Jadestone reaches 'milestone' with ministerial support at Akatara

Asia Pacific-focussed oil and gas production company Jadestone Energy said on Tuesday that Indonesia’s Minister of Mines and Energy has issued a ministerial decree allocating gas sales from the Akatara gas field in the Lemang production sharing contract (PSC), onshore Indonesia, to a subsidiary of the national electricity utility, PT Perusahaan Listrik Negara.

The AIM-traded firm said the ministerial decree would facilitate the development and commercialisation of the Akatara gas field, and also the associated production and sales of LPG to the local domestic market in Jambi, together with condensate sales, to a local buyer.

Jadestone also announced that a heads of agreement in relation to gas sales from its planned development had been executed with PT Pelayanan Listrik Nasional Batam (PLN) as buyer.

A fully-termed gas sales agreement would now be progressed, with negotiations underway.

The firm said the ministerial decree and heads of agreement specified a gross sales volume of 20 billion Btu per day starting in the first quarter of 2024, and a plant gate sales price of $5.60 per million Btu, at a delivery point about 17 kilometres from the field.

Indonesia's upstream regulator, SKK Migas, had approved the heads of agreement, which Jadestone said was “fully aligned” with the ministerial decree.

“I am delighted to have come to this critical milestone and to have obtained the support of both the Minister and SKK Migas in pursuing this important development,” said Jadestone president and chief executive officer Paul Blakeley.

“Gas from the Akatara field will ultimately be used for electricity generation by PLN, while LPG sales will provide much needed energy directly to the local market to meet domestic cooking requirements for the local population in the Jambi region.

“The associated condensate production will be utilised in the local market as well and will proportionately offset the reliance on imported product.”

Blakeley said substituting coal burning with locally-produced gas for power generation, as well as LPG for local domestic use, were both important contributions by Jadestone to the UN Sustainable Development Goals.

“The ministerial decree facilitates the development of the Akatara gas field and allocates the Lemang gas to meet domestic electricity demand for industrial users in Batam,” he added.

“Importantly, these arrangements are in line with the price, volume, and tie-in expectations we set out when we acquired our 90% operated interest in this asset just over six months ago, meaning our expectations for value add remain unchanged.

“I look forward to pressing toward formal field development sanction, in preparation for gas sales to commence, with key work streams already underway, optimising the existing front end engineering study and preparing for contract tendering later this year.”

At 0905 BST, shares in Jadestone Energy were up 3.7% at 75.7p.