BP in talks with four firms on Tangguh LNG diversion

Anglo-America energy giant BP Plc is in talks with four companies over the possibility to offtake a portion of LNG production from Tangguh LNG project that would have been shipped to Sempra?s LNG receiving terminal in Mexico, a top official from upstream oil, gas watchdog said on Monday.

BPMIGAS Chairman R. Priyono said that BP and BPMIGAS is currently considering offers from Thailand?s PTT, China?s CNOOC, South Korea?s KOGAS and Japan?s Tohoku Electric to divert 1.85MTPA of LNG from Tangguh that would have been shipped to Sempra.

Priyono said that the companies are seeking to offtake Tangguh LNG based on 2-11 years contract.

?BP and BPMIGAS are currently evaluating the offer that would give the best deal,? he said without elaborating further.

BP-operated Tangguh LNG is contracted to supply 3.7 million tonnes of LNG starting 2009 to Sempra?s receiving terminal in Costa Azul, Mexico. Under the contract, Sempra would pay the Tangguh LNG based on Southern California (Socal) index price. BP could divert half of the volume of LNG by paying $1 per MMBTU premium to Sempra.

Tangguh LNG project, which is located in West Papua province, will start LNG production by the end of this year. The plant itself has a total production capacity of 7.6 MTPA and proven reserves of more than 14 trillion cubic feet of LNG.

Other than Sempra, Tangguh will supply 2.6 MTPA of LNG to CNOOC?s Fujian LNG terminal, 1.1MTPA to South Korean companies SK Corp and Posco and 120,000 tonnes per annum to Japan?s Tohoku Electric. (alex)