The Indonesian Ministry of Energy and Mineral Resources (MEMR) has issued a directive to Conrad Asia Energy, the operator of the Mako Gas field offshore Indonesia, stating that all gas produced from the field would be sold to state-owned PT PLN Energi Primer Indonesia (PLN) due to strong domestic demand for gas in Indonesia.
As a result of the MEMR directive, Conrad is working to finalize a Gas Sales Agreement (GSA) with PLN, which is a subsidiary of Indonesian state-owned electric utility company PT Perusahaan Listrik Negara (Persero).
The Mako Joint Venture partners include Conrad with 76.5% operating stake, Coro Energy with 15% working interest, and Empyrean Energy with 8.5%.
The Mako gas price will be linked to the Indonesian Crude Price (ICP), which is akin to Brent oil-linked liquified natural gas (LNG) pricing. This structure will be economically equivalent to the pricing previously approved for Mako gas to be sold both domestically and for export, thereby underpinning the value of gas from Mako.
“With a new government in Indonesia committed to providing gas powered electricity under its New Energy Plan, directing Mako Gas for the domestic market makes strategic sense. Empyrean is encouraged that this new development will lead to further short-term momentum for the Mako Gas Field and Duyung PSC,” said Tom Kelly, Empyrean’s CEO.
As part of the Mako project, Conrad has announced that it understands that MEMR will direct PLN to build the required approximately 7 km gas spurline with an investment value of approximately $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 the Duyung PSC Prospective Resources and gives a ready means to commercialize additional gas volumes.
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
The new Government of Indonesia is formulating its New Energy Plan 2024-2034 under which it will prioritize gas exploration and production to meet rapidly rising domestic energy demand.
Around 15 GW of gas power capacity across Indonesia is planned to be built until 2034, especially to support the base load capacity.
The MEMR directive is anticipated to support potential farmout arrangements in Duyung and Financial Investment Decision (FID) for Mako.
