Natural gas explorer-developer Conrad Asia Energy (ASX: CRD) and majority-owned subsidiary West Natuna Exploration have approved a final investment decision (FID) for the Mako gas project located within the Duyung production sharing contract (PSC) in Indonesia’s Riau Islands Province.
The approval, which gives Conrad and its partners the green light to proceed with the US$320 million commercial development, will see a ramp-up in construction and commissioning activities targeting first gas before end 2027.
West Natuna has a 25% stake in the project and will incur US$80m in development costs plus project contract costs of more than US$110m.
Conrad confirmed that full funding and a substantial contingency allowance had been secured for all budgeted project costs.
Two-Stage Gas Development
The Mako field contains 2C contingent resources of 376 billion cubic feet (Bcf), 58Bcf of which will be net attributable to Conrad.
The two-stage development will comprise six initial development wells tied back to a leased mobile offshore production unit with a design capacity of 172 million standard cubic feet of natural gas per day.
Sales gas will be transported via an 18-inch, 59 kilometre-long pipeline to the KF platform in the adjoining Kakap PSC, as well as into the 656km-long West Natuna Transportation System subsea gas pipeline for delivery to Indonesia’s domestic market.
Mako gas will be sold to PLN Energi Primer Indonesia (owned by government electricity utility PLN Persero) under a contract extending to the expiry of the Duyung PSC in January 2037.
Fully Contracted Developer
Chief executive officer Miltos Xynogalas said FID approval was a transformative moment for the company that “will transition Conrad from a speculative exploration and appraisal company to a fully contracted gas development company with a defined and funded capital program and a clear path to production […] in the fastest-growing energy consumption region in the world.”
“With contracted gas sales in place, funding secured and first gas targeted, we believe […] Mako represents a disciplined and substantially de-risked entry into South-East Asia, which we aim to augment with our Aceh gas accumulations in due course.”
“This project has been systematically de-risked across subsurface, engineering, permitting and funding, positioning Conrad to progress confidently into construction,” Mr Xynogalas said, adding that the FID reflected many years of technical, commercial and financing discipline.
“It is fully-funded with substantial contingencies at a time when access to development capital for smaller companies remains challenging and it preserves our exposure to long-term cash flows while materially reducing medium-term balance sheet pressure and equity dilution risk.”
