Tangguh development plan will be revised

The plan of the development of the liquefied natural gas (LNG) project in Papua proposed by BP Indonesia in early July will be revised to allow the province to get better revenue from the project, Koran Tempo reported on Monday.

"We are still negotiating with (BP Indonesia) about the possible revision of the plan of the development of the Tangguh gas project," Director General of Gas and Oil, Iin Arifin Takhyan was quoted as saying by the newspaper.

Iin did not disclose which of the development plan to be revised, but sources said that the change would include part of the so-called First Tranche Petroleum (FTP) arrangement that should be paid to the local government in Papua province.

FTP is the government's rights to receive part of the sales revenues from the sales of oil and gas produced by its production sharing contractor. The amount of the FTP varies between 10 and 20 percent of the gross revenues.

The government earlier proposed to give the Papua administration 3.2 percent of the FTP if it is set at 20 percent, or 2.42 percent if the FTP is 15 percent. BP, on the other hand, proposed to pay US$2 million each year within the first year of the production, and the amount to be increased to US$8 million a year after the fifth year.

The Tangguh LNG project will be in full operation in 2017 although initial production and sales will begin in 2007. (*)