Vancouver-based CBM Asia Development Corp. (TSX-V:TCF) is investing in the prospect of striking coalbed methane gas riches in Indonesia.
The junior natural gas explorer announced a joint operating agreement between Jakarta-based PT Medco CBM Sekayu and South Sumatra Energy Inc. earlier this week to explore a coalbed methane block in the South Sumatran Basin.
Coalbed methane is a natural gas created from decomposed organic matter trapped in coal seams.
A consortium of companies, including CBM Asia, own South Sumatra Energy. The agreement allows CBM to partake in a production-sharing contract for the 58,349-hectare Sekayu coalbed block.
CBM now holds a 13% interest in South Sumatran, but has the right to increase that stake to 26% if it funds US$1,743,500 in expenditures before December 31, 2012. It has already committed to fund an initial US$3.25 million in exploration expenditures at Sekayu to prove up reserves and submit a development plan to the Indonesian government.
CBM believes Indonesia could hold one of the world’s largest coalbed methane gas resources with as much as 453 trillion cubic feet in place.
The company could not be reached for comment by press time.