CBM Asia Claims ExxonMobil Is Exiting Firms’ Joint Project in Kalimantan

By : Jakarta Globe | on 1:23 PM December 23, 2013
Category : Business, Corporate News

CBM Asia Development, a Canadian company engaged in the exploration and development of coal-bed methane projects in Indonesia, said in a statement on its website last week that its American partner ExxonMobil planned to exit the firms’ joint project in Kalimantan.

CBM Asia and Exxon inked a joint venture deal last December to farm four existing coal-bed methane blocks in South Kalimantan’s Barito Basin and share harvest rights in other blocks in East Kalimantan’s Kutai Basin. Under the deal, both CBM Asia and Exxon held equal stakes in the blocks operated under Indonesia’s production sharing contracts scheme.

The Canadian company said in last week’s statement that it signed a $30 million memorandum of understanding for a “loan with warrant” with a prominent “European family office.” The memorandum included a $15 million letter of credit facility to fund the Barito Basin project.

CBM Asia, which under last year’s deal, has been the chief operator on the four blocks in the Barito Basin, said the MoU was presented to Exxon on Dec. 13, but in respond the Canadian company received a draft termination proposal by Exxon.

The statement by CBM Asia did not give reasons for Exxon’s decision to exit the project. Exxon’s management was not immediately available for comment.

CBM Asia added that it has requested compensation for the extensive planning and technical support the company has provided to Exxon to help it fulfill its obligations under the production sharing contracts scheme during the past 18 months.

CBM Asia has been keen to tap Indonesia’s coal-bed methane sector, as the country is believed to have one of the largest resources of this kind in the world with a potential 453 trillion cubic feet in place, more than double the country’s natural gas reserves.

Other explorers of coal-bed methane in Indonesia include ENI, Medco Energi, Santos, Total, BP and Dart Energy.

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