BP gets partial funding for Tangguh

BP Plc, Europe's second-biggest oil company, and its partners have secured at least half the financing to build a $2.2 billion liquefied natural gas plant in Indonesia that's still short of customers, an Indonesian official was quoted by Bloomberg as saying.

The Tangguh project got funds to build as much as 60 percent of the plant's 7 million metric tons a year of capacity, Rachmat Sudibyo, the head of Indonesia's oil and gas regulatory body BPMigas, said in an interview at the World Gas Conference in Tokyo. Japan Bank for International Cooperation and banks in China may help fund the venture, said an official from BP.

``We've got sales, we've got some more prospective sales and we're hoping to work with JBIC, well mainly JBIC, and other commercial banks, possibly groups from China to finish the financing,'' Anne Quinn, BP's group vice president for power, gas and renewables, said in a separate interview. ``It's looking very good actually.''

Tangguh is vying with rivals in Indonesia and abroad to secure enough sales to warrant a go-ahead for two 3.5 million-ton production lines. BP and partners such as the state oil company Pertamina hope to add customers in South Korea or Japan, after last year winning a contract for 2.6 million tons a year to a planned LNG terminal in China's Fujian province.

``The financing is also dependant on how much of the LNG market Tangguh can get,'' Rachmat said.``We're very active in participating in the bidding to supply Taiwan and Korea, and we're still active in getting the market in Japan for Tangguh.''

Tangguh is bidding in competition with a Malaysian project that includes Petroliam Nasional Bhd. to supply South Korea's Posco and SK Corp. with 1 million tons a year for two decades.

Tangguh is also working with United Resources Inc. of Taiwan to bid for a supply contract to Taiwan Power Co., the state-run utility, Rachmat said.

United Resources, a joint venture of Royal Dutch/Shell Group and Asia Cement Corp. called TaLNG Co., state oil refiner Chinese Petroleum Corp. and Tung Ting Gas Corp. are bidding to supply Taiwan Power with 1.7 million tons a year of LNG starting from 2008. Taiwan Power may announce the winning bidder by the middle of this month.

BP and its partners will decide on the investment in the Tangguh project by the end of this year, BP's chief executive Lord Browne said on Monday.

``We've moved the selling effort and the financing altogether,'' Quinn said. ``We're very confident we're going to get this project sanctioned and fixed this year.''

The $2.2 billion Tangguh project includes development of gas fields and construction of the LNG plant, tankers, related infrastructure and pipelines, Quinn said.(*)