Foreign, local firms to join tender for coalbed methane fields

Ika Krismantari, The Jakarta Post, Jakarta

Eight foreign and local companies will take part in the country's first-ever exploration and production tender for coalbed methane (CBM) gas in August this year, an official says.

The Energy and Mineral Resources Ministry's director for the upstream oil and gas industry, Priyono, said last week the companies would include Australia's third largest oil and gas producer, Santos, the U.S.-based oil firm Vico, Indonesian state oil and gas company Pertamina, Medco Energi Internasional Indonesia, which is the country's biggest publicly traded oil company, and Indonesia's largest gas distributor, Perusahaan Gas Negara (PGN).

The tender will be conducted on a direct offer basis, with companies having carried out a feasibility study to be given priority, he said.

CBM fields to be tendered are located in South Sumatra and in Barito, South Kalimantan. They are estimated to have deposits of 183 trillion cubic feet and 101.60 trillion cubic feet of gas, respectively. These two areas are believed to hold the largest CBM deposits in the country.

"Pertamina will sign with us in May, as they started the project earlier, while other investors will have to wait four more months to finish their studies," Priyono said.

Pertamina and its partner Ephindo have been conducting a joint study on a CBM block in South Sumatra and Jambi since the end of 2006.

Energy and Mineral Resources Minister Purnomo Yusgiantoro has called on oil and gas companies to begin investing in the coalbed methane sector, considering Indonesia has the largest CBM deposits in the world after China, with estimated total reserves of 453 trillion cubic feet, or the equivalent of about 81.5 billion barrels of oil.

If it was able to tap these reserves, Indonesia could meet its gas export commitments while at the same time filling rising domestic demand.

The government recently said it was reviewing its liquefied natural gas export policy amid an increase in gas demand at home.

The government hopes to attract up to US$2.5 billion in investment to develop 90 CBM wells expected to produce up to 100 million cubic feet of gas per day by 2014.