Policies

Permen ESDM 35/2021 - Procedure for Determination and Bid of Oil and Gas Working Areas

Last updated: 6 February 2023

This Regulation of the Minister of Energy and Mineral Resources revoked and replaced Regulation Number 36 of 2008 concerning Coalbed Methane Gas Business. The law provides the following definitions: 

  • Coalbed methane (CBM): a natural gas (hydrocarbon) of which methane gas occurs naturally in the process of coal formation (coalification) in conditions trapped and adsorbed in coal and/or coal seams and/or coal seams
  • Unconventional oil and gas: oil and gas formed and confined in fine grained and low permeability reservoir rocks within the maturity zone that will be economical to produce through horizontal drilling using hydraulic fracturing stimulation techniques within the maturity zone, including shale oil, shale gas, tight sand oil, tight sand gas, coalbed methane, and methane-hydrate

It provides that the provisions regarding cooperation contracts for unconventional oil and gas work areas also apply to cooperation contracts for coalbed methane work areas. As such, if there is potential for unconventional oil and gas (e.g. coal mine methane) in a work area, the contractor needs to submit a work plan and budget for a potential study, which will be conducted by the Ministry and SKK Migas (Special Task Force for Upstream Oil and Gas Business Activities Republic of Indonesia) or BPMA (Aceh Oil and Gas Management Agency). The results of the study will be submitted to the Minister and will contain information on the following:

  • petroleum system;
  • source rock type, quality, maturity, volume;
  • fracturability;
  • amount of resources
  • economic evaluation; and
  • proposed principal terms of the Cooperation Contract

Following the results of the evaluation, the contractor of the work area can propose changes to its current cooperation contract or propose a new one, which the Minister will need to approve. If the contractor does not submit the proposal within six months after the results of the potential study, and exploitation of the unconventional gas is technically and economically feasible, a new contractor will be invited to develop it.

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