Conrad Asia Energy has secured a partnership with Nations Natuna Barat, a subsidiary of Indonesia's Arsari Group, to advance the development of the Mako gas field offshore Indonesia. This partnership enables the project to move towards a final investment decision.

Transaction Details

Nations Natuna Barat will acquire a 75% non-operated participating interest in the Mako gas field, located on the Duyung production sharing contract in the Natuna Sea. The company will provide full financing for all project development costs and associated working capital, estimated at US$320 million, through to the start of commercial gas production, subject to government approval. This arrangement follows the departure of former partners Empyrean Energy and Coro Energy, who were unable to meet financial commitments.

Project and Resource Overview

The Mako field contains best-estimate contingent resources of 413 billion cubic feet of gas, making it the largest unexploited gas resource in the area, with additional exploration potential on the PSC. The development concept involves a leased mobile offshore production unit (MOPU). Indonesian contractors Asiatek Energi and Synergy Engineering conducted front-end engineering and design work for the subsea, umbilical, riser, and flowline (SURF) components and the MOPU, respectively.

Commercial and Development Plans

All gas production from Mako is mandated for Indonesia's domestic market, altering Conrad's initial plan to export gas to Singapore via existing pipelines. Conrad has advanced technical and commercial discussions with Star Energy, operator of the contiguous Kakap PSC, for a facilities sharing agreement to tie in the Mako export pipeline at the Kakap KF facilities. The field, discovered in 2017, received approval for an updated Plan of Development in 2022 after resource estimates increased.

Financial Arrangements and Timelines

Under a Carry Loan Agreement, Conrad's wholly owned subsidiary, West Natuna Exploration Limited (WNEL), will have its costs recovered through future production revenues. WNEL will receive a US$16 million consideration, payable in three tranches from the first quarter of next year until first production, which is anticipated in the fourth quarter of 2027. This funding secures Conrad's share of development expenditure and positions the company for first gas in late 2027.

Strategic Implications and Future Plans

Conrad's chief executive emphasized that Nations' extensive experience in upstream oil and gas makes them an ideal partner, aligning interests for the project's success. WNEL retains a 25% participating interest and operatorship, reflecting Conrad's asset knowledge and capabilities. Concurrently, Conrad plans to use net proceeds from Nations' funding and future Mako cash flows to advance exploration, appraisal, and development opportunities in its wholly owned Aceh PSCs, including moving towards a Plan of Development for existing shallow-water discoveries in Aceh.