Tangguh LNG to focus marketing to Japan, South Korea

Anglo- American Energy giant BP Plc. said it would focus marketing of its Tangguh LNG project to Japan and South Korea markets in the future.

?After closing LNG deals with South Korea?s SK Corp. and with Sempra Energy, BP Tangguh will focus its effort to penetrate Japan and South Korea markets, which are Indonesia?s traditional markets,? said BP's Group Vice President Gas, Power and Renewables Anne Quinn in a recent interview.

Tangguh LNG is expected to close 500,000 per annum of LNG supply deal with South Korean firm K-Power this month, and deal to supply 3.7 MTPA of LNG to West Coast USA with Sempra Energy this coming August.

Quinn said for the time being, Tangguh would not likely to pursue other North American market, as the market in the vicinity of West Coast of USA is already limited, at least in the short term.

Quinn said that penetrating Japan and South Korean market would give justification for Tangguh to build its third and fourth trains. Several Arun and Bontang LNG contracts will expire within the next six years, giving Tangguh a window to supply the markets, as Arun LNG would not be able to continue to supply LNG beyond its current contracts due to reserves depletion.

If deal with Sempra could be closed, Tangguh will already be booked to its capacity of around 7 MTPA as it had also bagged deal to supply 2.6 MTPA of LNG to the Chinese province of Fujian and 500,000 tons per annum to South Korean firm Posco.

Another market that Tangguh is eyeing, said Quinn is The Philippines, which, according to her could take up to 3 MTPA. But the market would not be coming for a while, as Philippines power industry is still undergoing heavy restructuring.

Quinn further added that negotiation to secure loan with JBIC is close. ?Financing with JBIC is moving along well,? she said, admitting that one of the hurdles to get the deal done was thus far Indonesian government had not granted PSC extensions of Wiriagar, Muturi and Berau PSCs. The three PSCs make up Tangguh LNG. Another hurdle, said Quinn was permit from Ministry of forestry.

?Those things are being discussed with the relevant ministries and we are now very close to get things done,? said Quinn. She also expressed confidence that Tangguh investment decision could be make by the end of this year, allowing the project to become onstream 2007-2008.

BP is seeking some US$3 billion finance from Japan and Chinese banks to develop Tangguh LNG project.(alex)