Govt may give short extension to Tangguh gas fields

Government may give BP Plc. a short extension of natural gas block contracts to mesh with the period for liquefied natural gas (LNG) sales contracts, a senior government official was quoted by reuters as saying on Friday.

"We are considering giving BP gas block extension contracts just to meet their LNG sales contracts period," director general oil and gas Iin Arifin Takhyan told reporters.

BP is negotiating with Indonesia to extend contracts for natural gas blocks that will supply LNG plants at its Tangguh project in Papua province.

"We are still in negotiations with BP. However we may give a short extension for their natural gas blocks and we may give another extension in the future."

BP plans to build two LNG plants as part of the Tangguh project with annual capacity of around 7.6 million tonnes.

The LNG plants will get natural gas feedstock from the Wiriagar, Muturi and Berau blocks, which together have combined reserves of 14.4 trillion cubic feet (tcf). BP is the operator of the three blocks.

A Mines and Energy Ministry official has said the contract for Wiriagar would expire in 2023, Muturi in 2022 and Berau in 2017.

The $5 billion Tangguh project, 3,000 km (1,880 miles) east of Jakarta, already has LNG supply contracts with China, the United States, Mexico and South Korea. Start-up is slated for mid-2008, although some sales agreements run from 2006.

BP has said it expected to make a final investment decision on the project by the year-end.

Indonesia, the world's biggest supplier of the super-cooled and compressed gas, has been struggling to meet its contractual commitments as gas output has declined and supply has been diverted to the domestic market, mainly to fertiliser plants.(*)