Journey towards excellence

Medco role in promoting South Sumatra as future national energy center

Hartono Nugroho

Production Director Medco E&P Indonesia

Sriwijaya University, July 6, 2011

@ PT Medco E&P Indonesia2011 All Information is Confidential 2

Medco Energi

1980 : Established Meta Epsi PribumiDrilling Company

1992 : Acquired small fields in East Kalimantan from Tesoro

1995 : Acquired 100% shares of StanvacIndonesia from Exxon / Mobil

1996 : Discovered largest onshore oil reserve of decade (Kaji-Semoga)

2001 : Largest private Indonesian oil & gas company (100 MBOPD)

2004-2011 : “Go International” by acquiring asset in US, Australia and Middle East

History of Medco Energi

MedcoEnergi : Vision, Mission & Values

Vision :The Energy Company of Choice

Mission :To search for and develop energy resources

innovatively and to increase stakeholders’

values in accordance with the highest ethical

and environmental standards

Values:

Indonesia Operations

Merangin

Lematang

South SumatraRimau

SimenggarisBengara

Tarakan

Senoro-Toili

Nunukan

Jakarta

Sembakung

Jeruk

Bangkanai

Block A

Bawean

SUMATRAKALIMANTAN

SULAWESI

JAVA

PAPUA

“Large portfolio, domestic and international, offers diversification of opportunities and risks across broader geological

formation.”

Medco E&P Indonesia� Producing blocks

� Development blocks

7

1

� Exploration blocks

� Economic interest

5

1

Central Sumatra

International Operations

OMANUSA

YEMEN

TUNISIA

LIBYA

“Global presence enhanced Company’s credibility when negotiating for hydrocarbon assets in under-exploited countries.”

• Medco’s international operations spread across 20 assets in Asia, Africa, and the US

Medco Energi Global

US (incl. Gulf of Mexico)

� Producing blocks

� Exploration blocks

8

5

Oman

� E&P service contract 1

Tunisia

� Development blocks 1

Yemen

� Exploration blocks 2

Libya

� Exploration blocks 1

Medco strategy in oil and gas business

Reserve Growth,

Production Increase

Cost, Revenue and

Resource Optimization

People & Technology

Development

CSR & Local Empowerment

Environmentally prudent

Increase stakeholders’ value

• Government

• Regional Government

• Stock holders

• Creditors

• Management

• Employees

• Local Communities

• Universities

The Energy Company of Choice

South Sumatra is one of national energy centers

909.80

556.62

383.35

670.00

94.93

1,022.35

PAPUA

NATUNA

MOLUCCAS

48.07

49.78

127.21

NAD

NORTH SUMATRA

CENTRAL SUMATRA

SOUTH SUMATRA

EAST JAVA

WEST JAVA

CELEBES

BORNEO3,790.48

111.89111.89111.89111.89

1.28

4.23

8.56

3.70

51.46

18.33

24.32

NATUNA5.74

NORTH

SUMATRA

15.22

17.90

CENTRAL

SUMATRA

ACEH

(NAD)

SOUTH

SUMATRA

WEST

JAVA

6.40

EAST

JAVA

EAST

BORNEO

CELE

BES

MOLU

CCAS

PAPUA

(Advance Resources

Interational, Inc., 2003

processed)

Oil Reserve Jan 2010 Gas Reserve Jan 2010

South Sumatra have significant reserves :

11.27 % of national oil reserves , 11.4% of national gas reserves , 40.3% of CBM resources

Contractors play a key role in cooperation with South

Sumatra stakeholders in monetizing the reserves

Source : ESDMSource : ESDM

• 2011 production : oil 22.58 mbopd , gas 165 bbtupd

• Supply domestic gas for :• Fertilizer plant (Pusri)

• Power plant (e.g PLTG Keramasan, Indralaya, Borang)

• City gas (Sarana Pembangunan Palembang Jaya)

• Energy Conservation/BBG (PDPDE South Sumatra)

• Support SEA Games

• Oil sales to Pertamina Plaju Refinery

• Supply LPG to South Sumatra area

Provide energy to the local

community

Medco contributions to South Sumatra

• Medco South Sumatra working area contributed

$ 3.48 Billion to Government in last 5 years

• Maintain low operating cost to maximize benefit to

the country

Optimize Cost and Maximize Revenue

Medco contributions to South Sumatra

� Green Proper company since 2009

� Re-vegetation program : commit to replant cleared land

� Zero discharge : produced water recycling

� Cluster drilling system to reduce cleared land

� Reduce Emission : Associated gas utilization

Environmentally prudent operation

� Strategic community development and empowerment � SRI Organic farming

� Education & religion facilities

� Training : agriculture, plantation etc

� Technical training for welder etc.

� Local people development : hiring and developing local people since early development and operation

� Increasing local content and supplier development

� Strategic partnership with Sriwijaya University

Corporate Social

Responsibility

Medco future development in South Sumatra :

Going beyond conventional production

• Increase oil production volume from existing reservoir by using new EOR technique (surfactant)

• Implementation of pilot project (EOR) in 2012

• Full scale program aim to increase recovery factor by approximately 8-10%

Rimau Enhance Oil Recovery Project

• Rambutan field : the first CBM study w/ Lemigas (2004)

• Medco : first company sign CBM contract in Indonesia

• Operates two CBM PSC in South Sumatra

• Sekayu PSC will start to produce CBM gas in 4thQ 2011

Coal Bed Methane

• Develop heavy oil prospects requiring complex technology and high investment

• Currently in R&D stage

Rimau Heavy Oil Development

• Explore and develop deep prospect/fractured basement with prospective potential reserves

Onshore deeper prospect exploration

Concluding remarks

1. Medco has operated oil and gas business in South Sumatra for more

than 20 yrs and play important role for national production and

state revenue

2. Medco will explore and develop hydrocarbon with

unconventional ways to support South Sumatra as a National Energy

Center

3. Medco need continuous support from local stakeholders for

sustainability of oil and gas industry in South Sumatra

Thank YouPT Medco E&P Indonesia ….. Proud of its achievements!

PADMA Award 2003 & 2007 :

Government of Indonesia Award for Sustainable Community Development Program

Social Empowerment Award 2007

National Welfare Coordination Minister Award for community development program commitment

PROPER Hijau 2009 :

Minister of Environment Award for consistent environment management

Zero Accident 2007 :

Minister of Manpower and Transmigration Award for zero accident 22.927.321 hours

PROPER Hijau 2010 :

Minister of Environment Award for consistent environment management

ISO 14001 (2007 & 2009) :

TUV Nord Indonesia certification for environmental quality management system