Managing Director and CEO of Conrad, Miltos Xynogalas, said the delay in the FID schedule was due to the delayed completion of negotiations for a gas sales agreement (GSA) with SembCorp Gas Pte Ltd., a Singaporean power company.

Additionally, Xynogalas mentioned that the postponement of the FID schedule was also due to ongoing technical and commercial negotiations with the West Natuna Transportation System (WNTS) joint venture to transport gas from the Mako field to Singapore.

"Conrad has made significant progress in the development of the Mako Field in the fourth quarter of 2023, despite the FID delay caused by extended negotiations with WNTS," Xynogalas said in a statement on Wednesday, January 31, 2024.

Xynogalas noted that Conrad has completed the front-end engineering and design (FEED) for the Mako Field. Based on this FEED, the investment cost for the first phase of field development is estimated to reach US$325 million, higher than the Competent Person's Report (CPR) estimate of US$251 million.

The increase in investment costs is due to rising industry costs. "The GSA completion target is agreed upon in the second quarter of 2024, as agreed by all parties," Xynogalas said.

Several key points in the GSA negotiations include the gas sales plan from the beginning of production until the end of the production sharing contract (PSC) term in the Duyung Block ending in 2037. The total gas sales volume is estimated to reach 293 trillion British thermal units (TBtu), or approximately 293 Bcf, with the potential to increase to 392 TBtu (approximately 392 Bcf), equivalent to 71-95 percent of the total 2C contingent resources reaching 413 Bcf, as tested by GaffneyCline Associates on August 26, 2022. Gas sales will follow the Brent crude oil price.

The completion of the GSA from the Mako Field is crucial for Conrad regarding the continuation of the partial divestment of their participating interest in the Duyung Block located offshore the West Natuna Basin, Riau Islands. Conrad, through its subsidiary West Natuna Exploration Limited, holds a 76.5 percent participating interest in the offshore Duyung PSC gas block along with Coro Energy Duyung (Singapore) Pte. Ltd (part of London AIM-listed Coro Energy Ltd with a 15 percent participating interest) and Empyrean Energy PLC (8.5 percent participating interest), a UK-based company.

The partial divestment of the Duyung Block was carried out by Conrad following the revision of the field development plan (PoD) approved by Minister of Energy and Mineral Resources Arifin Tasrif in November 2022. Through this PoD revision, the gas contingent resources from the Mako gas field increased by 458 percent to 297 billion cubic feet following the successful appraisal drilling last year.

Additionally, upstream oil and gas authorities have allowed Conrad to export gas to Singapore 100 percent due to the lack of domestic transmission infrastructure. The Singapore market is already connected to the West Natuna Transportation System pipeline. The government has granted Conrad permission to export gas up to 100 percent to the Singapore market via this pipeline. However, Conrad must allocate exports up to 25 percent of gas production to the domestic market after the domestic transmission infrastructure is built.