Govt completes CBM regulation, to issue it in July

The Ministry of Energy and Mineral Resources has finished formulating a regulation which will provide a guideline for coal-bed methane (CBM) development, the government?s official said.

The ministry?s upstream director Eddy Hermantoro said on Wednesday that the CBM regulation will be issued early next month by the Directorate General of Oil and Gas. ?We are waiting for the right time,? he said.

The regulation will, among other, provide guidelines for utilization of CBM produced during dewatering period, establishment of boundaries separating one cbm area from another, and safety. ?This is a technical guideline," he said, without providing more details.

Last January, the government offered a new production sharing (PSC) scheme for CBM development. Eddy said that the new contract scheme called Gross Production Sharing Contract (GPSC) would benefit both the contractors and the government.

He said the new contract scheme would free the government from the obligation of paying cost recovery as adopted in PSC. ?It will also benefit contractors because the GPSC scheme offers more flexibility,? he added.

Under the GPSC scheme, contractors could begin gas production even before the government approves their Plan of Development (PoD). ?In the current PSC, commercial production could be started only after the PoD is approved,? he added.

In December 2009, he also that CBM contractors will be offered a 45 percent split in production during dewatering period.

Eddy said the new regulation will be applied retroactively to the 20 CBM contracts that have been signed. Eddy hoped with the new regulation at least five contractors could start gas production in 2011.(godang)