Ephindo stops activities at CBM blocks, waiting for incentives
Tuesday, April 12 2016 - 03:09 AM WIB
PT Energi Pasir Hitam Indonesia (Ephindo) has suspended all activities at two coal bed methane (CBM) blocks, Sekayu II and Melak Mendung I, operated by the firm while it is waiting for incentives from the government.
Ephindo?s President Director Sammy Hamzah said exploration activities at the blocks have been done and the blocks are getting into commercialization stage. Activities at the block have been stopped since early this year and the firm has no planned activities this year.
Sammy said CBM investors are now expecting the government to provide incentives as well as to change the contract system for CBM blocks in order to revive the industry.
?We are all trying to survive. We are trying to get incentives from the government and waiting for the issuance of the directive regarding sliding scale and gross split sliding scale (contract systems) ,? Sammy said but stopped short of elaborating the incentives sought for by the firm.
All CBM blocks follow a production sharing contract (PSC) system, similar to the one applied in the oil and gas conventional blocks. The ministry of energy and mineral resources (MEMR) however issued MEMR Regulation No. 38/2015 on Non-Conventional Oil and Gas which allows CBM contractors to adopt either sliding scale or gross split sliding scale contract systems for their blocks, aside from PSC system.
When asked for comment, Djoko Siswanto, Director of the Supervision of Oil and Gas Upstream Activities at the directorate general of oil and gas, said CBM investors do not need to wait for the issuance of a directive implementing the MEMR regulation No.38/2015.
?They don?t need to wait for the implementing directive. (if they want to change their contract system), they can apply now in line with the MEMR Regulation No. 38/2015,? he said.
Ephindo has stakes in several CBM blocks, including Sekayu II and Melak Mendung I, which are operated by the firm. Sekayu II located in South Sumatra is 74 percent owned by the firm, while Melak Mendung I, located in East Kalimantan, is wholly owned by the firm.
Editing by Johannes Simbolon