Govt offers new production sharing scheme to CBM contractors

The government is offering a new production sharing scheme to contractors involved in the production of coal bed methane (CBM) in Indonesia.

Edy Hermantoro, the Director for Upstream Development at the Energy and Mineral Resources Ministry, said in Jakarta on Tuesday that the new contract scheme called Gross Production Sharing Contract (GPSC) would benefit both the contractors and the government.

He said the new contact scheme would free the government from paying cost recovery as adopted in the production sharing contract. ?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 production sharing contract, the commercial production could be started only after the approval of the PoD,? he added.

Edy said that the contractors would be given enough time to study the advantages and disadvantages of the new contract scheme. ?They have the rights to choose which of the contracts really suit their operation,? he said.

The government has so far issued 20 production sharing contracts in the exploration and production of CBM or gas methane. (*)