COMPANY PROFILE

EP COMPANY PROFILE

foreword
PT PERTAMINA EP or PEP is one of the most prominent oil and gas producers in Indonesia, will strive to put its best efforts in undertaking the nations duty to fulfilling the needs of Indonesias community at large. With endless waves of passionate enthusiasm, PEP commits to constantly increase its exploration and production undertakings through proper implementation of Good Corporate Governance to achieve the desired-end-state, PEP WORLD CLASS.

messagefrommanagement
When PT Pertamina EP began its transformation journey in 2006, Indonesias economic situation was remarkably motivating. The year was decorated with various records of success, yet also painted with numerous challenges that made us more experienced in managing the company. At early 2006, the country still experienced a carry-over economic burden from the previous year due to oil price increase, which in turn resulted in higher prices. All the while, non-fundamental factors such as geopolitics and market speculation conspired in soaring global oil price trend. Thus, oil and gas industry has continued to appear very prospeting and optimistic in nature. It was within such situation that Pertamina EP sets its transformation pace in motion. The transformation program was designed to resolve technical problems and simultaneously answer the socially situational pressures. With average production growth of 6-7 percent in the past three years, we have high optimism to continue growing and answering both government and peoples challenges to escalate our national oil and gas production.

Tri Siwindono
(President Director)

PEP COMPANY PROFILE EP

02

vision
In becoming the foremost oil and gas producer, PT PERTAMINA EP (PEP) has split its visionary aspirations into a three-year strategic planning period, each of which is aiming to become: Respectable Cost Cost-Effective and Efficient Oil & Gas Producer (for 2006-2008), Number 1 Oil & Gas Producer in Indonesia (2009-2011) and PEP World Class (2012-2014).

corevalues
Highly respecting the corporate ethical values throughout our behavior.
It has been PEP commitment to constantly foster standard ethical behavior and to implement professional business ethics throughout internal and external interactions. Such behavioral sandards, that we call core corporate values, have been perceived as fundamental as well as strong groundwork of a continuous relationship with the stakeholders. The values consist of focus, integrity, visionary, excellence, mutual respect, good corporate governance, optimization, personal quality, empowerment, peerless shareholder value and proper HSE.

mission
While reaching the set objective, PEP consistently strives to run the oil and gas business efficiently, effectively, and within a safe and healthy environment, thus increasing value for the stakeholders.

PEP COMPANY PROFILE EP

04

17 September

ourmilestone

13 September 17 September

Government issued Oil and Gas Law No. 22 Year 2001.

2001

year of

The signing of Coorperation Contract between PT PERTAMINA (Persero) and BP MIGAS on all Oil and Gas Mining Authority Zone.

2003

The establishment of Pertamina EP.

2005

The Signing of Coorperation Contract that established PERTAMINA EP working areas

2005

1968
PERMINA merged with PERTAMIN into PERTAMINA.

20 August

Business wise, the voyage of Pertamina EP is interrelated with its mother company, PT Pertamina (Persero). In harmony with global and national oil and gas industry dynamics, PT Pertamina (Persero) has undergone several changes in name and status. It started with the establishment of PERMINA in 1957, which \turned into PERTAMINA after merging with PERTAMIN in 1968. In 1971, the government issued Law No. 8 that positioned PERTAMINA as state-owned oil and gas company.

to establish separate business subsidiaries so that the business of exploration, exploitation and production of oil and gas become more managable. It was on such ground that Pertamina EP was established on 13 September 2005. Then on 17 September 2005 PT Pertamina (Persero) signed a Production Sharing Contract (PSC) with BPMIGAS, governing all oil and gas mining areas accordingly. Eventually, majority of those areas became Pertamina EPs working areas, including those previously managed by PT Pertamina (Persero) through Technical Assistance Contract (TAC) and Joint Operating Body Enhanced Oil Recovery (JOB EOR).

10 december

1957
Establishment of PT Perusahan Minyak Nasional (PERMINA).

As oil and gas environment continues to shift, the government responded by issuing Oil and Gas Law No. 22 Year 2001 which altered the status of PERTAMINA into a State-Owned Enterprise, which renamed PT Pertamina (Persero), with separate Directorates for the upstream and downstream businesses. The law also urged PT Pertamina (Persero)

PEP COMPANY PROFILE EP

06

businessfocus
PEP strives to transcend maximum efforts and synergy throughout all levels of the organizationin order to achieve excellent outcomeat the end of the day.

corebusiness
PT Pertamina EP (PEP) is an operating subsidiary business unit that focuses on managing the upstream oil and gas production through a more manageable exploration and exploitation activities. Adding to that, PEP has been undertaking other supporting businesses, which have been intended to back up the main business directly or indirectly. Soon after its establishment on 13 September 2005, PEP has been dedicating to undergo its core business with strong commitment, to work hard and be productive, have motivated PEP in elevating Indonesias position as a net oil importer. Consequently, PEP has strived to constantly increase the oil and gas production capacity, to which its daily capacity of production indicate 120 thousand of barrels oil per day (BOPD) and 1,000 million standard cubic feet per day (MMSCFD) of gas. Supported with the above capacity of oil production, PEP feels confident to reach the raw oil production targeted by the government for export. Meanwhile, PEPs gas production is fully produced to support domestic industry needs, as part of PEPs contribution to add to Indonesias competitive advantages within the industry.

PEP COMPANY PROFILE EP

08

The following illustrates PEPs production of oil and gas:

1200

1030

1000

1100

1120 870 1007

800

900

980 785

600

400

200

legend: oil gas

0 year 2005 year 2006 year 2007 year 2008

The following illustrates PEPs top 10 oil and gas producer:

This page is intentionally left blank

490.879 118.91 83.119 76.854 48.441 45.673 41.898 38.863 28.941 23.627 0

Chevron Pacific Indonesia Pertamina + JOB + TAC ConocoPhillips Ltd. Total PetroChina Int. Ind. Ltd. CNOOC (SES) B.V. Medco E & P Indonesia Chevron Indonesia Company BOB Bumi Siak Pusako Pertamina Hulu BP Indonesia 100 200 300 400 500

2554.32 1070.77 1031.99 747.88 494.06 287.24 285.99 170.61 150.91 123.53 0 Vico PetroChina Int. Ind. Ltd. Pertamina

Total ConocoPhillips Ltd. ExxonMobil Oil Indonesia

Chevron Indonesia Company CNOOC (SE) B.V. Premier Oil Medco E & P Indonesia 500 1000 1500 2000 2500 3000

Top 10 Oil Producer

Top 10 Gas Producer

In accordance with the Technical Assistance Contract (TAC) and Joint Operating Body Enhanced Oil Recovery (JOB EOR), PEPs

working areas, respectively; all stretched from Sabang to Merauke as marked on the following operation map:

EP COMPANY PROFILE

NORTHERN SUMATRA

BLOCK UDANG BLOCK TARAKAN BUNYU

BLOCK SANGATTA BLOCK SANGA SANGA BLOCK LIRIK BLOCK JAMBI CENTRAL SUMATRA BLOCK MATINDOK BLOCK TIMOFORO BLOCK SORONG

BLOCK TANJUNG

SOUTHERN SUMATRA

BLOCK KAMUNDAN & WIRIAGAR

WESTERN JAVA EASTERN JAVA

SUMATRA 01 02 03 04 05 06 07 08 Perlak NAD Area West Sakakemang East Sakakemang Kluang Siarak Area Suban Southern Sumatera Area Udang 01 02 03 04 05 06 07 08 09

EASTERN INDONESIA Sanga-sanga Sangatta Bunyu Matindok Sele Klamono Timoforo Area Wiriagar Kemundan 01 02 03 04 05 06 Lirik Jambi Limau 01 02 03 04 X-Ray

JAVA Lapisan L. Parigi Jabati Area Western Java

At this stage, PEP owns four main backbone fields for their high production capacity. As a consequence, any impacts resulted from those fields will eventually affect the whole PEP production. The four working fields are Tambun, Limau, Sukowati and Poleng.

Capacity wise, total production of Tambun field is 14,000 BOPD, Limau field is 8,000 BOPD; Sukowati field is 19,000 BOPD, and Poleng field is 8,500 BOPD. In total, all the four main fields contribute 49,500 BOPD or 40 percent of the targeted 125,000 BOPD.

UBEP

Benakat Tanjung Sangasanga & Tarakan

EP COMPANY PEP COMPANY PROFILE 10PROFILE

marketposition PEP aims to be the number one oil and gas producer in Indonesia in 2011, by optimizing its largest oil and gas reserve.
Today, PEP is the second biggest oil and gas producer in Indonesia, with its total oil and gas production has reached 400,000 barrel oil equivalent per day (MBOEPD). While on the reserve side, PEP holds the largest oil and gas reserve in Indonesia, totaling at 6,171 MMBOE, also the third largest in Asia Pacific. Focusing on extracting and filtering of condensate gas transmission pipes, intensifying Enhanced Oil Recovery (EOR), and Put on Production (POP) for exploration wells come as the fifth, sixth and seventh focus, respectively. Another strategic program includes acquisition of 3D seismic data that aims to obtain a more accurate 3D seismic data needed for the development of production field and EOR The third focus is to reactivate old wells on the production fields, while reactivation of old fields comes as the fourth focus. The reactivation initiatives seem potentially promising to adapt while adjusting with the fluctuative increase of the oil price.

PEP is the only one amongst five major Cooperation Contractors who is confident to attain 2008 oil and gas production target set by the government. strategy
Various strategic programs have been developed to support the companys growth. One of those is 7 Focus Point, which has been strategically implemented since 2008. Firstly is to focus on securing production of the main fields, considered as the backbone of all PEP production activities. Next is to focus on optimalization of production by way of improving infrastructure and supporting facilities of the existing fields, aiming at enhancing production level of those fields.

application; all 3D seismic programs have located 2,700 km2 areas. Meanwhile, other strategic programs include: accelaration of KSO cooperation; speeding up unitization; resource intensification, accelerating resource verification; and other daily operationalrelated initiatives.

EP COMPANY PROFILE

This page is intentionally left blank

PEP COMPANY PROFILE EP COMPANY PROFILE

12

corporatestrengths
Production has reached 80% of the ultimate primary recovery level and the estimated oil reserves totaling at 5 billion barrels of oil (BBO). ourpeople
Employees of Pertamina EP (PEP) are professionals who are selected through a strict and accurate process. In addition, their capabilities are continuously enhanced to shape them into enthusiastic people who posses a lasting and competitive uniqueness, professional interpreneurship spirit and of high moral. These moralities are essential since PEP workers are fighters/warriors who persistently HR development of PEP emphasizes on increasing personal quality and empowerment by meeting the World Class People standards. Our journey to build world class employees began with some initial projects carried out during early relied upon as the countrys revenue generator. Thats the reason why human resource (HR) improvement has become a constant necessity. transformation phase, namely Talent Management and Succession Planning. Talent Management is a founding guidance for potential employees or those with extra skills to be developed as the companys key players. This guidance is a tool for company leaders in developing and selecting officials to take up key positions. Since it is based on meritocracy therefore all employees have equal opportunities for self-development. Succession Planning, is a tool for planning, preparing of employees career path and development, as well as cadre monitoring and evaluation. Cadre development has begun since entry level and will be monitored on a constant basis.

Therefore, rigorous, sustainable, and comprehensive programs aimed at developing professionalism among our employees, have been continuously implemented throughout our growth.

PEP COMPANY PROFILE EP COMPANY PROFILE

14

differentiation
With 140,000 km2 of working area, PEP is a Contractor of Cooperation Contract operating on the most widespread area in Indonesia. This also means that PEP owns 20 percent shares of national oil reserve and 10 percent of national gas reserve. These potentials will eventually turn Pertamina into the largest oil and gas producer in Indonesia. Meanwhile, production is projected to increase to 684 MBOEPD in year 2014, double from the 2007 production of 350 MBOEPD. The operation of three regions is divided into 12 Field Areas namely Rantau, Pangkalan Susu, Lirik, Jambi, Prabumulih and Pendopo in Sumatera Region, Subang, Jatibarang and Cepu in Java Region and Sangatta, Bunyu and Papua in Eastern Indonesia Region. Beside managing the previously mentioned working areas, PEP also manages its working areas through projects, namely gas development project of Pagar Dewa in Sumatera, Gundih in Central Java and Matindok in Sulawesi. Pertamina EP divides its working areas into three regions, Sumatera, Java and Eastern Indonesia Region. The head office manages the entire JOB EOR and TAC operations, while each region manages their own operation.

operations
To manage its oil and gas working areas, PEP conducts own operation and partnership cooperation in form of Joint Operating Body Enhanced Oil Recovey (JOB EOR) and Technical Assistance Contract (TAC).

Throughout its operations as a subsidiary of PT PERTAMINA (PERSERO), PEP total oil production has contibuted majorly to the nationals oil reserve.

EP COMPANY PROFILE

corporatecommitment
PEP is committed to striving for the best in all its business activities, including HSE performance. goodcorporategovernance
Proper implementation of Good Corporate Governance (GCG) aims to strengthen corporate image as well as performance, while maximizing the shareholders values at the same time. Within PEP, GCG implementation has five aims. Firstly, it aims to maximize the corporate values by aggressively applying the principles of transparency, independency, accountability, integrity and adequacy throughout all corporate conducts. Ensuring a professional and Throughout all conducts, PEP holds Good Corporate Governance principles such as Transparency, which is open and honest in all decision making process, while assuring that any financial related information is relevant and accurate. Principle of Independency states that employees must avoid situations which independent corporate management practices comes as the second aim. The third is developing a specific decision making system by all Business Units based on high ethical codes and strict compliance to the set regulations and business codes. Realizing the Corporate Social Responsibility program to the stakeholders and escalating a conducive national investment climate, particularly in energy and petrochemical areas are the fourth and fifth aim. Clarity in describing each business units functions, duties and responsibilities in order to manage the company more effectively is principle of Accountability that PEP holds strongly. Principle of Responsibility implies appropriateness of companys management practices to prevailing rules, in a way that also complies with healthy corporation principles. And lastly, principle of Fairness understood as being fair and equal treatment in meeting the stakeholders rights as the stated by the prescribed rules and regulations. could cause conflicts and pressures, internally or externally, that are not in accordance with prevailing rules and regulations, as well as healthy corporation principles.

We believe that proper good governance implementation is the foundation of our movement, with the spirit of integrity and rightness, to being the foremost national oil and gas producer of a world-class state of mind.

PEP COMPANY PROFILE EP COMPANY PROFILE

18

healthsafetyenvironment Moreover, preserving the green nature of the surrounding environment has also been our main endeavor in creating a healthy and clear atmosphere.
At PERTAMINA EP (PEP), Health, Safety, and Environment (HSE) initiatives have been undertaken to ensure adequate management performance and practices. HSE practices ensure that risks to both people and the environment are addressed, as well as enhancing social growth of the surrounding community. Going world class, PEP realizes that HSE implementation is inseparable from all business aspects. In due course, PEP strives to sustainably improve its understanding of the HSE culture, so that the HSE initiative can be merged into the primary corporate culture through integrated HSE Management System that is integral and will synchronize all business operations. More importantly, the system will bring about a more safe, excellent, efficient and environmental concern operations. A set of HSE Management System emphasizes on 13 major elements has been made effective by PEP to affirm that it is the duty and responsibility of everyone in the company. Therefore, proper HSE implementation throughout all layers is a compulsory action However, proper implementation of HSE Management System throughout PEP and partners operations is one of the developed five strategies. Other strategies include special HSE workshop for workers, making HSE practices inseparable from the corporate culture, integration of the required technology with PEPs operations, and strengthening the corporate image throughout all aspects of HSE. PEP commits to bring about respectable HSE practices in accordance to the applied regulations and HSE standards. The objective is to minimize incidents, actively anticipate the negative impact resulted, and improve the companys image. for PEP to reach HSE Operating Excellence. The 13 elements include ideal leadership and integrity; awareness, training, competency; partnership management, design, construction and commissioning; operation and after operation management; inspection and maintenance; security management (materials and products); management of change; communication; crisis and emergency handling; incident investigation; documentation; and evaluation and audit.

PEP COMPANY PROFILE EP

20

corporatesocialresponsibility Intense interactions with the local people and regular community development initiatives have initially been PEPs moral obligation ever since our early establishment. PEP realizes that the support and involvement of the local community play an important role throughout our business sustainability and hence our growth.
As part of the community, PT PERTAMINA EP (PEP) is committed to actively express its social responsibility and to create an environmental friendly operations. Likewise, PEP believes that positive social perception is good for business, providing a secure, inspiring and dynamic atmosphere. Realizing its responsibility to the community, PEP knows that community development is a moral obligation, a way of showing concern and earning trust. Hence, PEP feels obliged to share its economic, social, and cultural perspectives through Corporate Social Responsibility (CSR) program. Besides, PEP also considers the CSR program as part of its business investment initiatives for growth, ensuring future business. It is PEP commitment to empower the local community and protect the areas of its operations to develop a conducive community relationship and to take responsive action in handling after-mining impact. As a result, the CSR activities are realized through a number of programs focusing on religious, health, education and economy related issues.

PEP COMPANY PROFILE EP

24

Head Office | Menara Standard Chartered 21st-29th Floor | Jl. Prof. Dr. Satrio No. 164 | | Jakarta Selatan 12950 | Indonesia |