CBM Asia Development Corp. (Toronto Venture: TCF) has signed a non-binding memorandum of understanding (MoU) with a multinational gas company to conduct a technical and market study of a CBM-to-LNG facility(s) with a potential capacity of up to 50 MMcf/d in South Kalimantan, Indonesia.
As specified under the MoU CBM Asia's responsibilities are;
- To conduct a commercial analysis on the CBM development strategy required to meet the proposed LNG facility capacity.
- To produce a technical study to determine gas production schedule, reserve certification and natural gas delivery points.
MGC's responsibilities are;
- To conduct market analysis on the demand for LNG.
- To undertake infrastructure study on construction of the LNG facility(s) and related logistical groundwork.
Each party is responsible for its own costs in relation to the study.
On completion of the Study, CBM Asia and MGC would jointly decide on the feasibility of the project with a view to entering into a definitive agreement on the establishment of a business relationship. The proposed business structure would require CBM Asia to supply natural gas whereas MGC would off-take gas, build own and operate the LNG facility, and market/deliver the LNG to the end consumer. The potential CBM field development, gas sales contract, LNG facility construction and other related works would remain subject to local, regional and central government approvals.
"We are very pleased to establish a relationship with MGC which has an extensive presence in the global LNG business including Asia/Australia. Furthermore, interest in South Kalimantan underscores our belief of the potential role the region's CBM resources will play in Indonesia's future energy requirements," said Alan Charuk, CBM Asia's president and CEO. "Indonesia's natural gas production has fallen over the past three years as aging conventional fields mature whereas Indonesia's economy continues to steadily grow pushing gas demand ever higher. CBM will help to bridge that gap and also help reduce energy bills by replacing high cost diesel (USD25/Mcf) currently used in the power generation and the coal mining industries.
"From a development perspective the potential establishment of a medium-scale LNG facility with capacity of up to 50 MMcf/d provides the crucial mid-development step beyond early-stage power generation towards development of new pipelines and/or large scale LNG facilities required for full-scale development of the Barito Basin's vast CBM potential."
CBM Asia is based in Vancouver, British Columbia.