Medco, Ephindo to invest $200m to develop CBM in S. Sumatra

The consortium JSX-listed energy firm PT Medco International Tbk and PT Energi Pasir Hitam Indonesia (Ephindo) is set to invest around US$200 million to develop a coal bed methane (CBM) in Banyuasin, South Sumatra.

 

Ephindo’s president director and CEO Sammy Hamzah said in Jakarta Wednesday that  Ephindo, in cooperation with the Bandung Institute of technology (ITB),  was conducting a feasibility study on the CBM project. “The field we are working in is owned by Medco and so all of infrastructure and facilities are available there,” he said.

 

Sammy is optimistic about the project, saying that the exploitation of the field which is predicted to have reserves of up to 183 trillion cubic feet/TCF will be successful despite the absence of a pilot project.

 

The consortium called Medco-Ephindo expects that the construction of the Banyuasin CBM project would commence in 2010 and production was expected to start a year later, with an initial output of 5-10 million standard cubic feet per day (MMSCFD).

 

“The gas output will be raised to 50-100 MMSCFD in the next three to five years,” he said.

 

Sammy is hopeful that the consortium’s minimal production share is 40 – 45 percent, with the government taking 56 – 60 percent. “We also hope that at the initial production stage, we will get a tax holiday for at least three to five years given that it is a new project in Indonesia.

 

Meanwhile, Medco’s director for corporate development Rashid I Mangunkusumo said that a joint venture would be formed to materialize the planned CBM project.

 

Currently, the consortium was discussing the project with the government and hopefully, the contract would be signed soon, he said.

 

According to Rashid, the CBM gas output would be marketed domestically because it is more economically viable. (godang)