by: Tasnim Ilmiardhi
Energy Legal Practitioners
Indonesia continues to search for alternative energy sources as an effort to fulfill the energy other than oil and gas.
One energy source that is considered and the potential for use is Coal Bed Methane (CBM). Indonesia is a country that has the potential of CBM to the two largest in the world, with estimated reserves of 453 TCF. CBM reserves of it scattered in eleven areas of the coal basin at various locations in Indonesia, both in Sumatra, Java, Kalimantan and Sulawesi.
Eleventh CBM basin location is in South Sumatra (183 TCF), Barito (101.6 TCF), Kutei (89.4 TCF) and the Central Sumatra (52.5 TCF) for prospective high category. North Tarakan Basin (17.5 TCF), Berau (8.4 TCF), Ombilin (0.5 TCF), Sand/Asam-Asam (3.0 TCF) and Jatibarang (0.8) has modarate category. Medium basin Sulawesi (2.0 TCF) and Bengkulu (3.6 TCF) Uncategorized prospective low.
Until now, the business development of CBM in Indonesia can be said is still in the stage of initiation. As a new business in the field of fossil energy, in particular in Indonesia, business CBM contains many risks.
Regulation
The Government has prepared a variety of devices for the regulation of CBM development. In addition to making investors interested to invest their capital, CBM development also aims to increase gas reserves, the use of environmentally friendly energy sources and expanding employment.
By regulation, guided by the rules CBM oil and gas. Law Number 22 Year 2001 and Government Regulation number 35 Year
2004 is still a general guide, particularly regarding the shape and pattern of the PSC. Each CBM blocks should be managed by a single business entity. Regarding the bidding procedures in the working area of any reference to the Minister of Energy and Mineral Resources Regulation number 35 year 2008, regarding the bidding procedures for oil and gas working areas.
CBM operations are treated as oil and gas operations. A company intending to commercialize CBM reserves must enter into a cooperation contract with the Executive Agency for Upstream Oil and Gas Business Activity (Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi or BPMIGAS), the upstream oil and gas regulator. The cooperation contract will share many similarities with the Indonesian production sharing contract (PSC).
However, significant differences compared to the CBM from the business that is related to oil and gas revenue sharing between the contractor and the Government. In the exploitation of CBM, the contractor obtained a result which is relatively large, namely equal to 45%. While the oil is (15%) and gas (30%).
Regulations relating to the business of CBM in Indonesia:
1.Government Regulation No. 35 Year 2004
2.Minister of Energy and Mineral Resources Regulation No. 36 Year 2008
3.Minister of Energy and Mineral Resources Regulation No. 35 Year 2008
4.Minister of Energy and Mineral Resources Regulation No. 28 Year 2006
5.Minister of Energy and Mineral Resources Regulation No. 27 Year 2006
Ministerial Regulation No.36 Year 2008 is a revision of the Ministerial Regulation No.33 Year 2006. Ministerial regulation has been revised following a variety of issues related to the overlap between the working areas of Oil and Gas (WK-Gas) with Mining Concession (KP) Coal. Significant Changes from 33 to 36 ministerial regulation is related to coal mining requirements get first priority in the exploitation of CBM in the working area of overlapping.
Contract Scheme
The government offers three schemes to contractors terms and conditions of cooperation contracts (KKKS), CBM for the development of the commodity that is expected to start production in 2011.
The third term models and conditions for CBM development that are offered are:
Indonesia continues to search for alternative energy sources as an effort to fulfill the energy other than oil and gas.
One energy source that is considered and the potential for use is Coal Bed Methane (CBM). Indonesia is a country that has the potential of CBM to the two largest in the world, with estimated reserves of 453 TCF. CBM reserves of it scattered in eleven areas of the coal basin at various locations in Indonesia, both in Sumatra, Java, Kalimantan and Sulawesi.
Eleventh CBM basin location is in South Sumatra (183 TCF), Barito (101.6 TCF), Kutei (89.4 TCF) and the Central Sumatra (52.5 TCF) for prospective high category. North Tarakan Basin (17.5 TCF), Berau (8.4 TCF), Ombilin (0.5 TCF), Sand/Asam-Asam (3.0 TCF) and Jatibarang (0.8) has modarate category. Medium basin Sulawesi (2.0 TCF) and Bengkulu (3.6 TCF) Uncategorized prospective low.
Until now, the business development of CBM in Indonesia can be said is still in the stage of initiation. As a new business in the field of fossil energy, in particular in Indonesia, business CBM contains many risks.
Regulation
The Government has prepared a variety of devices for the regulation of CBM development. In addition to making investors interested to invest their capital, CBM development also aims to increase gas reserves, the use of environmentally friendly energy sources and expanding employment.
By regulation, guided by the rules CBM oil and gas. Law Number 22 Year 2001 and Government Regulation number 35 Year
2004 is still a general guide, particularly regarding the shape and pattern of the PSC. Each CBM blocks should be managed by a single business entity. Regarding the bidding procedures in the working area of any reference to the Minister of Energy and Mineral Resources Regulation number 35 year 2008, regarding the bidding procedures for oil and gas working areas.
CBM operations are treated as oil and gas operations. A company intending to commercialize CBM reserves must enter into a cooperation contract with the Executive Agency for Upstream Oil and Gas Business Activity (Badan Pelaksana Kegiatan Usaha Hulu Minyak dan Gas Bumi or BPMIGAS), the upstream oil and gas regulator. The cooperation contract will share many similarities with the Indonesian production sharing contract (PSC).
However, significant differences compared to the CBM from the business that is related to oil and gas revenue sharing between the contractor and the Government. In the exploitation of CBM, the contractor obtained a result which is relatively large, namely equal to 45%. While the oil is (15%) and gas (30%).
Regulations relating to the business of CBM in Indonesia:
1.Government Regulation No. 35 Year 2004
2.Minister of Energy and Mineral Resources Regulation No. 36 Year 2008
3.Minister of Energy and Mineral Resources Regulation No. 35 Year 2008
4.Minister of Energy and Mineral Resources Regulation No. 28 Year 2006
5.Minister of Energy and Mineral Resources Regulation No. 27 Year 2006
Ministerial Regulation No.36 Year 2008 is a revision of the Ministerial Regulation No.33 Year 2006. Ministerial regulation has been revised following a variety of issues related to the overlap between the working areas of Oil and Gas (WK-Gas) with Mining Concession (KP) Coal. Significant Changes from 33 to 36 ministerial regulation is related to coal mining requirements get first priority in the exploitation of CBM in the working area of overlapping.
Contract Scheme
The government offers three schemes to contractors terms and conditions of cooperation contracts (KKKS), CBM for the development of the commodity that is expected to start production in 2011.
The third term models and conditions for CBM development that are offered are:
- GPSC scheme (gross productions sharing contract), ie all direct production halved between government and contractors or without cost recovery.
- the form of CBM development costs by KKKS not chargeable to the state.
- model PSC (production sharing contract). The model PSC was still using the pattern-sharing contract with cost recovery.
Elimination of cost recovery is very interesting and could improve the investment is expected to accelerate CBM and CBM development by investors because in passing the supervisory role of government is not too tight and simplify the provisions of the contract.
Based on data from the Ministry of Energy, there are 15 CBM contracts until the end of 2009 by using the Product Sharing Contract contract. Some of them are Sekayu Block, South Sumatra with a consortium of PT Medco CBM Sekayu and Ephindo as a contractor.
The Government will accelerate the development of CBM with the adjustment of contract terms and conditions and improve the existing rules so that the device can be produced in 2011. Investors were also given the option to use the model contracts or GPSC PSC.
Contract PSC model is usually used for conventional oil and gas development because it can be planted after the new gas field development plan (plan of development / PoD) is signed. However, in the development of more practical use CBM GPSC model contracts for gas production after dewatering and process gas can be utilized before the PoD signed. Only, he said, the government is still counting the amount of profit-sharing contract model with GPSC.(*)
Based on data from the Ministry of Energy, there are 15 CBM contracts until the end of 2009 by using the Product Sharing Contract contract. Some of them are Sekayu Block, South Sumatra with a consortium of PT Medco CBM Sekayu and Ephindo as a contractor.
The Government will accelerate the development of CBM with the adjustment of contract terms and conditions and improve the existing rules so that the device can be produced in 2011. Investors were also given the option to use the model contracts or GPSC PSC.
Contract PSC model is usually used for conventional oil and gas development because it can be planted after the new gas field development plan (plan of development / PoD) is signed. However, in the development of more practical use CBM GPSC model contracts for gas production after dewatering and process gas can be utilized before the PoD signed. Only, he said, the government is still counting the amount of profit-sharing contract model with GPSC.(*)
2 comments:
Good Afternoon
Definitely gonna recommend this post to a few friends
thx a lot
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