Tangguh expansion to prioritize domestic demands

Upstream oil and gas authority BPMIGAS said future expansion of BP-operated Tangguh LNG project must prioritize demands for domestic gas demands.

?Domestic gas demands fulfillment must come first; BPMIGAS will only allow export of excess capacity in the future,? said BPMIGAS chairman Kardaya Warnika during a parliamentary hearing in Jakarta Wednesday.

Tangguh project, which is slated to commence production in 2008, is currently developed with capacity of 8 million tons of LNG per annum. According to Kardaya, gas reserves at Tangguh are adequate to expand the project?s capacity to 16 MTPA.

?Expansion plan for Tangguh is currently being studied, but no decision has been made yet,? he said.

All of Tangguh first phase production would go to Chinese, South Korean and US market.

BPMIGAS and the government had been under fire over the policy of prioritizing overseas gas buyers and neglecting domestic demands, the allegation which BPMIGAS strongly denied. The government had also been criticized for selling Tangguh LNG too cheaply.

State electricity firm PLN and state gas distribution firm PGN had conducted studies to develop LNG receiving terminal in East and West Java as part of effort to ease gas supply shortage in Java and to achieve security of gas supply for PLN. PLN earlier said it would bane EPC winner for its 3.5MTPA West Java receiving terminal next month, with operations viewed to commence as early as 2008-09. PLN has said it would double the terminal?s capacity after a few years in operations.

?However, Kardaya said thus far, PLN had not made any formal request regarding LNG supply. (alex)