Indonesia's Pertamina Seeks Renegotiated Terms for CBM Development

Indonesia’s state energy firm Pertamina will seek to renegotiate the terms of its agreements with government for exploiting coal bed methane, Jakarta Globe newspaper reported Tuesday.

“We have to meet to discuss either a better pricing deal or larger share in the production sharing contract,” the newspaper quoted Pertamina’s upstream director Muhamad Husen as saying.

Pertamina has witnessed discouraging results from its CBM assets in in South Sumatra’s Muara Enim district during the two years of exploratory drilling.

Husen said the estimated reserves were only half of what was expected, Jakarta Globe reported.

CBM development has also been hampered by the problems of land acquisition and slow permit issuance, Husen added.

Pertamina holds contracts to exploit CBM resources in four blocks of Muara Enim district, with participating interests ranging from 45 percent to 73 percent, the newspaper said.

In 2008 the Indonesian government started development projects on unconventional gas with the aim of producing 500 million standard cubic feet of natural gas per day by 2015.

Current output stands at less than 1 mmscfd. The government has since revised its objective downward to only 8.9 mmscfd.