Govt to revise regulation on CBM development

The government will soon revise a regulation on development of the country?s coal bad methane (CBM) so that a number of problems hampering investment in the exploration and production of the gas methane could be removed, Kompas reported on Thursday.

Minister of Energy and Mineral Resources Purnomo Yusgiantoro said in Jakarta on Wednesday that the revision would allow investors to receive a higher percentage from the production split, a well as to eliminate the investment barriers due to the overlapping of the CBM fields with coal, oil and gas concession areas.

He said that under the existing regulation, the government received 55 percent of the gas methane production and investors the other 45 percent.

In the revised regulations, investors who develop more costly CBM areas would receive a higher percentage of the production split, he said.

Indonesia has CBM reserves of about 453.3 trillion cubic feet, mostly found in southern and central parts of Sumatra. According to the existing regulation, the development of CBM fields is based on oil and gas law.

However, as CBM reserves are mostly found in coal mining concession areas, the development of the CBM fields is often hampered by a regulation which requires investors to get a recommendation letter from coal concession owners to develop the CBM fields.

Director General of Coal and Geothermal Resources at the Ministry of Energy adn Mineral Resources Simon F. Sembiring said that these kinds of investment problems would be eliminated under the revised CBM regulation.

So far, the government has awarded one contract to develop CBM, that is to the Medco Energy International-Energi Pasir Hitam Indonesia consortium. The consortium was given a contract to develop CBM in the Musi Banyuasin block onshore South Sumatra.

According to Purnomo, the government will not change the the CBM contract that it had signed to follow the new regulations. (*)