Medco signs third CBM contract

Publicly listed energy firm PT Medco Energi Internasional Tbk has signed a Production Sharing Contract for Coal Bed Methane exploration in Lematang block, South Sumatra, the firm announced on Monday.

The deal was signed by Medco's indirect subsidiary PT Medco CBM Lematang, which is owned by PT Medco Energi CBM Indonesia, PT Methanindo Energy Resources (Sugico Group), PT Saka Energi Indonesia, an affiliate of state gas distributor PT Perusahaan Gas Negara (Persero) Tbk, and the upsteam oil and gas regulator (BPMIGAS).

The contract agreement spells out the rights and obligations of each operator and non-operator, including assessment of joint exploration development, and CBM production at the 805.8 square kilometer block.

As CBM area is located in a productive oil and gas asset and taken into account Medco's experience in the CBM industry, the company will be named the operator.

The contract allows all parties to conduct exploration in 10 years at the longest, and exploitation in no longer than 20 years.

The consortium expects the contract to contribute to the government given the block's huge potential of CBM reserves. Frila B. Yaman, Medco Energi operational director said: ?PSC CBM Lematang is the third contract we have signed after the PSC CBM Sekayu and PSC CBM Muralim. All the PSCs are located in South Sumatra and close to our oil and gas PSCs."

He added that the company and the consortium were committed to drilling 2 core holes, 2 exploration wells and 2 exploration wells for dewatering with investment reaching US$ 4.6 million for the first three years. Lukman A. Mahfud, MedcoEnergi president director, said ?The signing shows commitment of Medco Energi to supporting the National Energy Policy through development of energy potentials available in Indonesia, including CBM, apart from oil and gas." (godang/giok)