 30mmscfd. In this case investment cost to build pipeline will be the lowest compare to other alternative of supply.

2.8. Barrier to Entry Study It’s known that PERTAMINA & PLN (Indonesia Power) have entered in to an MOU, enable PERTAMINA or it’s later joint ventures will supply gas to the PLN (IP) power plant at Makassar area as well as Pomalaa, however till to date there has been nothing progressing.

In the mean time, one local natural gas Producer, Energy Equity Sengkang have delivered presentation to the local South Sulawesi Province government to deliver their produced gas of abt. 70 mmscfd to Bali in the form of LNG through it’s LNG vehicle i.e. SS LNG Sengkang irrespective of local demand of abt. 32 mmscfd to Makassar. The gas demand of abt. 32 mmscfd for Makassar city have been well known in the market, according to the Local government owned company (Perusda) there have been at least 8 parties (including BBG) who have declared their interest to develop LNG trade to Makassar, and offering cooperation-ship with local government owned vehicle for joint study. One of them is Prodigy (owned by Bakrie Group who owned of abt. 30% shares of Energy equity Sengkang), the other parties beside BBG are BOSOWA, TONASA, etc. One advantage out of BBG was that BBG had once delivered presentation to The Local Province Governor, and managed to get a positive respond. Another issues would be again the current price of The Natural Gas at the producer’s end against the PLN (IP) ability to absorb the price of natural gas at their end, after considering all the transport, ragas cost fee plus some risk margin of the traders. 3. Scenario Comparison 3.1. Qualification Criteria The criteria used to qualify the scenario were as follow: 1. FSRT be located in Muara Tawar at water depth 15-16 m 2. Charted FSRT with capacity 125,000-138,000m3 3. Mooring system: Side by side or mooring tower system 4. Pig launcher, pipeline and pig receiver facility to be installed 5. ORF in Muara Tawar 3.2. Scenario Pre-selection 3.3. Scenarios Evaluation

The pre-selected scenarios were evaluated in order to select the most appropriate concept based on the following criteria: technical risk, operating constraint, process flexibility, and impact of construction, environmental value, safety issues, cost and planning 4. Recommended Scheme 4.1. Technical Costs

The below attached project budget estimate is not fully adequate and thus the reported costs are subject to detailed review, and should only be considered as a very preliminary assessment. Reported costs integrate main equipment and bulk procurement, pre-fabrication and site construction/installation. Cost related to land acquisitions, tie-ins to existing facilities and permits are also excluded as well as contingencies.

4.2. Execution Plan

An Indicative planning is illustrated below

4.3. Summary 5. Outstanding Issues The following items should be further followed up/checked/analyzed at pre-project / FEED level:

5.1. Detail ship specification (ship particular) + charter rate 5.2. Barge option (particular requirements, mode cost, etc) 5.3. Power Plant Profile (Turbine specification, future development, existing pipe route, current energy supply, gas supply specification, PLN approach, etc)

5.4. Potential Pipeline Route 5.5. Potential Terminal Location 5.6. Source of Supply (detail of supply potential) 5.7. Permiting (Location permit – Pemda, Terminal location permit – Dep. Hub, etc)

ATTACHMENT 1 – PHASE OF DESIGN STAGE

ATTACHMENT 2 – TIME FRAME OF DESIGN FACILITIES

ATTACHMENT 3 – PIPELINE DESIGN PROCESS

ATTACHMENT 5 – TYPICAL PICTURE OF PIG RECEIVING ON ORF - SSWJ

ATTACHMENT 7 – LOCAL LINE PIPE MANUFACTURER PT KHI PIPE INDUSTRIES

BAKRIE PIPE INDUSTRIES

Attachment 8 - FSRT and facilities budget estimate (supporting data’s)