With two offshore blocks in the bag, Conrad looks forward to exploring ‘host of high-impact gas plays’

Exploration & Production

January 6, 2023, by Melisa Čavčić

Natural gas-focused Conrad Asia Energy has inked Production Sharing Contracts (PSCs) for two blocks offshore Indonesia, which contain existing gas resources along with a multi-trillion cubic feet (Tcf) exploration potential.

Back in November 2022, Conrad Asia Energy was named as the winning bidder for the Offshore North West Aceh (ONWA) and Offshore South West Aceh (OSWA) PSCs, located offshore northwest and southwest of the Aceh Province of Indonesia.

In an update on Friday, Conrad disclosed that the signing of PSCs for these two blocks took place on Thursday, 5 January 2023. Thanks to this, Conrad will operate and hold a 100 per cent participating interest in both blocks. The company explains that these acquisitions are consistent with its core strategy of developing assets with the potential to supply gas to the rapidly growing South East Asia markets.

Miltos Xynogalas, Conrad Managing Director and Chief Executive Officer, commented: “We are delighted to have been awarded these PSCs, and to have matured the blocks from when we first started to evaluate them some four years ago. These blocks are consistent with our company strategy of being focussed on gas in offshore locations within Asia, in order to build our gas portfolio in the region.”

Over the past four years, Conrad conducted joint technical studies under Joint Study Area (JSA) arrangements over the blocks, which have now been converted to PSCs with a 30-year tenure. This will allow the firm to develop existing discoveries and explore additional resources.

Peter Botten, Conrad Chairman, remarked: “The markets for gas in the general Asian region and in particular Indonesia are very strong as the country has experienced strong economic growth over the past years. At the recent G20 meeting in Indonesia, the world pledged to finance Indonesia $20 billion to help it transition away from coal.

“Gas is the important transition fuel in the fourth most populous country in the world. Indonesia is looking to double its gas production by 2030 and is actively encouraging the exploration and development of natural gas where it recently announced it would need some $170 billion in upstream investment by 2030. Conrad is delighted to be an active participant in this important initiative to secure vital energy supplies in this growing economy.”

Gas leads with multi-trillion cubic feet potential

According to Conrad, the blocks for which it has signed PSCs contain known gas discoveries in shallow water and at shallow reservoir depths along with additional prospectivity in both the shallow and deeper-water areas of the PSCs.

“There is significant upside for Conrad in the exploratory opportunities that exist in both the shallow and the deepwater areas, where we have already identified a host of high-impact gas plays. The deepwater areas potentially contain several multi trillion cubic feet in size gas leads, with evidence of hydrocarbon accumulations from observed gas chimneys and seismic flat spots,” highlighted Xynogalas.

The company further explains that the gas discoveries in the shallow water, which were made in the 1970s, have all been flow tested at potentially commercial rates. However, they were not developed at the time due to prevailing low gas prices and immature markets.

Furthermore, the deepwater areas have several “really large structures” with multi-trillion cubic feet potential, based on Conrad’s statement. The firm underlines that it identified these structures with gas chimneys and flat spots displayed on seismic data, indicating evidence of potential hydrocarbons.

“The most prospective leads are in 1,000 metres of water, which by global standards is not deep. Conrad has a 100 per cent working interest in these blocks and will be seeking partners to participate in exploration efforts in these areas. Major companies have already expressed an interest to review our data,” added Xynogalas.

Moreover, Conrad underscores that despite the numerous discoveries, the PSCs are classified as “frontier areas” and have been granted “attractive fiscal terms, which are amongst the most favourable in Indonesia.”

The firm also confirms that it has initiated third-party competent persons reports for the known gas discoveries, which will contain contingent resource estimates and valuations based on conceptual development plans.

The ONWA block, which contains the Meulaboh-1 and Meulaboh East-1 gas discovery wells, comprises total acreage of 9,182 square kilometres. On the other hand, the OSWA block, which contains the Singkel-1 gas accumulation, covers 10,700 square kilometres.

Regarding Conrad’s other recent activities, it is worth noting that the company received approval in November 2022 from the Indonesian government for its revised development plan for the Mako gas field, which was submitted in September 2022.