Indonesia to Tender CBM Areas

BP Migas, Indonesia's upstream regulator, said that the Indonesian government plans to tender six coal bed methane (CBM) areas in April or May. The six areas are in South Sumatra and East Kalimantan, which hold subtantial coal reserves, Energy Ministry's Upstream Oil and Gas Director R Priyono said, as reported by the media.

"The six areas include those part of coal mine concessions, oil and gas, and areas that haven't been awarded yet (open areas)," Priyono said. Priyono said further that the government will give the first priority to companies that operate the coal concession or oil and gas areas which will be tendered out. If they aren't interested in the area, the government will hold an open tender.

Priyono said that according Regulation of The Minister of Energy and Mineral Resources number 033 of 2006 on Business Undertaking of Coalbed Methane, the CBM development will follow regulations on natural gas, and not coal. However, thus far the investors that are interested in developing CBM want a better split than in gas.

"Split for gas is 70 percent for the government and 30 percent for the company. In CBM, they want to get a bigger portion of revenue as it is an alternative energy," he said. Several companies including Pertamina, PGN and Shell have said that they want to develop CBM. The potential of the fuel in Indonesia is estimated at 453.3 trillion cubic feet (TCF).