Coal Bed Methane Development in Indonesia: Golden Opportunity or Impossible Dream?

The potential for commercialising the coal bed methane (CBM) resources of Indonesia is well recognised. Indonesia’s vast coal reserves, which are mainly located in South and East Kalimantan and South Sumatra, have been estimated – albeit somewhat optimistically – to contain up to 453 trillion cubic feet of natural gas. Although doubts have been expressed about the scientific basis for these figures, this is an enormous potential energy resource in anyone’s books. The ‘prize’, so to speak, would be to demonstrate the capacity to produce and sell significant quantities of CBM profitably into the domestic natural gas market and/or via liquefied natural gas (LNG) export. Nevertheless, despite this potential, Indonesia has been relatively slow to develop a CBM industry by comparison to its peers in the region. A prime factor in this relative lack of progress has been uncertainty surrounding the legal and regulatory framework applicable to CBM exploitation in Indonesia and perceived deficiencies in the way that...