Singapore-headquartered natural gas player Conrad Asia Energy has signed a binding agreement with PT PLN Energi Primer Indonesia (PLN EPI), a wholly owned subsidiary of Indonesian state-owned electric utility company PT Perusahaan Listrik Negara (PLN Persero), for the sale and purchase of natural gas from its field in the West Natuna Sea off the coast of Indonesia .
The gas sales agreement (GSA) provides for all the gas produced from the Mako gas field, or a contract quantity of approximately 392 trillion British thermal units (Btu), to be supplied for domestic use at a gas price linked to the Indonesian Crude Price (ICP), an oil price index similar to Brent.
This is in line with the announcement made in March , when the Indonesian Ministry of Energy and Mineral Resources issued a directive for all the gas from Mako to be made available for the domestic market.
The contract term lasts until January 2037, which is when the Duyung production sharing contract (PSC) holding Mako expires. It provides for the sale of plateau gas rates of 111 billion Btu per day, which is equivalent to around 111.9 million standard cubic feet per day (mmscfd). The contract therefore covers Mako’s entire 2C contingent resources.
Conrad Managing Director and Chief Executive Officer (CEO), Miltos Xynogalas , said: “The GSA between the Mako Joint Venture and PLN EPI is a significant milestone both in the development of Conrad and in our progress to bringing the Mako Field into production. The signing of the GSA underpins the financial viability and crystallises the value of the Mako Field. For Conrad, this is an important step in building its gas business in Asia.”
While the terms of the GSA are confidential, Conrad did disclose that PLN EPI will finance and build a 5–7 kilometer pipeline connecting the main West Natuna Gas line to Pemping Island and onward link to Batam.
The new deal is expected to support the pending farm-out arrangements in the Duyung PSC with Coro Energy and a final investment decision (FID) for Mako. The former transaction recently received a green light from Coro’s shareholders to proceed.
Conrad holds a 76.5% operated participating interest in the Duyung PSC via its wholly owned subsidiary West Natuna Exploration Limited , which will grow to 91.5% once the Coro transfer is completed. The remaining 8.5% is held by Empyrean Energy .
Duyung is located in the Riau Islands Province, approximately 400 kilometers northeast of Singapore. The Mako gas field within it is thought to contain 376 billion cubic feet (Bcf) of 2C contingent resources, 192 Bcf of which are net attributable to Conrad. This will increase to 231 Bcf following the Coro transfer.
Conrad also pointed out that negotiations on the sale or farmout of some of its interest in Duyung PSC are underway. Therefore, the timing of the FID for Mako and the consequent first gas will be revised once these arrangements are finalized.