Govt approves POFD for Tangguh LNG expansion
Friday, November 2 2012 - 01:49 AM WIB
The approval was announced today by UK Prime Minister David Cameron in London after a bilateral meeting with visiting Indonesia ?s President Susilo Bambang Yudhoyono. Also attending the meeting was BP Group Chief Executive, Bob Dudley, and BP Regional President Asia Pacific, William Lin.
BP submitted in early September the plan for the development of a third LNG liquefaction train (Train 3) for Tangguh. Approval of the plan is an important step in preparation for the final investment decision for this expansion, which is currently expected to be taken in 2014. This would potentially enable operation commissioning for the new train to begin in late 2018.
Total investment in Train 3 by Tangguh project partners is currently estimated to be up to US$12 billion.
David Cameron said: "This agreement on a ?7.5bn ($12 billion) development is great news for BP, one of the largest foreign investors in Indonesia . It's a huge boost to the UK's growing trade and investment in Indonesia 's emerging market."
BP and partners in the Tangguh project will now begin tendering for the front-end engineering and design (FEED) services for the proposed Train 3 development.
The planned expansion will build on the established operation of the two existing liquefaction trains at the Tangguh LNG site, which is located in Teluk Bintuni Regency in West Papua. Train 3 is expected to add 3.8 million tons per annum (mtpa) liquefaction capacity to Tangguh, bringing total project capacity to 11.4 mtpa.
As part of the POFD, BP and its partners have also committed to a comprehensive package to help address Indonesia ?s LNG requirements as well as local energy needs in Teluk Bintuni Regency.
Under the terms of the plan, BP and its partners have agreed to sell and supply 40 per cent of the LNG output from Train 3 to Indonesia?s state electricity company PT.PLN for the Indonesian domestic market.
In addition, as part of the plan up to 15 million standard cubic feet a day of piped gas, supplied from the Tangguh fields and sufficient to generate up to 50MW of local power, would be allocated for sale from the date of the Train 3 start-up. This would supply and enable local infrastructure and commercial business as well as stimulate light industrial development, particularly in the North Shore villages of Teluk Bintuni Regency and beyond.
Finally, recognizing the immediate needs that exist in the local area, the plan includes agreement for up to 8MW of power generated at the Tangguh plant to be sold to PLN to distribute to communities residing in the Teluk Bintuni Regency. The electricity is expected to be provided in stages, with the first 4MW available in January 2013 and up to a further 4MW may be provided to PLN in following years.
Tangguh is operated by BP Indonesia as contractor to BPMIGAS. BP holds a 37.16% interest in the project. Other Tangguh contract partners are MI Berau B.V. (16.30%), CNOOC Ltd. (13.90%), Nippon Oil Exploration (Berau), Ltd. (12.23%), KG Berau/KG Wiriagar (10.00%), LNG Japan Corporation (7.35%), and Talisman (3.06%)
Further regulatory and partner approvals will be required before the final investment decision for Tangguh expansion is taken.
Editing by Reiner Simanjuntak