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The tender process for the exploration and production of coal
bed methane (CBM) gas in Indonesia will be delayed until August
following a request from interested bidders asking for more time to set
up pilot projects in order to determine the project's economic
feasibility, an official said.
The director of upstream oil and gas development at the Energy and
Mineral Resources Ministry, Priyono, said recently that four out of six
investors who planned to submit tenders had requested more time to
develop pilot projects before officially submitting their bids.
"It will take almost three months to build such pilot projects,"
Priyono said.
CBM is a natural gas found in coal mines. It is formed by the activity
of microbes during the coal-forming process and is eventually trapped
in coal beds.
The first round of CBM tenders will be conducted on a direct offer
basis, under which investors have the right to nominate the areas they
are interested in and conduct preliminary studies. When the process
opens, these investors will be given the chance to bid for the block.
However, Priyono said the government would offer two areas in South
Sumatra and South Kalimantan in May to state owned oil and gas company
Pertamina and PT Medco EP Indonesia, which have signed a memorandum of
understanding to develop the areas.
The two concession areas in South Sumatra and in Barito, South
Kalimantan, are believed to hold the biggest deposits of CBM in
Indonesia, with estimated deposits of 183 trillion cubic feet and
101.60 trillion cubic feet respectively.
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.
Several investors have expressed interest in CBM projects in Indonesia,
including Australian-based oil company Santos and Trans-Asia Oil and
the Energy Development Corporation in the Philippines.
Many potential investors have conducted feasibility studies on CBM
production in some areas of the country, including a joint study by
Pertamina, Ephindo and Shell in South Sumatra and Jambi that commenced
in late 2006.
Pertamina, together with the country's third largest oil and gas
producer PT Medco EP and the government's oil and gas research and
development center Lemigas, has signed a memorandum of understanding
concerning a CBM pilot project, also in South Sumatra.
The government has drawn up a detailed plan for CBM exploration,
setting out a production target of 1 billion standard cubic feet per
day, or the equivalent of about 0.18 million barrels of oil, by 2025.
In the short term, the government hopes to attract up to US$2.5 billion
in investments to develop 90 CBM wells that will be able to produce 100
million cubic feet of CBM per day by 2014.
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