BP eyes Japan deals for Tangguh: Report

Britain's BP Plc is certain to go ahead with the US$3 billion development of the giant Tangguh gas field in Indonesia, and expects to add a Japanese buyer to its list of customers, a top executive was reported by Reuters as saying Friday.

Gerald Peereboom, president of Tangguh LNG, said the project in the remote Papua province, one of two separatist hotspots in Indonesia, was key in the company's ambitions to build a hub for its liquefied natural gas (LNG) business in Asia.

He dismissed speculation that the project might not go ahead. "A lot has been made of this year-end investment decision. This project will go ahead, absolutely," Peereboom said, referring to a company announcement earlier this year that it would make a final investment decision by the end of 2003.

Peereboom said BP was focused on the Japanese market after sealing deals with buyers in China and South Korea for just under four million tonnes of liquefied natural gas a year, a volume he said had made the project commercially viable.

"I believe we will be signing a Japanese contract in the not-to-distant future, at least getting a commitment...I hope it's before the end of the year," he said in an interview. He declined to give details.

Peereboom said he did not believe potential buyers were concerned about potential supply disruptions from Papua.

Construction of the Tangguh LNG plant, including an initial two trains with a capacity of 3.5 million tonnes each, was expected to start in the first half of next year to meet supply commitments in the second half of 2007, Peereboom said.

"BP has established a very good hub, a beachhead in the Atlantic Basin, and would like to do the same in Asia-Pacific and Tangguh would be that hub. The biggest LNG consumers in the world are right here in Asia, it just makes sense," he said.

"You become a truly global gas player if you can be in both the Atlantic and the Pacific, so Tangguh is really the key."

Peereboom said BP wanted a Japanese customer on board soon, partly because a large chunk of the project's financing will come from the Japan Bank for International Cooperation (JBIC). He indicated the green light to proceed would come after that.

BP is operator of Tangguh and holds a 37.16 percent stake.

Other key shareholders are China's CNOOC Ltd. with 12.5 percent and Britain's BG Group Plc with 10.73 percent. An entity comprising Japan's Mitsubishi Corp and INPEX Corporation has 16.3 percent.

Last year, CNOOC and BP signed a 25-year contract to supply 2.6 million tonnes of Tangguh LNG annually from 2007. BP has also signed preliminary supply deals with South Korean buyers for 1.15 million tonnes a year.

BP has said Tangguh holds 14.4 trillion cubic feet of proved and certified natural gas reserves. Peereboom said probable and possible reserves brought that total to 24-25 tcf.(*)