Conrad Asia Energy Ltd has signed a binding Gas Sales Agreement with PT PLN Energi Primer Indonesia, marking a significant step in the company’s progress toward commercial production from its flagship Mako Gas Field. Under the deal, all natural gas produced from the field will be sold domestically, with a total contracted volume of 392 one thousand billion British thermal units. The contract spans the current production sharing period of the Duyung PSC, running until January 2037, and sets a sale rate of up to 111 billion British thermal units per day, equivalent to approximately 111.9 million standard cubic feet per day. The pricing for Mako gas is linked to the Indonesian Crude Price, a mechanism comparable to Brent oil pricing, ensuring that the producer is not economically disadvantaged despite deviating from the typical fixed domestic offtake price. This structure aligns with previous pricing arrangements both for export and domestic sales and reflects Indonesia’s commitment to secure gas for its growing energy needs. Notably, the Indonesian Ministry of Energy and Mineral Resources revoked earlier directives involving other buyers, leading to the termination of previous agreements with PGN and Sembcorp, and underscoring the government’s focus on a singular domestic supply route. The agreement is supported by the fact that PLN EPI, a subsidiary of the state-owned power utility, will finance and construct the necessary pipeline connecting the main West Natuna Gas line to key market hubs, including Batam, at no cost to Conrad. This infrastructure development further solidifies the financial viability of the project. The deal is also seen as critical in facilitating pending farm-out arrangements and progressing toward a final investment decision on the Mako project. Market sentiment around the news is mixed. On the bullish side, the deal highlights strong demand driven by Indonesia’s rapid energy transition, especially with rising power requirements from data center growth and industrial users. The government-backed nature of PLN EPI and its established role in the nation’s electricity supply lend credibility and stability to the project. Furthermore, the oil-linked pricing mechanism and cost-free pipeline construction reduce financial risks and bolster the investment thesis for Conrad Asia Energy Ltd. Conversely, there are bearish considerations to note. The terms of the agreement remain confidential, leaving some uncertainty about specific contractual obligations and pricing details. Additionally, the reliance on a single domestic buyer and the broader market volatility in energy prices could expose the project to regulatory and economic risks. For beginner traders, while the news signals potential long-term value creation, the inherent risks in commodity markets and the operational complexities of large-scale gas projects warrant cautious optimism.