The Ministry of Energy and Mineral Resources (MEMR) in Indonesia has approved the Plan of Development (POD) for the Mako gas field at the Duyung PSC in Indonesia.
West Natuna Exploration Limited (WNEL) owns a 100% stake in the Duyung PSC. WNEL is owned by Conrad Petroleum (90%) and Empyrean Energy (10%). Conrad Petroleum is the operator of the field.
The plan for the development of the Mako gas field was submitted in August 2018 and re-submitted under the gross split regime in January 2019.
Conrad and Empyrean informed about the approval of the plan on Monday, March 11.
The Duyung PSC covers approximately 890 km2 in the Riau Islands Province, situated in the offshore Indonesian waters of the South China Sea, and is proximal to the West Natuna Transportation System (WNTS), a gas pipeline to markets in Singapore.
WNTS currently supplies approximately 0.4 billion cubic feet (Bcf) of natural gas per day to Singapore.
Mako field conversion of PSC
Conrad also announced the conversion of the Duyung Production Sharing Contract (Duyung PSC) from the cost recovery scheme to the gross split scheme. The amended PSC was agreed by Conrad and the Government of Indonesia on January 25, 2019.
Namely, in 2017, Indonesia’s MEMR introduced new regulations as it replaced the cost recovery scheme with the gross split regime. Since its introduction, the gross split scheme has considerably simplified the government approval processes and is expected to have a positive impact on the oil and gas industry, Conrad explained.
In June 2017, Conrad drilled the successful Mako South-1 exploration well. A recent resource audit by Gaffney Cline & Associates reported contingent 2C resources of 276 Bcf in the Mako gas field.
Miltos Xynogalas, Conrad’s CEO said, “The approval of the POD for Mako is an important milestone in the maturation of the Mako gas field. This step advances the project and provides the certainty necessary for Conrad to conclude gas sales contracts and finalize access to evacuation routes. In addition, it allows Conrad to continue exploring within the Duyung PSC, and acreage with several identified leads and prospects and a confirmed petroleum system.”
He added: “The gross split scheme significantly streamlines the budgeting and approval process for operations within the PSC area, enabling contractors such as Conrad to increase their operational activities. Furthermore, the lower tax burden prior to commercial production provides us even more incentive to launch additional operations in the near future.”
Tom Kelly, CEO of Empyrean, commented: “The POD approval by the Ministry of Energy and Mineral Resources in Indonesia is another important milestone in progressing the Mako gas field towards production. Tenure has now been secured on the Duyung PSC out to 2037 which reduces risk and adds intrinsic value to the project. Importantly, the POD approval is also crucial to advancing negotiations of the heads of agreement into a gas sales agreement with the buyer in Singapore for the off-take of Mako gas. It also paves the way for appraisal later in the year that can increase resources at Mako and hopefully test the deeper Tambak prospect.”
It is worth reminding that Coro Energy on February 11, 2019, announced the acquisition of a 15% stake in the Duyung PSC. Coro agreed to pay $4.8 million, and also contribute $10.5 million for the 2019 drilling campaign.
James Menzies, Chief Executive Officer, commented; “We are pleased to see this project advancing so soon after the announcement of our acquisition, the approval of the POD for the field is a key step toward monetizing the Mako gas. The Duyung partners are finalizing plans for the 2019 drilling campaign which we expect to commence in late summer and we look forward to updating the market shortly with our plans.”
The operator’s current field development plan envisages an initial four-well development scheme, a small platform with compression facilities and an additional four wells as a second phase to be drilled later in the field’s life. The plateau production rate is envisaged to be up to 90 MMscf/d.
Offshore Energy Today Staff