Conrad Asia Energy has pushed back the final investment decision (FID) for its Mako project in Indonesia.
The Australian listed company said it had made progress on the project during the last few months, with total costs now estimated to be $325 million. Costs to reach first production are $250mn. Previously, it had forecast total costs to be $303mn.
Conrad has a 76.5% stake in the Duyung licence, which holds the Mako gas field. Coro Energy has a 15% stake in Duyung.
Conrad said talks with offtakers were making progress but had encountered some delays. As a result, the FID has slipped until mid-2024, pushing start up to mid-2026.
The company has completed front-end engineering and design (FEED) on Mako. The project is expected to produce 120 million cubic feet per day for seven years.
Talking terms
Conrad signed a term sheet to sketch out a gas sales plan with Sembcorp Gas in the third quarter of 2023. The Australian producer said talks with the offtaker, and the Ministry of Mining and Natural Resources, had improved the price formula and delayed a final agreement. It expects to finalise the deal by the end of the second quarter this year.
There have also been delays on talks with the West Natuna Transportation System (WNTS), which would carry Mako gas to Singapore.
Progress on the corporate side of the plan is also coming. Conrad is trying to farm down its stake in Duyung and said more companies had expressed interest in the project.
It also is in talks with a financial advisor on debt funding for the project. Again, it expects to choose a lender and complete documents by mid-2024.
Conrad managing director and CEO Miltos Xynogalas welcomed the interest from potential financiers and farm-in partners. “We have seen increased interest in the region to fund gas developments. We remain confident that when all commercial aspects of the project have been concluded, Conrad will be in a position to take FID.”
Coro chairman James Parsons welcomed progress on the talks, saying they underpinned “both the robust economics of the Duyung PSC and the likely attractiveness of the project to debt providers and potential farm in partners.”
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