Strides made in putting all project pieces in place for FID by year-end for gas field offshore Indonesia

Natural gas-focused firm Conrad Asia Energy has signed a binding gas sales agreement (GSA) for the sale and purchase of the domestic portion of gas from the Mako field off the coast of Indonesia with Perusahaan Gas Negara (PGN), a subsidiary of Indonesia’s national oil company Pertamina.

Tambak-2 well, Mako field; Source: Coro Energy

This is viewed as an important step in the commercialization of the Mako gas field, said to be the largest undeveloped gas field in the West Natuna Sea. The field forms part of the Duyung production sharing contract (PSC). Conrad holds a 76.5% operated interest in the Duyung PSC via its wholly-owned subsidiary West Natuna Exploration Limited (WNEL), with Coro Energy and Empyrean Energy holding 15% and 8.5% stakes, respectively.

Empyrean Chief Executive Officer, Tom Kelly, remarked: “This domestic GSA is a great step forward for the Mako gas field development. We can also look forward eagerly for news with regards the export GSA in the near term.”

While the terms of the PGN GSA are confidential, it was disclosed that the total contracted gas volume is up to 122.77 trillion British thermal units (Btu) with estimated plateau production rates of 35 billion Btu/day. Furthermore, the deal entails a seven-month stop date and is subject to PGN’s construction of a pipeline tie-in connecting the West Natuna Transportation System with the Indonesian gas market in Batam. 

The Mako field is believed to contain 2C contingent resources of 376 billion cubic feet (Bcf). The Tambak-1 and Tambak-2 wells drilled during the appraisal campaign showed the presence of well-developed, high-quality reservoir sandstones with a common gas water contact across the Mako field.

The remainder of the gas from the field is planned to be exported to Singapore under a separate GSA, which is being negotiated. According to Conrad, the deal is expected to be finalized in the coming few weeks. A non-binding term sheet outlining the key terms and serving as the basis for negotiating a definitive GSA was signed with Singapore’s Sembcorp last September.

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Conrad’s Managing Director and Chief Executive Officer (CEO), Miltos Xynogalas, noted: “As shared during our recent AGM, our focus has been finalising the underwriting gas sales agreements between the Mako Joint Venture, the Indonesian Government and Regulator and a Singapore based customer. These agreements are the essential documents that demonstrate financial viability of the project, which in turn underwrite value and financial sustainability.”

While the first gas was originally targeted for 2025, the production start-up date has now been postponed to 2026. A final investment decision (FID) for the Mako project, targeted for Q4 2024, is conditional upon the signing of both GSAs. 

Conrad intends to continue expanding its business relationship with PGN with its other resources located off the coast of Aceh Province of Indonesia, for which the two companies signed a memorandum of understanding (MOU) this February. The gas player won the Offshore North West Aceh (ONWA) and Offshore South West Aceh (OSWA) PSCs in 2022, while the contracts were signed in early 2023.

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Currently, 3D seismic surveys for the four gas discoveries in the Aceh portfolio are scheduled for later this year to determine their size, previously estimated at 15 trillion cubic feet (Tcf), 11 Tcf of which is said to be net attributable to Conrad.