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Currently, the main challenges in Indonesia oil and gas industry are declining oil production, oil consumption exceed production and low reserve discoveries.Government has made many efforts to overcome the challenges to avoid potential energy crisis in the future. The oil demand is increasing, on the other hand, oil supplies are mainly generated from mature fields, only a small portion generated from new discovery fields.To overcome energy crisis, government should made energy diversification to optimize other energy resources such as gas, coal, geothermal as well as renewable energy resources and reduce oil dependency.One of unexploited energy resources in Indonesia is coal bed methane, with abundant reserves lying from Sumatra to Papua and an environment friendly energy to answer “Global Warming issues.Government start utilizing CBM gas resources by tendering many CBM blocks to investors to explore and exploit potential areas.Coal bed methane is important to Indonesia with the following reason : Clean gas, environment friendly to reduce CO2 emission Energy diversification : reduce oil consumption and subsidy Abundant undeveloped coal base reserves New undeveloped unconventional gas resources Able to reduce electricity shortage through small scale power plant Sustainability of supply, able to feed unutilized LNG plantBecause CBM is new business, therefore Government should have clear and strong strategies in developing the business. The important factors which is influence the CBM business is geological aspect, political stability and attractive fiscal terms.Keyword: Attractive fiscal terms will attract investor to run and develop CBM business in Indonesia.