Asia-focused natural gas exploration and development company Conrad Asia Energy Ltd recently welcomed an important next step in the commercialisation of the Mako gas field — the largest undeveloped gas field in Indonesia’s West Natuna Sea.
Conrad announced last week that it has signed a binding gas sales agreement (GSA) for the sale and purchase of the export portion of natural gas from the Mako gas field with Sembcorp Gas Pte Ltd, a wholly-owned subsidiary of leading energy and urban solutions provider Sembcorp Industries Ltd.
The GSA with Singapore-based Sembcorp for gas from the Mako gas field — in which Conrad has a 76.5% participating interest—marks a further step in the commercialisation of the Mako field.
With this latest gas sales agreement, along with the gas sold under a separate domestic sales agreement with Indonesia’s largest gas company, PGN, all of Mako’s current gas contingent resources have been committed to gas buyers.
Conrad highlights that the completion of the two gas sales agreements is a significant milestone on the path to a final investment decision for the Mako project, which is targeted for Q4 2024.
With natural gas being an essential transition fuel in the energy mix across Asia, the sale of all Mako’s contingent gas resources represents an important project in Asia.
Mako is just one of several gas resources in Conrad’s Asian portfolio as it continues to pursue the development of gas across the region.
“The most significant event in the company’s history”
Conrad managing director and CEO Miltos Xynogalas said: “The GSA between the Mako Joint Venture, the Indonesian Government and Sembcorp is the most significant event in the company’s history as it has progressed Mako from an exploration concept in 2017 to a gas development project in 2024.
“This GSA is the essential document that underpins the financial viability and the value of the project. This is an important step for Conrad in the commercialisation of the Mako Gas Field and building its gas business in Asia.
“Conrad has been working closely with Sembcorp for over a year and is delighted to have progressed this to a formal GSA.
“Combined with the PGN GSA, the two GSAs are significant milestones on the road to final investment decision which is targeted for the end of this current year. With these GSAs now signed, Conrad can continue to progress its farmout discussion and final investment decision.
“Mako is the first of what we believe will be several gas projects that Conrad aims to bring into commercial production from its existing portfolio of gas discoveries which includes its gas resources in Aceh.
“Asia has the fastest gas consumption growth in the world as its economies transition away from coal to the cleaner burning natural gas and we are proud to be involved in this transition.”
Conrad-Sembcorp binding gas sales agreement
The contract term is until the end of the Duyung PSC in January 2037 and allows for the sale of up to 76 billion British thermal units per day (Bbtud), which is equivalent to around 76.9 million standard cubic feet per day (mmscfd).
The gas sales agreement also contains provisions for the sale of up to an additional 35 Bbtud (around 35.4 mmscfd) should a tie-in pipeline not be built to the Indonesian domestic market in Batam and domestic market obligation sales do not therefore eventuate.
Conrad holds a 76.5% operated interest in the Duyung PSC, which contains Mako, via its wholly owned subsidiary West Natuna Exploration Ltd. The Mako field contains 2C contingent resources (100%) of 376 billion cubic feet (Bcf), (of which, 187 Bcf are net attributable to Conrad) and is scheduled to begin production in 2026.
The West Natuna Sea has been supplying Singapore with natural gas for more than two decades and Mako is expected to extend this supply for at least another decade via the existing transportation system.