Conrad Asia Energy has signed Production Sharing Contracts (PSCs) for the Offshore North West Aceh (Meulaboh) and Offshore South West Aceh (Singkil) PSCs offshore northwest and southwest of the Aceh Province of Indonesia.
Australian-listed Conrad will operate and hold a 100% participating interest in both blocks. The acquisitions are consistent with Conrad’s core strategy of developing assets with the potential to supply gas to the rapidly growing South East Asia markets, the company said on 6 January.
In November 2018, Conrad was granted two Joint Study Areas (JSAs) located offshore northwest and southwest of the Aceh Province. Meulaboh and Singkil were offered under the Indonesia Petroleum Bidding Round (IPBR) 2022 first licencing round, in which Conrad submitted bids on 5 September 2022. Due to the deep-water environment and the lack of exploration in large parts of each block, notwithstanding the existing discoveries in the shallow water, the blocks are deemed by the Indonesian authorities as “frontier” with corresponding fiscal arrangements which Conrad said are attractive and favourable compared to Indonesian PSCs over blocks in more mature areas.
The total firm investment commitment made by Conrad for the blocks is US$30 million, with a combined signature bonus of US$100,000 for the government.
The total committed work program for each PSC is US$15 million and includes geological studies for 2023, 500 square kilometres of 3D seismic acquisition for 2024 and the drilling of a well for 2025. The costs of the 2023 commitments will be funded from the company’s recent public offering on the Australian Securities Exchange. The costs for subsequent activities will be from various sources including farm-in partners as the PSCs are matured and the commencement of cash flow from the Mako gas field.
The blocks contain known gas discoveries (Contingent Resources) in shallow water and at shallow reservoir depths as well as additional prospectivity in both the shallow and deeper-water areas of the PSCs, noted Conrad.
The gas discoveries in the shallow water were made in the 1970’s and have all been successfully flow tested at potentially commercial rates. They were not developed at the time due to prevailing low gas prices and immature markets.
The deep-water areas have several really large structures with multi-trillion cubic feet potential that Conrad has already identified with gas chimneys and flat spots displayed on seismic data, indicating evidence of potential hydrocarbons.
Despite the numerous discoveries, the PSCs are classified as “frontier areas” and have been granted attractive fiscal terms which are amongst the most favourable in Indonesia, added Conrad.