BP, Govt, Irian Jaya talking on strategy to win Chinese LNG contract
Bontang?s LNG Train I remains an option to supply LNG to China
Monday, July 16 2001 - 03:46 AM WIB
Purnomo said Saturday the meeting was aimed among others to consider options whether to supply China with LNG from the Tangguh LNG project in Irian Jaya or the ninth train or Train I of the Bontang LNG plant in East Kalimantan.
?We would map out the benefits and losses to supply the LNG from Tangguh or Bontang,? Purnomo said.
Purnomo noted however he was thus far more inclined to see the LNG supplies to China come from the Tangguh LNG plant as the development of the Tangguh project would spur the development of the less-developed province of Irian Jaya, especially the planned Memberamo industrial center around the Tangguh LNG plant.
?I can?t imagine that Tangguh will remain undeveloped given the fact Irian Jaya is less developed (compared to other areas of the country),? Purnomo said.
Indonesia has decided to participate in the international tender to supply China with LNG but thus far the government has apparently made no clear decision whether to supply to the LNG from the Tangguh LNG plant or the Train I.
Some people at Pertamina still prefer Train I to the Tangguh plant as LNG from the former would cost cheaper than Tangguh?s LNG. Train I is an expansion project, while Tangguh is a grassroot project.
The Tangguh LNG plant is owned by a consortium led by BP, while the Bontang LNG plant is owned by a consortium led by French oil and gas firm TotalFinaElf.
BP Indonesia?s public and general relations Satya Wirayudha said Saturday that during the Monday meeting, BP would also ask for the responses from the government and the Irian Jaya provincial administration to its previous proposal for them to cut their expected profits from the Tangguh LNG project.
All shareholders of the project need to cut their expected profits for at least the first years of the LNG production, in order to cut the price for the Tangguh LNG and, as such, to broaden the chance for the Tangguh plant to win the tender for the Chinese LNG supply contract, Satya said.
BP was ready to gain no profits in the first years of the LNG production to ensure winning of the Chinese LNG contract, he said
BP Indonesia?s gas marketing vice president Jimmy Straughn earlier said BP, which has a 50 percent stake in the gas reserves that will feed the Tangguh LNG plant, had been offering Chinese state oil and gas concern China National Overseas Oil Corporation (CNOOC) a five percent stake in the gas reserves to attract China to buy LNG from Tangguh.
China is planning to buy more than 3 million tons of LNG per year ? its first LNG imports ? for its southern province of Guangdong.
Indonesia is tightly competing with other countries, including Qatar, Malaysia, Brunei, Australia, Iran and Russia to become the first LNG supplier to the world's largest nation. (Ary Dharmawan)