Govt to amend CBM contracts

In a bid to help accelerate production, the government plans to amend coal bed methane (CBM) production sharing contracts that would provide certain incentives to the contractors, reports said on Friday.

Director for Upstream Oil and Gas Management at the Ministry of Energy and Mineral Resources, Naryanto Wagimin was quoted by Kontan daily as saying that since first development started in 2008, CBM production in the country has only reached less than 1 million standard cubic feet per day.

He explained that following evaluation, the government has realized that CBM can?t be treated the same as oil and gas due to their different characteristics.

Therefore, Naryanto said that the government would amend the CBM contracts particularly those signed by contractors which have realized their commitments.

Under the planned contract amendment, the government would provide certain incentives to help accelerate production such as excluding the exploration and production period limit. Under the current mechanism, exploration and production periods are limited to six years, and 30 years, respectively.

Another incentive is that the number of exploration well will be expanded. ?CBM production is parallel with the number of wells. With increasing number of wells, production will also increase,? Naryanto said.

Of the existing 54 CBM contractors, only about 20 percent have realized their commitments, he said. (*)