Japanese firms to hold majority stake Tangguh LNG project: report

Japanese trading house Mitsui and Co. has reached a basic agreement with BG Group Plc. of Britain to buy a 10 percent interest in an Indonesian natural gas development project, a news report said Sunday.

The deal, estimated at about 30 billion yen (US$256.4 million), takes the combined stake in the project held by Japanese companies above 50 percent, the Nihon Keizai Shimbun newspaper said, citing sources close to the matter.

It is the first major natural gas development scheme to be majority-owned by Japanese firms, the newspaper said.

Development of the natural gas field, located in Tangguh, in the westernmost part of Irian Jaya, is led by British Petroleum (BP), and is expected to cost a total of $3 billion, the newspaper said.

Production is expected to start in summer 2007, it said.

The area is believed to have one of the world's largest reserves of natural gas, along with a gas field on Russia's Sakhalin Island, the newspaper said.

Indonesian production is expected to reach the equivalent of seven million tons of liquefied natural gas a year, it said.

Mitsui aims to sell the liquefied natural gas in the Asia-Pacific market, including Japan, the United States, China and South Korea, the Nihon Keizai said.(*)