Coal bed methane development in Indonesia: the economics of the stakeholders' perspective.

Sumarno, T.B.; Bergmann, Ariel; Dow, Stephen; Heffron, Raphael J.

Abstract

The Government of Indonesia (GoI) initiated a study on Coal Bed Methane (CBM) resources in 2002 through its oil and gas research institution called Lemigas. This contributed to the first CBM project starting in 2008 by PT Medco CBM Sekayu, in South Sumatra Basin, followed by six other CBM projects that year. The number of projects increased significantly and by 2012, Indonesia had 54 CBM blocks. However, this number has now decreased to 30 CBM blocks by the end of 2018 and is going to be lower in 2019 since there are 3 blocks considering termination process. The growth of the industry has been very slow and vulnerable. This paper will discuss the main economic issues in the CBM industry in Indonesia from six different stakeholders' perspectives, the GoI, CBM investors, industry association, consultancies, industry observer, and local communities in which CBM projects have been developed. The GoI was represented by the Special Task Force for Oil and Gas Industry (SKKMigas) and the Association of Oil and Gas Producer (ADPM); the CBM investors were represented by the current investor, prospective investor which was also an ex-investor; the industry association was represented by the Indonesian Petroleum Association, the consultancies were represented by the IHS Markit and WoodMackenzie; an industry observer was represented by an individual who concerns on the industry, and the local communities were represented by the local communities in the four main CBM basins which are Kutai Basin, Barito Basin, South Sumatra Basin and Central Sumatra Basin. This paper comprehensively examines and analyses the economic issues of the CBM industry in Indonesia to present a deeper and better understanding what lies behind the deterioration of the industry. The result of this latter analysis will be internalised into the development of a fiscal model that then determines at what level incentivisation (from taxation) will result in the development of new CBM.

Citation

SUMARNO, T.B., BERGMANN, A., DOW, S. and HEFFRON, R.J. 2019. Coal bed methane development in Indonesia: the economics of the stakeholders' perspective. In Proceedings of the 42nd International Association for Energy Economics international conference 2022 (IAEE 2019): local energy, global market, Montreal, Canada. Cleveland: IAEE [online]. Available from: https://www.iaee.org/proceedings/article/16305

• Conference Name: 42nd International Association for Energy Economics international conference 2022 (IAEE 2019): local energy, global market
• Conference Location: Montreal, Canada
• Start Date: May 29, 2019
• End Date: Jun 1, 2019
• Acceptance Date: May 29, 2019
• Online Publication Date: May 29, 2019
• Publication Date: May 29, 2019
• Deposit Date: Oct 21, 2022
• Publicly Available Date: Oct 21, 2022
• Publisher: International Association for Energy Economics
• Series Title: IAEE conference proceedings
• Series ISSN: 2707-6075
• Keywords: Electricity demand; Electricity supply; Government plan; Indonesia; Coal bed methane (CBM)
• Public URL: https://rgu-repository.worktribe.com/output/1763934
• Additional Information: The file accompanying this record contains just the presentation slides and extended abstract. The full text is available to purchase on the IAEE website: https://www.iaee.org/proceedings/article/16305