Conrad Asia Energy (ASX:CRD) shares were unchanged heading into the second hour of morning trade on Thursday as the company unveiled a new deal with Indonesia’s National Oil Company (NOC).
A binding sale key terms contract has been inked between CRD and PT Pertamina, or Persero, which obliges both parties “in good faith” to move ahead to a sales agreement outright.
The company is to provide Persero with gas from its Mako field offshore Indonesia, a jurisdiction which requires a government-stake-holding production sharing contract (PSC).
Mako is part of the larger Duyung PSC in which Conrad holds a 76.5% interest located in the West Natuna Sea.
As for a final legally binding sales agreement, both parties have until 31 May 2024 to get that deal across the line. Today’s pre-contract ahead of that contract is also binding – a large sign of confidence the deal will go through.
However, Conrad must first be instrumental in the construction of a pipeline connecting the West Natuna assets to the domestic gas market infrastructure in Batam.
Indonesia’s government basically requires foreign energy players to supply the domestic market – something Australia doesn’t require quite as much.
All in all, the deal will see 29.5% of Mako gas sales ported to Batam under the deal. Remaining gas will be sold to Singapore based on a term sheet inked mid-late last year.
“These Key Terms are a very important milestone paving the way for a fully termed gas sales agreement and brings the company a step closer to the FID for the Mako development,” Conrad chief Miltos Xynogalas said.
“This agreement, combined with Conrad’s recent signing of a Memorandum of Understanding for its Aceh gas resources also with PGN, will further advance the Government of Indonesia’s ambition to meet the fast-growing energy needs of the country.”
CRD last traded at $1.00/sh.