Govt, BP complete Tangguh negotiation

BP Plc, Europe's largest oil company, and Indonesia's government completed negotiations relating to the Tangguh liquefied natural gas project, paving the way for construction to begin, Bloomberg reported Thursday.

BP has agreed to jointly share the financial claims from buyers should the project fail to deliver LNG because of any Indonesian government order, Director General of Oil and Gas Iin Arifin Takhyan told reporters in Jakarta yesterday. BP will have the right to tap the project's revenue to pay for any claim before dividing the remaining revenue according to a production-sharing contract with the government.

``Basically the project pays for claims by itself,'' Iin said. ``Now that we've got approval from the Energy and Mineral Resources Minister on the results, we're now trying to set the date for signing next week'' on the start of construction.

The latest delay was caused by a disagreement over a clause that indemnifies BP Plc against steps the government may take, Energy Minister Purnomo Yusgiantoro told reporters in Jakarta in January. Under the clause, the government bears financial responsibility for government actions that prevent BP from meeting its gas supply obligations from the project.

BP earlier wanted the government to pay all claims should the project fail to deliver LNG as a result of Indonesia's directives.

Signing of the contract had been scheduled for last year. The US$ 5 billion LNG plant in the easternmost province of Papua will supply a total of 7.6 million metric tons of gas a year to customers in South Korea, China and the U.S. (*)