Conrad Asia Energy Ltd. continues its efforts to secure access for the sale of gas from the Duyung Block to Singapore through the pipeline facilities of the West Natuna Transportation System (WNTS) joint venture. These efforts involve commercial and legal agreements to supply gas to the prospective buyer, SembCorp Gas Pte Ltd., a Singaporean power company.
“Conrad has made solid progress for the development of the Mako field in the fourth quarter of 2023 despite delays in the Final Investment Decision (FID) caused by the extension of negotiations with WNTS,” Managing Director and CEO Conrad Miltos Xynogalas said in a press release as quoted on Sunday, February 4, 2024.
Additionally, Conrad is still negotiating with SembCorp to finalize a definitive gas sales agreement (GSA), following the signing of a non-binding agreement at the end of last year. Several key points in the GSA negotiations include the gas sales plan from the start of production to the end of the production sharing contract (PSC) in the Duyung Block until 2037
. The total gas sales volume is expected to reach 293 trillion British thermal units (Tbtu) (about 293 Bcf) with the potential to increase to 392 Tbtu (about 392 Bcf), equivalent to 71 percent to 95 percent of the total 2C contingent resources potential of 413 Bcf, as evaluated by GaffneyCline Associates on August 26, 2022. Gas sales will follow the Brent crude oil price.
The finalization of the GSA from the Mako Field is crucial for Conrad regarding the continuation of divesting or farm-down of their participation rights in the Duyung Block, located offshore of the West Natuna Basin, Riau Islands.
Miltos stated that the company is still focused on finalizing several provisions in the GSA negotiations for the gas field with the current Singaporean buyer.
“The target is to finalize the GSA by the end of the second quarter of 2024, as expected by all parties,” said Miltos.
Meanwhile, in the revised field development plan (PoD) for the Mako Field, Conrad is required to allocate 29.5 percent of total gas sales for domestic market obligations (DMO). Currently, Conrad and PT Perusahaan Gas Negara (PGN) are finalizing a formal agreement to implement the revised PoD mandate. Gas DMO allocation from the Duyung Block will be priced at US$5.5 per MMbtu for PGN.
The PoD revision was signed by Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif in November 2022. Through the PoD revision, the gas contingent resources from the Mako gas field increased by 458 percent to 297 billion cubic feet after the successful appraisal drilling the previous year. Conrad, through its subsidiary, West Natuna Exploration Limited, holds a 76.5 percent participation interest in the offshore Duyung PSC gas block along with Coro Energy Duyung (Singapore) Pte. Ltd (a part of Coro Energy Ltd listed on London AIM, with 15 percent participation interest) and Empyrean Energy PLC (8.5 percent participation interest), a company established in the UK.