Govt provides 100% cost recovery for CBM & shale gas

The explorations and exploitations of unconventional gas such as coal bed methane (CBM) and shale gas are different from conventional oil and gas. Therefore, the government will not limit the cost recovery of the unconventional gas, Director General for Oil and Gas at the Energy and Mineral Resource Evita H. Legowo said.

?The cost recovery (for the unconventional gas) is 100 percent as long as the costs are in line with applicable regulation,? Evita said Tuesday during the 2nd Indonesia-US Energy Investment Roundtable in Jakarta.

She said the cost recovery scheme is aimed to encourage investors to explore shale gas potentials in the country, which remains untapped. Apart from offering 100-percent recoverable costs, the government is also mulling over a plan to provide longer production sharing contract (PSC) of over 30 years for the development of unconventional gas.

?We have not made the decision over the matter, but we think it could be done,? added Evita.

She said the development of shale gas in Indonesia should help meet domestic growing demand for gas in line with the country?s sustainable economic growth.

David B. Sandalow, the Assistant Secretary for Policy and International Affairs at the Energy Department of the United States, said that developing shale gas requires advanced technology and that explorations take longer time, which is about five to six years.

He said at present about 30 percent of gas production in the United States is contributed by shale gas and it is expected to further increase to 49 percent in 2035.

Editing by Roffie Kurniawan