BP Tangguh finally agrees on FTP requirement

BP Tangguh has finally agreed to fulfill the government's requirement to make first tranche payment from the sales of its liquefied natural gas (LNG) project in Papua, Koran Tempo reported on Tuesday.

Director General of Oil and Gas Iin Takhyan said in Jakarta on Monday that the agreement was made during a negotiation held by the government and BP Tangguh in Jakarta, last week.

"BP Tangguh has agreed to pay the first tranche payment," he was quoted as saying by the newspaper.

Like in the country's other oil and gas projects, the government imposes the so called, First Tranche Petroleum (FTP) payment amounting to between 10 percent and 20 percent of oil and gas production.

BP Tangguh and BP Migas, the government's agency responsible for oil and gas exploration and production agreed that the FTP payment could be paid after all the gas producer's debts were settled. But the government felt that if the FTP payment was made after all the company's financial obligations were fulfilled, it could provoke massive protest from oil and gas producing regions because funds from the FTP is supposed to be redistributed to the regions. The protest could in turn escalate into independence movement.

Iin Takhyan said that although the agreement on the FTP payment had been achieved, both the government and BP Tangguh had yet to discuss the percentage of the FTP the company had to pay from its Tangguh gas project. (*)