PROJECT UPDATE: CBM Asia Signs Gas-to-Power MoU with PT Navigat Energy

Described by the Petroleum Economist as a “stealth sleeper play,” Indonesia’s coal-bed methane (CBM) has been for the most part overlooked by conventional gas exploration companies. But for Canadian exploration company CBM Asia Development (TSXV:TCF), CBM is a prime target.

CBM Asia holds several participating interests and rights in nine CBM production-sharing contracts, along with options to participate in at least nine more. This week, CBM Asia signed a Memorandum of Understanding (MoU) with PT Navigat Energy to supply up to 5 million standard cubic feet per day (MMscfd) of CBM from its planned production pilot(s) to a gas engine power generation project in the Barito Basin, located in South Kalimantan, Indonesia.

According to CBM Asia’s press release, CBM Asia and PT Navigat, which is an integrated distributor of clean power generation technology in Southeast Asia, will follow through with negotiations with Persero, the state power supplier for Indonesia, on the sale of power and gas. CBM Asia’s role will be as a gas producer and supplier.

The latest MoU comes two months after a September signing of a non-binding MoU that will see CBM Asia and a multinational gas company conduct a market study of a CBM-to-LNG facility with a potential capacity of up to 50 Mmscfd. Should the study return the project’s feasibility, the two companies plan to enter into an arrangement whereby CBM Asia will supply natural gas and the multinational will take the gas and build, own and operate a LNG facility.

For CBM Asia, the two MoUs are important milestones as they indicate that the company has established commercial channels for early monetization of over 50 Mmscfd from pilot production and plan of developments, Alan Charuk, CBM Asia’s president and CEO, said in a company statement.

“The quality of our potential gas offtakers, joint venture partners and their financial supporters will play a major role in our ability to secure project financing for these exciting development programs,” he said.

Securities Disclosure: I, Vivien Diniz, hold no investment interest in any of the companies mentioned. 

Editorial Disclosure: CBM Asia is an advertising client of the Investing News Network. This article was not written as part of their advertising campaign.