Asia-focused Conrad Asia Energy Ltd said it has signed a gas sales agreement (GSA) for the sale and purchase of natural gas from the Mako Gas Field offshore Indonesia with PT PLN Energi Primer Indonesia (PLN EPI), a wholly owned subsidiary of state-owned PT Perusahaan Listrik Negara (PLN Persero).
The agreement, which covers the current Duyung Production Sharing Contract (PSC) period until January 2037, provides for a total contact quantity of 392 trillion British thermal units (Btu), or the sale of 111 billion Btu per day, Conrad said in a news release.
The Mako gas price will be linked to the Indonesian Crude Price (ICP), an oil price index similar to Brent. The resulting pricing mechanism will be economically similar to the mix of prices previously approved for Mako export and domestic gas sales, with 100 percent of the gas produced from the field to be sold at the above-referenced price rather than the usual fixed domestic offtake price, according to the release.
Financial terms of the agreement were not disclosed.
PLN EPI will finance and build the pipeline connecting the main West Natuna Gas line to Pemping Island and the onward link to Batam. Conrad will not bear any costs in relation to the construction of the pipeline, the company said.
The agreement is expected to support the pending farm-out arrangements in the Duyung PSC and a final investment decision for the Mako field, Conrad said.
Conrad Managing Director and 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 crystallizes the value of the Mako Field”.
For Conrad, this is an important step in building its gas business in Asia. Conrad has worked closely and effectively with PLN to conclude a formal GSA promptly following the Directive from the MEMR to sell all gas from Mako into the Indonesian domestic market. The island of Batam is experiencing strong energy demand growth fueled by power demand from data centers and Mako is ideally placed to supply energy to that growing market,” Xynogalas continued.
“Mako is the first of many gas projects we aim to bring into commercial production from our existing portfolio of gas discoveries, which also include our Aceh gas resources where we hold four existing discoveries. Asia has the fastest gas consumption growth in the world and continues to progress on its energy transition path away from coal. We are extremely proud to participate in and support Indonesia’s ever-growing exploitation of its natural gas resources. The resultant strong gas demand in Indonesia underpins the tangible value of our discovered resources and provides a compelling investment thesis for Conrad,” he concluded.
Conrad holds a 76.5 percent operating participating interest in the Duyung PSC via its subsidiary West Natuna Exploration Limited. Duyung is located in the Riau Islands Province, Indonesian waters in the West Natuna area. The Mako Gas Field contains 2C contingent resources of 376 billion cubic feet (Bcf), of which 192 Bcf are net attributable to Conrad, according to the release.
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