EXCLUSIVE: BP offers 5% stake in Tangguh to CNOOC
Colin Powell asks China to buy LNG from ExxonMobil?s Qatar plant
Saturday, July 14 2001 - 05:09 AM WIB
Meanwhile, U.S. Secretary of State Colin Powell has sent a letter to the Chinese government asking it to side with American energy giant ExxonMobil?s LNG project in Qatar in the future tender for the LNG contract, industry executives said.
?We know the competition will be tight, but we will do our utmost to win the contract,? state oil and gas company Pertamina?s president Baihaki Hakim told Petromindo. Com Friday evening at the Soekarno-Hatta International Airport on the arrival of the Indonesian delegation to China .
The Indonesian delegation headed by Minister of Energy and Mineral Resources Purnomo Yusgiantoro was on a visit to China for several days from Wednesday to show Indonesia?s strong interest in the Chinese LNG supply contract.
Aside from Baihaki and top executives of BP Indonesia, top officials from the Irian Jaya provincial administrations, including the province?s vice governor and council speaker, also took part in the visit to demonstrate the province?s supports for the LNG project.
China plans to buy three million tons of LNG ? the country?s first LNG imports ? for its southern province of Guangdong.
The Chinese government earlier said that it might ask the future suppliers of LNG to the country to allow the Chinese oil and gas company to have a stake in their LNG projects.
BP Indonesia vice president marketing Jimmy Straughan said told Petromindo on the arrival of the Indonesian delegation that BP had officially offered CNOOC five percent stake in the gas reserves that will feed the Tangguh LNG plant.
Today, BP has a total of 50 percent stake in the Wiriagar, Berau and Muturi production sharing contract (PSC) blocks, which will feed the Tangguh LNG plant with natural gas. BP and its partners have discovered proved gas reserves of 14.4 trillion cubic feet in the three PSCs.
Straughan said CNOOC was currently studying the offer and CNOOC officials will come to Indonesia next week to review the data to determine whether they would be interested in buying the stake.
The Chinese government had told the Indonesian delegation during the visit that it would announce the tender for the LNG supply contract late this month and bidders will be given until third week of Agust to submit their bidding proposals.
The Chinese government would shortlist the bidders to three in the first round of the tender and then choose one or two of the three selected bidders as the winners.
Purnomo said Indonesia would compete with Australia, Malaysia, Brunei, Qatar, Iran and Russia during the bidding process.
Competition was tight, but Indonesia was optimistic that the Tangguh project would have a good chance to win the contract, Purnomo said.
?We have a long history of supplying LNG to buyers and we are able to guarantee the security of supply since we will have a total of 14 LNG trains in Arun, Bontang and Tangguh.
?So, whenever there is a supply disturbance in one place, we can quickly swap it from any other place,? Purnomo said.
Purnomo also said the Tangguh LNG plant would offer a competitive price, but he did not specify the price.
Indonesia has built the Arun LNG plant in Aceh, which now has four trains in operation, and the Bontang LNG plant in East Kalimantan, which now has eight LNG trains in operation.
BP, which is the leader of the consortium which owns the Tangguh LNG plant, plans to build two trains in the first phase development of the project.
Straughan shared Purnomo?s optimism, citing various advantages owned by Indonesia compared to other bidders.
?The first advantage is, BP is the 30 percent owner of the terminal and has already a very good relations with Guangdong?s local government,? Straughan said referring to the LNG receiving terminal being built by BP and CNOOC in the province.
?The second (advantage) is the assurance from Pertamina and the Indonesian government to use Arun and Bontang supplies to support Tangguh,? he added.
?We also have a transportation advantage, since we are closer to Guangdong from any other competitors except Malaysia,? Straughan added.
Straughan also noted aside from competitive price and security of supplies, Pertamina?s willingness to formulate a flexible contractual terms would become another important factor that will place the Tangguh project in a better position compared to its competitors.
?The flexibility on how willing you are to allow the buyer to fluctuate on the amount of LNG in a year-to-year basis.
?Even if finally China decides to buy only 50 percent of the LNG requirements from Tangguh, BP will continue with the Tangguh project,? Straughn said.
BP Indonesia?s vice president for governmental relations Satya Wirayudha, who was a member of the Indonesian delegation, said all Indonesia?s competitors had made all-out efforts, including sending high profile delegations to China, to ensure their winning of the contract.
?Leaders from those countries had made visits to China in their bid to win the supply contract.
?U.S. Secretary of State Colin Powell has even wrote to the Chinese government in favor of ExxonMobil which has stake in Qatar,? Satya said. (Alex/Godang)