CBM Asia to Start Joint Study of Sumatra Block

CBM Asia has received clearence to begin a joint study of the 1,382 sq km Riau Area CBM Block. As per the agreement, CBM Asia and its partner PT Tranaco Utama will conduct geological studies in cooperation with an Indonesian University to determine the economic viability of potential coalbed methane within the study area.

If the study area is deemed economically viable, CBM Asia and Tranaco will hold the right to apply for a Production Sharing Contract (PSC) for the area, the Canada based company said in a statement.

The Riau study area is located in Central Sumatra, with its southern boundary sharing the northern boundary of the company's 70% held and operated Hulu PSC. CBM Asia has signed a Heads of Agreement with Tranaco under which CBM Asia will hold an 80% participating interest in the Riau Area CBM Block and will be the Operator. CBM Asia will pay 100% of the Joint Study costs which are estimated at $300,000. The Joint Study is expected to take four months to complete.

CBM Asia also said that it has made formal applications to conduct an additional three Joint Studies in prospective CBM areas in Sumatra and Kalimantan with a combined area of 7,704 sq km.