Operators need incentives to develop CBM gas

The government needs to provide incentives and more favorable production sharing scheme to encourage oil and gas companies to develop the country's untapped coal bed methane (CBM) gas reserves, Pertamina EP's president director Kun Kurnely has said.

"Incentives are needed because the CBM gas, besides having less economic value, is more costly to extract," he told reporters during a workshop in Bali, Friday.

In addition to investment incentives, the government also needed to provide a higher production share to companies involved in the development of CBM gas, he said.

If the normal production share ratio for gas is 65 percent and 35 percent in favor of the government, the production split ratio for CBM gas should be at least 70 percent and 30 percent in favor of operators, he added.

The ministry of energy and mineral resources has issued a regulation in the development of CBM gas but it is based on cooperation scheme made on oil and gas development, rather than on coal mine development contracts.

According to technical director of Medco Edi B Setyobudi, it will be more favorable for operators if the development of CBM gas is based on contracts of work system adopted in coal mining activities.

At the occasion, Pertamina EP, Medco and the Research Development Division of the Upstream Oil and Gas Regulatory Body, BP Migas signed an agreement on joint study on CBM gas. (godang)