I

ndonesia'€™s biggest energy firm, PT Pertamina, will tap into shale gas exploration this year in the state-controlled company'€™s bid to discover unconventional natural gas amid dwindling crude oil production.
Pertamina CEO Galaila Karen Agustiawan signed the production-sharing contract of the Sumbagut block in North Sumatra during the inauguration of the of the 37th Indonesian Petroleum Association (IPA) convention in Jakarta onWednesday.
Witnessed by President Susilo Bambang Yudhoyono and  Energy and Mineral Resources Minister Jero Wacik,  interim upstream oil and gas watchdog SKKMigas chief Rudi Rubiandini also signed the contract on the behalf of the country'€™s regulator.
'€œWe hope that the signing of the PSC [production-sharing contract] for non-conventional oil and gas block will create good momentum for the future development of Indonesia'€™s alternative energy resources,'€ Karen told reporters.
Located in North Sumatra, the Sumbagut block is estimated to possess 18.56 trillion cubic feet (tcf) of shale gas and Pertamina, who will operate the block through its subsidiary, PHE MNK Sumbagut, has been given six years for its first exploration phase and four years for a second exploration phase.
Pertamina, according to Karen, has committed to spend US$7.8 billion to explore the Sumbagut block, aiming to produce around 40 million meters standard cubic feet per day (mmscfd) to 100 mmscfd by 2020.
'€œShale gas is expected to support the government'€™s campaign to diversify the nation'€™s energy sources  tocurb our dependence on crude oil,'€ said Karen, adding that most of the shale gas produced
from the Sumbagut block would be allocated to domestic buyers.
Shale gas is a natural gas produced from shale rocks and other geological formations by injecting water and chemicals into the rocks through a technique known as hydraulic fracturing.
Last year, the Energy and Mineral Resources Ministry announced that Indonesia had estimated shale gas resources of around 574 trillion cubic feet (tcf) throughout Sumatra, Kalimantan, Papua and Java.
Sumatra supposedly has the largest shale gas reserves of around 233 tcf, particularly in the central region, where approximately 86.9 tcf of shale gas resources can be found, according to the ministry'€™s
geological bureau.
Kalimantan has an estimated 194 tcf of shale gas reserves, the ministry said, followed by Papua Island (90 tcf) and Java Island (48 tcf), while the remaining 9 tcf was spread across other parts of the
archipelago.