Operator Conrad Asia Energy has lined up Singapore’s Sembcorp Gas as the sole buyer for the gas from its Mako field development offshore Indonesia, where the partners are progressing towards the final investment decision.
Conrad Asia and co-venturers Coro Energy and Empyrean Energy confirmed on Tuesday that the operator has signed a non-binding term sheet with Sembcorp Gas for a long-term gas sales agreement (GSA) for the field, which is on the Duyung production sharing contract in the Natuna Sea.
The terms agreement underpins the commercial development of the Mako field, providing secure and reliable gas that is less carbon intensive than liquefied natural gas, according to Empyrean.
“Critically, the term sheet has been endorsed by the Indonesian petroleum upstream regulator SKK Migas,” noted Coro.
Potential to increase
The term sheet relates to the sale of Mako gas from start of production until 2037 for a total gross sales volume of about 293 billion cubic feet, with the potential to increase to around 392 Bcf. Gas sales will be priced against Brent oil.
“I am delighted to have now secured the GSA heads at the Duyung PSC, approved by the buyer and, critically, endorsed by the Indonesian authorities,” said Coro chairman James Parsons.
“This is a critical step in the commercial derisking of our project, positioning us perfectly for bids from the operator’s farm-out process, which we expect to play out shortly.”
Mako was discovered seven years ago by Coro and Empyrean. The Indonesian authorities approved the revised development plan in late 2022.
Mako was independently estimated by Gaffney, Cline & Associates in August 2022 to contain gross best estimate contingent resources of 413 Bcf of gas.
Further details of the GSA will be released to the market once the agreement is executed, Coro said.
Conrad Asia, Sembcorp Gas and SKK Migas will now work towards finalising a definitive GSA.
Empyrean chief executive Tom Kelly cautioned: “Whilst the company is confident that a binding agreement will be reached, there can be no guarantee that the final documentation will be completed and/or on the terms currently envisaged.”
Updated to include more details and comment from Empyrean chief executive.