BP interested in PLN?s LNG receiving terminal project
Financing deal for Tangguh project expected to be closed later this year
Friday, January 16 2004 - 09:35 AM WIB
?That will be a good opportunity for us. West Java is a good market. But thus far, we haven?t made any decision as we are still studying whether the project is economic or not,? BP Indonesia?s senior vice president Lukman Mahfoedz told Petromindo.Com on the sidelines of the Stakeholders Meeting between President Megawati Soekarnoputri and oil and gas corporate leaders at the Bogor palace.
He said BP needed to make a serious study before making a decision because it had put a lot of investment in the development of LNG receiving terminals in China?s provinces of Guangdong and Fujian. The company has also agreed to participate in a project to build a 1,074-megawatt (MW) gas-fired power plant in South Korea, owned by the country?s top oil refiner SK Corp.
PLN has planned to build an LNG receiving terminal and re-gasification facilities in West Java as part of its strategy to shift from oil to cheaper natural gas and to provide security of gas supplies to its power plants in the area. The company has said it would start the construction of the project late this year and the project is expected for completion in 2007.
Separately, PLN?s power generation director Ali Herman Ibrahim said PLN had completed a feasibility study on the project, but the feasibility study still ?needs further examination?.
Ali said several companies, including BP, state owned oil and gas company Pertamina and state-owned gas distribution company PT PGN, had shown interest in the project.
Separately, Bill Schrader, president of BP Indonesia, said he hoped financing deal for the Tangguh LNG project could be closed later this year.
The Tangguh project, located in the Bird?s Head area of West Papua, is expected to become the third LNG center of the nation, after the Arun LNG plant in Aceh and the Bontang LNG plant in East Kalimantan. According to Schrader, the project needs roughly US$1.5 billion in investment.
?BP is still working to secure financing from consortiums of Chinese and Japanese banks,? Schrader said.
Japan and China, two biggest economic powerhouses of Asia, are now in a cutthroat competition to expand their ownership in the Tangguh project as they realize the importance of the project to meet their domestic energy needs. Japan is now the largest importer of LNG, while China is projected to surpass Japan in the consumption of the commodity in the future.
BP has 37.16 percent stake in Tangguh project. Other participants are: MI Berau B.V (comprising Japanese firms Mitsubishi Corporation and INPEX Corporation) (16.30 percent); Chinese firm CNOOC Ltd. (12.50 percent); Japanese firm Nippon Oil Exploration Berau (12.23 percent); British firm BG Group (10.73 percent); KG Companies (Japan National Oil Corporation, Kanematsu Corporation and Overseas Petroleum Corporation) (10.0 percent); and LNG Japan Corporation (Nissho Iwai Corporation and Sumitomo Corporation)(1.07 percent).
Recently, BG announced plans to sell its 10.73 percent stake in the project to Japanese firm Mitsui & Co. but CNOOC said it would block the plan, citing that it had the pre-emptive right to buy the stake. (Alex)