Vico Indonesia, a joint venture between BP and Eni, signed a memorandum of understanding Friday to sell coalbed methane to Indonesian power utility Perusahaan Listrik Negara, energy and mines minister Jero Wacik said.
The MOU is the first commercial sales agreement for CBM in Indonesia.
Under the terms of the deal, Vico would sell 500 Mcf/d of CBM from its Sanga-Sanga field in East Kalimantan to PLN over a five-year period. Supplies are expected to start from the end of 2011, said LN President Director Nur Pamudji.
Upstream regulator BPMigas' deputy head of operations Rudi Rubiandini said the Sang-Sanga field was expected to increase its production to 10,000 Mcf/d in 2012-2014, and was likely to ramp up to 300,000 Mcf/d by 2020.
Vico has estimated that the Sanga-Sanga field contains about 10 Tcf of CBM, some of which may be economically recoverable. The company had originally expected to produce its CBM commercially at a rate of 10,000-30,000 Mcf/d in 2010 and ramp up to 500,000 Mcf/d in 2015, former CEO Chris J. Phillips said in an interview in 2008.
Indonesia's CBM resources could total as much as 453 Tcf, much higher than its conventional natural gas resources of around 190 Tcf. Both Sumatra and East Kalimantan are major coal-producing regions.
Indonesia is promoting the use of alternatives, including CBM, to reduce its dependency on oil. The country's crude and condensate output has fallen over recent years due to natural decline of 12% annually. The government has revised down its 2011 crude and condensate output target by 3% to 945,000 b/d, from 970,000 b/d previously.
