BP Indonesia sees Tangguh development/environmental approvals by year-end

BP Indonesia said it expects to secure development and environmental approvals from the government by the year-end for the Tangguh gas field ahead of the scheduled start of construction in 2003, AFX-ASIA reported Friday.

Tangguh president director Gerry Peereboom said he expects the environmental and social analysis to be approved by the end of August or early September, while the company is still finalising the Plan of Development and expects to obtain government approval for it later this year.

BP plans to start delivering liquefied natural gas (LNG) from Tangguh by 2005/06 using two LNG trains with annual capacity of 6-7 million tonnes.

Industry observers have raised doubts whether Tangguh can secure the necessary supply contracts to justify starting with two trains, after news yesterday that it lost the Chinese government's lucrative Guangdong supply contract to Australia's North West Shelf project, valued at more than US$10 billion over 25 years.

BP owns one-sixth of the North West Shelf. It is the operator of Tangguh through a joint venture with state-owned oil and gas company Pertamina.

At a joint press conference with Pertamina and the Ministry of Energy and Mineral Resources, Peereboom said while Tangguh is disappointed at missing out on the Guangdong contract, it remains confident it can secure other major deals with customers in traditional and emerging markets.

"The Guangdong bid for us was important, but it was far from the only market we're looking at," he said.

"All in all we're very encouraged our project is going to go forward. Have no doubt about that."

He said there are no plans at the present time to change the schedule or capacity of the Tangguh development, which is estimated to cost $2.0 billion in initial investment.

Among the other contracts which could secure Tangguh's future is a second supply deal with China.

BP is currently in talks with the Chinese government to supply 2.5 million tonnes of gas per year from Tangguh to Fujian province, starting 2006/07.

An Indonesian government taskforce plans to meet with Chinese officials to step up the lobbying efforts, Energy and Mineral Resources Minister Purnomo Yusgiantoro told reporters.

He would not speculate on the potential value of the Fujian deal, saying only that it is worth 85 pct of the Guangdong contract in volume terms. (*)