(EnergyAsia, February 7 2012, Tuesday) — Canada’s CBM Asia Development Corp (CBM Asia) said it has signed a Heads of Agreement with PT Tranaco Utama, a private Indonesian company that holds the first rights to undertake a production sharing contract (PSC) for a 1,500-square kilometre coalbed methane block in Kalimantan in Indonesia.

CBM Asia said it has the right to acquire 80% participation interest in the proposed PSC and be appointed operator in consideration for reimbursing Tranaco’s sunk costs and payment of signing bonus to the Indonesian government upon the award of the contract. Tranaco will hold the remaining 20% participation interest

On January 18, the two companies submitted a proposal to Indonesia’s Director General of Oil and Gas (known as Migas) to approve the award of the PSC through the Direct Offer Mechanism under Ministerial Regulation of the Department of Energy and Mineral Resources. The proposal is based on a joint evaluation study undertaken by Tranaco in 2011.

Alan T. Charuk, CBM Asia’s CEO and President, said:

“This agreement represents the advancement of our business strategy to materially expand our land position in Indonesia where, in 2011, we acquired a 70% participating interest and operatorship in the Bentian Besar CBM PSC and the Hulu CBM PSC.

“There are a number of coalbed methane PSCs in proximity to the block area operated by Exxon Mobil and BP.”
 
CBM Asia Development Corp is a Vancouver, British Columbia-based unconventional gas company with significant coalbed methane (CBM) exploration and development opportunities in Indonesia. The company holds various participating interests in four CBM production sharing contracts in Indonesia which has one of the largest CBM resources in the world with a potential 453 trillion cubic feet in-place, more than double the country’s natural gas reserves (Stevens and Hadiyanto, 2004).

Since 2008, the Indonesian government has granted a total of 39 CBM PSCs, representing exploration commitments of over US$100 million through 2015.