Conrad Asia Energy (ASX:CRD) is a Singapore-headquartered energy company focused on the exploration, development and production of Natural Gas in Southeast Asia. Its flagship asset is the Mako Gas Project, located offshore Indonesia in the West Natuna Basin .

The company has been progressing Mako from an appraisal-stage project toward development and production. Key milestones include a final Investment decision, development contracts, drilling arrangements, funding initiatives and a long-term gas sales agreement.

Mako is intended to become the company's principal producing asset and forms the centre of its strategy to establish a sustainable natural gas Business in the region.

The Mako Gas Project

Mako is located within the Duyung Production Sharing Contract in the West Natuna Basin, offshore Indonesia.

The field is situated in relatively shallow water, with water depths of approximately 60 to 100 metres. Its location provides access to existing regional gas infrastructure and creates potential connectivity with the West Natuna Transport System.

The project's proximity to established infrastructure is an important part of its development strategy because infrastructure access can reduce the complexity and cost associated with bringing offshore gas projects into production.

Conrad has been progressing the project through a series of development milestones. These include the formal final investment decision, construction contracts and drilling arrangements.

The company has reported that more than 90 per cent of the project's Capital contracts have been secured, representing approximately US$290 million of an estimated US$320 million development budget.

Gas Sales and Commercial Framework

A key component of Mako's development is its gas sales agreement.

Under the arrangement disclosed by the company, the project has a binding gas sales agreement supporting the sale of gas for an extended period. The agreement provides a commercial framework for future production and is an important part of the project's development Economics .

Indonesian authorities have also identified Mako gas for domestic Supply requirements.

The combination of an established gas sales framework and access to regional infrastructure provides the project with a defined commercial pathway as development progresses.

However, actual production and Revenue will depend on successful completion of the development, drilling, commissioning and subsequent operations.

Ownership and Development Structure

The Mako project sits within the Duyung Production Sharing Contract.

Following a farm-down transaction, PT Nations Natuna Barat, a Subsidiary of the Arsari Group, took a 75 per cent participating interest, while Conrad retained a 25 per cent interest and operatorship.

The transaction was structured to help address the funding requirements associated with Mako's development.

Under the arrangement, Nations is expected to make payments to Conrad and provide funding support for Conrad's share of development costs through a Carry Loan Agreement.

The carried funding is intended to reduce the amount of capital Conrad needs to provide before first gas. The loan is expected to be repaid from future production revenues.

This structure allows the company to retain exposure to Mako while sharing a significant portion of development costs with its project partner.

Development Progress

The development programme has moved into an increasingly active phase.

Conrad has awarded a subsea umbilicals, risers and flowlines contract to Timas Suplindo. The company has also secured drilling rig arrangements as it prepares for the next stages of field development.

The contracts cover important elements of the offshore development programme and represent progress toward the company's planned production timeline.

Conrad has targeted first gas from Mako in the fourth quarter of 2027.

Meeting that objective will require the company and its contractors to complete offshore construction, drilling, subsea installation, commissioning and associated infrastructure work.

Why Natural Gas Matters in Southeast Asia

Natural gas plays an important role in Southeast Asia's energy mix.

Several countries in the region are balancing rising electricity Demand with the need to maintain reliable energy supplies while gradually developing lower-carbon energy sources.

Gas can provide flexible generation and industrial fuel while renewable energy capacity expands.

Indonesia is also a major natural gas producer, although individual regions can experience supply and infrastructure constraints. Projects that can connect to existing infrastructure and established markets may therefore have strategic importance beyond the size of their individual reserves.

Mako's location near existing infrastructure and its connection to a defined gas sales framework are important features of the development concept.

Funding Strategy

Financing is a major consideration for offshore gas developments because capital requirements can be substantial.

The Mako development has an estimated capital budget of approximately US$320 million. Conrad's farm-down and carried funding arrangements are designed to reduce its immediate funding burden while allowing it to maintain a 25 per cent interest in the project.

The Carry Loan Agreement provides funding for Conrad's share of development costs through to first gas, with repayment expected from future production revenues.

This structure can reduce upfront capital requirements, but it also creates future repayment obligations. The company's ability to meet those obligations will ultimately depend on production performance, operating costs and project revenues.

Key Risks

Mako remains a development project, and significant work must be completed before production begins.

Offshore construction, drilling and commissioning can encounter delays caused by weather, equipment availability, contractor performance, supply-chain constraints and technical issues.

Capital costs can also change during development. Although most of the project's capital contracts have been awarded, the remaining work still carries potential cost and schedule risks.

The funding structure creates another consideration. The carried development costs are effectively a future obligation that will need to be repaid from project revenues.

Regulatory and production-sharing-contract requirements in Indonesia also need to be managed throughout the development and operating phases.

Gas sales arrangements provide greater commercial visibility, but production remains subject to successful field development and operational performance.

What Comes Next?

The next phase of the project is focused on execution.

Key milestones include completion of the farm-down arrangements, development drilling, subsea construction and installation, completion of the remaining capital contracts and progress toward first gas.

Quarterly activity reports should provide updates on development expenditure, construction progress and the overall production schedule.

The company may also provide further information about drilling results, field performance and the project's resource base as development activities progress.

The transition from project planning to physical construction and commissioning will be particularly important because it represents the stage at which technical plans must be converted into an operating gas field.

Conclusion

Conrad Asia Energy has positioned the Mako Gas Project as the centrepiece of its Southeast Asian natural gas strategy.

The project has progressed beyond exploration and appraisal, with a final investment decision, gas sales arrangements, development contracts and a funding structure supporting the path toward production.

The farm-down has also introduced a strategic partner and reduced Conrad's immediate share of development expenditure while allowing the company to retain operatorship and a 25 per cent participating interest.

With first gas targeted for the fourth quarter of 2027, the focus is now on execution. Construction, drilling, subsea installation, commissioning, funding management and regulatory compliance will all be important to the project's outcome.

If successfully developed, Mako could provide Conrad with an operating gas asset and establish a foundation for further energy development across Southeast Asia.