PERTAMINA/ARCO award Tangguh FEED contract to Chiyoda-Mitsubishi

Pertamina and Arco have awarded a front-end engineering design (FEED) contract for the Tangguh LNG plant to a consortium of Chiyoda Corporation and Mitsubishi Corporation, Pertamina said in statement Thursday.

The contract award to Chiyoda. Mitsubishi is one contract in a multiple FEED strategy selected by Pertamina and Arco to promote competition and to achieve a competitive project cost.

The Liquefied Natural Gas (LNG) plant will be located in Berau Bay in the eastern Indonesia providing of Irian Jaya also known as Papua. The plant will be able to produce 6 million tones of LNG per year from two processing train. Once complete, Tangguh will join Arun and Bontang as Indonesia's third LNG center. The addition of Tangguh will strengthen Indonesia's position as the world's largest exporter of LNG and will provide added reliability for Pertamina's LNG customers. FEED will be conducted in Jakarta.

The contracting process for Tangguh FEED has been hailed in local media as transparent and highly competitive. "Pertamina has demonstrated its commitment to fair and transparent business practices through the process used to award Tangguh FEED," stated Djoko Subekti, PKB executive coordinator for Pertamina. He went on to say, "The result of the process speaks for itself: a world-class contractor conducting the work in Indonesia using local technical expertise at an extremely competitive price. The intense competition shows how much companies want to be part of this project.

Commenting on the contract signing, Leon Cedron, President and Resident Manager of Arco Indonesia, said, "With the start of FEED, the project sponsors have achieved the next key milestone in bringing Tangguh LNG to the market. This keeps us on track to meet customer needs for the full range of demand growth scenarios."

The Tangguh gas fields contains18.3 trillion cubic feet (tcf) of independently certified proved and probable natural gas reserves, with an additional 5.4 tcf of possible reserves already identified. Additional exploration slated for the surrounding PSCs is expected to discover supplementary reserves. A two train initial development of the Tangguh LNG plant will involve more than US$ 1.5 billion of investment with additional investment required to develop the gas production facilities.

The Tangguh LNG project is being developed by a consortium of international companies led by Pertamina. Three Production Sharing Contract (PSCs) comprise the Tangguh LNG project: Arco operated Berau and Wiriagar PSCs and EG operated Muturi PSC. The Tangguh PSC contractors include Arco, occidental Berau of Indonesia Inc., Nippon Oil Exploration (Berau) Ltd., BG International Limited, KG Berau Petrolium Ltd., KG Wiriagar Petromlium Ltd., Cairns Ltd., and Indonesia Natural Gas Resources Muturi Inc., a wholly owned subsidiary of Nischo Iwai Corporation. (*)