Green House Gas or GHG (CO2, CH4, N2O, HFC, PFC, SF6) are gasses released by activities on the earth surface, either by natural activities (CO2 release by plants) or human activities. The growth of human civilization over the past decades has contributed to the significant rise of GHG release and concentration in the atmosphere. High level concentration of GHG is regarded as the source of Global Warming phenomenon, with CO2 as the main contributor (60%). Global Warming has caused a series of impacts, including the rising of sea level, the melting of icecaps in North Pole, and significant climatic changes worldwide. In the fight against Global Warming, the Earth Summit in Rio de Janeiro in 1992 opened signature on United Nation Framework Convention on Climate Change (UNFCCC), which became effective in 1994. Subsequent summit held in Kyoto in 1998 ended with Kyoto Protocol, which then came into force in February 2004.

Clean Development Mechanism (CDM) is the only mechanism under the Kyoto Protocol which involves developing countries (non-Annex 1 countries) in global action of greenhouse gas emission abatement in order to prevent the climate change. The CDM is supervised by the CDM Executive Board (CDM EB) and is under the guidance of the Conference of the Parties (COP/MOP) of the UNFCCC.

MedcoEnergi is involved in CDM through an “associated gas recovery and utilization project”. This project was initiated in 2003 to reduce the amount of associated gas flared in Kaji-Semoga oil field. Although the flaring activity itself is not prohibited by Government but it releases CO2 emission to the atmosphere. The installation of the LPG Plant allowed the recovery and processing of the associated gas into LPG, condensate, and residue gas. One of the main factors in  choosing LPG as an option for associated gas utilization was due to relatively high composition (± 16%) of propane and butane. The LPG Plant commenced its operation in 2004 under the management of PT Medco LPG Kaji.

The associated gas is produced as a by-product of oil production activity at Kaji-Semoga oil field, operated by PT Medco E&P Indonesia, located ± 80 km from Palembang, the capital city of South Sumatra province, Indonesia. Limited amount of the associated gas had been used for oil production, gas injection, utilities, and on-site consumption whilst the major amount was flared, prior to LPG Plant operation.

This project has received Letter of Approval from Indonesian DNA (Designated National Authority) – Komisi Nasional Mekanisme Pembangunan Bersih (KN MPB) in December 2006. The approval shows that it has complied with the requirement of sustainability aspects of CDM project. The project is currently under validation process, carried out by DNV. After the validation process is completed, the project will be registered to CDM EB, in July 2007 as the expected registration date. Once registered, the next step would be the implementation of monitoring period and  verification & certification process, prior to CERs (Certified Emission Reductions) issuance.