West Natuna Exploration Ltd. (WNEL), a subsidiary of Conrad Asia Ltd., has recently entered into a non-binding agreement with Sembcorp Gas Pte. Ltd. in Singapore for the supply of gas from the Mako gas field in Indonesia. The agreement has been endorsed by SKK Migas, the petroleum upstream regulator in Indonesia.
The non-binding agreement outlines key terms for approved gas production from the Mako field, starting in 2025 until the end of the Duyung production sharing contract (PSC) in 2037. The total sales gas volume is estimated to be approximately 293 billion cubic feet (Bcf), with the potential to increase to approximately 392 Bcf. The gas sales will be priced against Brent oil. Both parties are now focused on finalizing a definitive gas sales agreement in the coming months.
The Mako gas field, located in the Natuna Sea, Indonesia, is regarded as the largest undeveloped gas resource in the West Natuna Sea. It is adjacent to the West Natuna Transportation System. Independent estimates from Gaffney Cline & Associates in 2022 suggest that the Mako field contains gross 2C contingent resources of 413 Bcf.
Empyrean Energy plc, a partner in the Duyung PSC, expressed their satisfaction with the agreement. Empyrean CEO Tom Kelly stated, “Empyrean is delighted that agreement has been reached between the operator of Mako and a major gas utility and that the agreement has been endorsed by the Government of Indonesia’s petroleum upstream regulator. Focus will now be on converting this significant milestone into a binding gas sales agreement.”
Kelly emphasized the importance of the Mako gas field for energy security and the transition to cleaner energy sources in the region. He highlighted the reliability of long-term gas supplies with lower carbon emissions compared to LNG, which aligns with Indonesia’s objective of doubling its gas production by 2030. Empyrean expects Mako to contribute to this objective while providing valuable foreign income to Indonesia.
WNEL holds a 76.5 percent participating interest in the Duyung PSC, with Empyrean and Coro Energy Duyung (Singapore) Pte. Ltd. holding 8.5 and 15 percent, respectively.
The Mako gas field was discovered by Conrad and Empyrean in 2016. Successful appraisal drilling has since delineated the resource, leading to formal approval for a revised development plan from the Indonesian government in late 2022.
Sembcorp Gas Pte. Ltd. has previously signed an agreement to import natural gas from Medco E&P Natuna Ltd. for the West Natuna gas fields. The company expects this agreement, estimated at $1.41 billion, to come into effect by the second half of 2023, with gas delivery starting in 2024.
The West Natuna Transportation System, a 403.9-mile natural gas pipeline, transports gas from three production facilities in the South Natuna Sea to an onshore receiving facility in Singapore.
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