ASIATODAY.ID, JAKARTA – Conrad Asia Energy Ltd (ASX:CRD) confirmed that the final investment decision (FID) for the Mako Field will be postponed until mid-2024. In fact, initially the FID was targeted to be completed at the end of 2023.
Managing Director and CEO Conrad Miltos Xynogalas said that the postponement of the FID schedule was due to delays in completing gas sales agreement (GSA) negotiations with SembCorp Gas Pte Ltd., a Singapore generating company.
Apart from that, said Miltos, 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 distribute gas from the Mako Field to Singapore.
“Conrad has made significant progress for the development of the Mako Field in the fourth quarter of 2023, despite delays in FID caused by extended negotiations with WNTS,” said Miltos as quoted in an official statement, Wednesday, January 31 2024.
However, Miltos said, Conrad had completed the front-end engineering and design (FEED) for the Mako Field. Based on the FEED, investment costs for the first phase of field development are estimated at $325 million, higher than the Competent Person’s Report (CPR) estimate of $251 million. The increase in investment costs was due to increased costs in the industry.
“The GSA completion target was agreed to be in the second quarter of 2024 which has been agreed upon by all parties,” he said.
Several important points in the GSA negotiations include the gas sales plan from the start of the production period until the end of the production sharing contract (PSC) in the Duyung Block ending in 2037, with a total gas sales volume reaching 293 trillion British thermal units (TBtu) (c 293 Bcf) with potential additions reaching the level of 392 TBtu (c 392 Bcf), equivalent to 71% and up to 95% of the total potential 2C contingent resources reaching 413 Bcf, as tested by GaffneyCline Associates on August 26 2022. Gas sales will later follow Brent crude oil price.
Meanwhile, the completion of the GSA from the Mako Field is crucial for Conrad regarding the continuation of the divestment or farm-down of some of their participation rights in the Duyung Block which is located off the coast of the West Natuna Basin, Riau Islands.
Conrad, through its subsidiary, West Natuna Exploration Limited, holds 76.5% participating interest in the Duyung PSC offshore oil and gas block together with Coro Energy Duyung (Singapore) Pte. Ltd (part of London AIM-listed Coro Energy Ltd, with a 15% participating interest) and Empyrean Energy PLC (8.5% participating interest) a company incorporated in the UK.
Conrad released part of the participation rights in the Duyung Block following the revision of the field development plan (PoD) which was approved by the Indonesian Minister of Energy and Mineral Resources, Arifin Tasrif, in November 2022. Through the PoD revision, contingent gas resources from the Mako gas field increased 458% to a level of 297 billion cubic feet after successful drilling appraisals last year.
Apart from that, the upstream oil and gas authority also allowed Conrad to export 100% of its gas to Singapore due to the unavailability of transmission infrastructure in the domestic market.
Meanwhile, the Singapore market is connected to the West Natuna Transportation System pipeline. The government gave permission to Conrad to export up to 100% of the gas to the Singapore market via this pipeline. However, Conrad must allocate exports of up to 25% of gas production to the domestic market after the domestic transmission infrastructure is built later. (AT Network)
Check out other news and articles at Google News
Discussion about this post