Mako Gas Project FID Approved: $320M Capex, 111 Bbtud Sales Contract Secured

A Defining Moment for Conrad Asia Energy

Conrad Asia Energy Ltd (ASX: CRD) has taken a decisive step forward by approving the Final Investment Decision (FID) for its flagship Mako Gas Project, located in the Duyung Production Sharing Contract area off Indonesia’s Riau Islands. This milestone marks Conrad’s transition from exploration and appraisal to a fully contracted gas producer, with first gas production targeted for the fourth quarter of 2027.

The project, which involves developing the Mako gas field with six initial wells tied back to a leased Mobile Offshore Production Unit (MOPU), is estimated to require a total capital expenditure of US$320 million. Conrad’s share, through its majority-owned subsidiary West Natuna Exploration Limited (WNEL), is approximately US$80 million. Importantly, full funding has been secured, including a substantial contingency allowance, reflecting strong financial discipline amid a challenging capital environment for smaller energy companies.

Secured Revenue and Strategic Partnerships

The Mako Gas Project benefits from a long-term, government-backed gas sales agreement with PT PLN Energi Primer Indonesia (PLN EPI), Indonesia’s largest power company. The contract guarantees sales of up to 111 billion British thermal units per day through to January 2037, covering the full contingent resources attributable to the field. This arrangement provides Conrad with contracted revenue visibility and underpins the project’s commercial viability.

Moreover, Nations Petroleum Natuna Barat (NNB), holding a 75% interest in the project, will fund its share of future costs and carry Conrad’s portion through the initial development phase. This carry loan agreement effectively reduces Conrad’s medium-term balance sheet pressure and equity dilution risk, allowing the company to preserve its capital base while progressing towards production.

Technical and Operational Readiness

The Mako field, discovered in 2017 and appraised through successful wells in 2019, contains 2C contingent resources estimated at 376 billion cubic feet (Bcf). Post recent transactions, Conrad’s net attributable share stands at 58 Bcf. The development plan leverages existing infrastructure, with sales gas transported via a 59-kilometre pipeline to the Kakap platform and then through the West Natuna Transportation System to the Indonesian domestic market.

Key contracts for long-lead items such as compressors, steel wellheads, and control systems have already commenced, with further contract awards expected imminently. The project’s design capacity of 172 million standard cubic feet per day positions it well to meet contracted sales volumes efficiently.

Looking Ahead

Conrad’s Managing Director and CEO, Miltos Xynogalas, emphasised the significance of this transition: "The Mako FID has transitioned Conrad from a speculative exploration/appraisal company to a fully contracted gas development and future production company with a defined and funded capital programme and a clear path to production." He highlighted the disciplined approach to de-risking the project across technical, commercial, and financing fronts, positioning Conrad confidently for construction and operation.

As Conrad moves into the execution phase, the focus will be on the safe and efficient award of construction and drilling contracts, with the market watching closely for progress towards first gas and subsequent cash flow generation. The Mako Gas Project not only represents a major step for Conrad but also contributes to the growing energy supply in Southeast Asia’s fastest-growing consumption region.