Empyrean Energy plc an oil and gas announced that Conrad Asia Energy Ltd (“Conrad”), the primary operator and 76.5% stakeholder of the Mako Gas Field in the Duyung Production Sharing Contract (PSC), Indonesia (“Mako”), has received approval from the Indonesian Minister of Energy and Natural Resources (the “Minister”) for both the gas price and volume allocation for Mako.
This marks a crucial step forward, enabling Conrad to finalize comprehensive Gas Sales Agreements (“GSA”). The Mako project aligns with Indonesia’s goal to double its gas production by 2030.
Key Developments:
- SKK Migas, the Indonesian upstream regulator, has notified Conrad that the Minister of Mining and Natural Resources (“Minister”) has issued an Allocation Letter. This letter endorses the volumes and prices for gas to be exported and sold domestically from the Mako gas field in the Natuna Sea.
- The Allocation Letter is a vital component in progressing the documentation for Mako gas sales and securing access to the West Natuna Transport System (“WNTS”). It establishes a formal basis for reserving pipeline capacity for Mako gas evacuation. Conrad is actively collaborating with relevant parties and SKK Migas to complete the GSAs, which include standard conditions precedent.
Duyung PSC – Mako Gas Field:
Empyrean possesses an 8.5% non-operated interest in the Duyung PSC, situated in the Riau Islands Province, Indonesian waters in the West Natuna area. This location is roughly 100 km north of Matak Island and about 400 km northeast of Singapore.
In the third quarter of 2023, Conrad signed a non-binding term sheet with Sembcorp, a significant Singaporean energy company. This document outlines key terms and forms the foundation for negotiating a definitive GSA.
SKK Migas has informed Conrad of the Minister’s issuance of the Allocation Letter, authorizing the volumes and prices of Mako gas for both export and domestic sale.
In adherence to its Domestic Market Obligation (“DMO”) as outlined in the Plan of Development (POD), Conrad is advancing negotiations for the domestic sale of Mako gas to a local buyer. This is contingent on the construction of a pipeline connecting the WNTS with Batam. Conrad plans to sell approximately 29.5% of Mako gas sales volumes to a domestic buyer to fulfill its DMO. Conrad and the domestic buyer are nearing the finalization of a formal agreement for these arrangements.
Empyrean CEO, Tom Kelly, commented: “The Indonesian Minister of Energy and Natural Resources’ approval of the gas pricing and allocation for Mako is a significant and welcome milestone in our journey towards finalizing definitive and binding Gas Sales Agreements for Mako gas. We are extremely pleased with the Indonesian Government’s support for the Mako Gas Field, which will contribute to Indonesia’s transition to cleaner energy sources.”
