BP and Pertamina compete in marketing of Tangguh gas
Friday, October 18 2002 - 03:50 AM WIB
The government has actually established a marketing body which comprises the BP-Migas as the chairman and Pertamina and BP Indonesia as its members. However both Pertamina and BP Indonesia demand to solely handle the marketing of the gas to be produce from the field which is estimated to have proven gas reserves of about 14.4 trillion cubic feet.
"With the establishment of the marketing board, potential buyers should negotiate directly with BP Indonesia as the operator," BP Indonesia?s president Gerald J. Peereboom in Jakarta on Thursday.
He argued that for buyers it would be better to negotiate with the operator because it knows better than others about the condition in the field, and its supply capacity. "If the marketing is handled by a single company, it could cause a conflict of interest," he said.
BP-Migas assigned Pertamina as the seller in the signing of the sale agreement with the Chinese province of Fujian early this month. Fujian will buy LNG from Tangguh project of 2.6 million tons a year under 25-year contract. It is not the first for Pertamina to handle the marketing of gas from Indonesia. In the past, as the representative of the government, the state owned oil and gas company handled all the marketing of both gas and crude oil.
The Tangguh LNG project is now under preparation for construction. The project, which will absorb about $3 billion in investment is expected to start production by 2005. The project has proven gas deposit of about 14.4 trillion cubic feet.
BP Indonesia owns 50 percent stake in the project, with the other 16 percent by Mitsubishi, 12 percent by Nippon, 11 percent British Gas, 10 percent Kanematsu Corp, and the remaining one percent by Nissho Iwai. The project is developed under 70-30 percent production sharing contract in favor of the Indonesian government. (*)