ASIATODAY.ID, JAKARTA – Conrad Asia Energy, an Asia-focused natural gas exploration and development company, announce that it has received a Directive from the Indonesian Ministry of Energy and Mineral Resources.
Conrad Managing Director and Chief Executive Officer, Miltos Xynogalas, said the approval of the new price and allocation for the GSA between the Mako Joint Venture, the Indonesian Government and PLN is a significant event.
“It has taken considerable time and effort to reach this important milestone and we can now move forward with greater confidence in all our projects. Oil-linked prices for pipeline gas contracts in Indonesia have been uncommon. Approval of such a structure for Mako demonstrates the willingness of the Government of Indonesia to secure gas for local consumption whilst ensuring that the producer is not economically disadvantaged. The PLN GSA underpins the financial viability and the value of the project and aligns with Indonesia’s new energy priorities,” said Miltos Xynogalas, March 12, 2025.
Indonesia is the fourth most populous country in the world and has amongst the fastest growing economies in the world.
“Mako is the first of what we expect will be several gas projects that Conrad aims to bring into commercial production from our existing portfolio of gas discoveries, including our Aceh gas resources. Asia has the fastest gas consumption growth in the world. As its economies transition away from coal to the cleaner burning natural gas and we are proud to be involved in this transition. The resultant strong gas demand in Indonesia underpins the value of our discovered resources and our investment thesis,” said Miltos.
The ongoing revision to Indonesia’s energy policy highlights the importance of Mako as well as the significant potential of Conrad’s Aceh gas assets. The Government recently announced of the roll-out a US$1.5 billion project to distribute liquefied natural gas (“LNG”) on a small scale to feed dozens of power plants now running on diesel via a unique hub-and-spoke model across Indonesia’s vast archipelago3. This has potential implications for Conrad’s discovered resources in offshore Aceh and for its previously announced small scale LNG collaboration with PGN4,5.
“The ongoing revision in Indonesia’s energy priorities has impacted the timing of the Mako project. However, the offset positive value driver across our portfolio is significant and underscores our strategy to focus on gas. Conrad is now in a much stronger position to attract partners into all our projects and this now gives us broader financing options from domestic sources,” he said.
As part of the Mako project Conrad also understands that MEMR will direct PLN to build the required approximately 7 kms gas spurline with an investment value of approximately US$50 million to link the West Natuna Transportation System (“WNTS”) with Pemping Island and subsequently to markets in Batam. The building of the pipeline and anticipated significant growth in gas demand, provides a spur to future exploration of Conrad’s Duyung PSC Prospective Resources and gives a ready means to commercialise additional gas volumes.
The new Government of Indonesia is formulating a New Energy Plan 2024-2034 under which it will prioritise gas exploration and production to meet rapidly rising domestic demand. Over the next decade, Indonesia anticipates natural gas demand to grow.
In January 2025, the Energy Minister Bahlil Lahadalia confirmed, “The orientation is to supply domestic demand. If that is not met, we will not permit exports.”.
The proliferation of data centres in Indonesia is one factor contributing to a substantial increase in energy demand (including natural gas) demand. Driven by a combination of location, infrastructure, and government incentives, Batam is emerging as a prime destination for such data centres.
As an example, the Indonesian Government has established a Special Economic Zone at Nongsa Digital Park in Batam. Together with the nearby Kabil Industrial Estate, Batam is emerging as a significant hub for data centre development and is witnessing an influx of global data centre companies. Ten companies have already committed to establishing data centres at Nongsa, with nine actively constructing facilities.
The Indonesian MEMR has also announced that a new oil refinery with a capacity of 500,000 barrels per day is to be built on Pemping Island, Batam, Riau Islands province. MEMR explained that the Pemping Island was chosen as the location for the refinery construction given its existing and already built supporting infrastructure, including gas infrastructure.
“Natural gas is an essential transition fuel in the energy mix across Asia and the sale of all Mako’s contingent resources gas resources represents an important project in Asia. Mako is one of several gas resources in Conrad’s Asian portfolio as it continues to pursue the development of gas across the region,” he said.
The MEMR Directive is an important step in the commercialisation of Mako field, the largest undeveloped gas field in the West Natuna Sea.
Duyung PSC – Mako Gas Field 76.5% Participating Interest, Operator
Conrad holds a 76.5% operated interest in the Duyung PSC via its wholly owned subsidiary West Natuna Exploration Limited. Duyung is located in the Riau Islands Province, Indonesian waters in the West Natuna area, approximately 100 kms to the north of Matak Island and 400 kms northeast of Singapore. The Mako field contains 2C Contingent Resources (100%) of 376 billion cubic feet (“Bcf”), of which 187 Bcf are net attributable to Conrad9. The West Natuna Sea has been supplying Singapore with natural gas for more than two decades and Mako is expected to extend this supply for at least another decade via the existing transportation system.
The contract term is until the end of the Duyung PSC in January 2037 and allows for the sale of plateau gas rates of 111 Bbtud which is equivalent to around 111.9 mmscfd. The contract is for the entirety of Mako’s 2C Contingent Resources.
The gas price will be linked to the Indonesian Crude Price (“ICP”), which is akin to Brent oil linked LNG pricing and will be economically equivalent to the pricing agreed approved earlier for Mako gas to be sold both domestically and for export, thereby underpinning the value of gas from Mako. This reflects the growing Indonesian domestic demand for gas.
The terms of the GSA are confidential.
A formal signing ceremony, in the presence SKK Migas representatives, will be arranged at a later date. In parallel, negotiations on the sale / farmout of some of Conrad’s Participating Interest (“PI”) in Duyung PSC are advancing, in light of the revised contract arrangements. Gas sales clarity will allow us to close the PI sale and financing arrangements for the development of Mako field.
The timing of a Mako Final Investment Decision (“FID”) and consequent first gas will be revised following finalisation of the above-mentioned matters.
PLN Background
PT PLN Energi Primer Indonesia (“PLN EPI”) is a sub-holding of PLN Persero which was established on 21 September 2020 to ensure the availability of primary energy supplies through consolidating procurement & logistics processes, searching for primary energy sources and developing a resilient ecosystem and strong supply chain. The energy sources include but not limited to coal, gas and liquid fuel and biomass. PLN EPI will be a buyer of energy sources and will in turn provide the storage and logistic system to supply to all power plants in Indonesia giving them flexibility in balancing the energy source requirement effectively and efficiently. (AT Network)
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