Tangguh loan agreement seen inked May: BPMIGAS

Upstream oil and gas authority BPMIGAS said that thus far Anglo-American energy giant BP PLC was still constrained to conclude US$ 3.5 billion loan talks with 7 major banks to finance the development of Tangguh LNG project in Papua.

?One of the hurdles in concluding Tangguh loan agreement is the fact that LNG sales agreement to Fujian had not been effective pending the government?s approval on GSA terms and condition revisions,? Eddy Purwanto, BPMIGAS deputy chairman in charge of gas marketing told Petromindo.Com. Other pending issues, said Eddy, included interest rate for the loan and the appointment of the loan arranger. He hoped that the loan deal would be closed next month.

He declined to name the banks BP was dealing with, but earlier reports mentioned Japan?s JBIC, ABN Amro, Asian Development Bank and a consortium of Chinese banks.

BPMIGAS chairman Kardaya Warnika earlier said that BP and CNOOC had in principal concluded revision of Fujian LNG supply terms and condition, which will allow Tangguh LNG to get higher price than originally agreed. The revision is pending the government?s approval.

BP expects the Tangguh project to start operating by late 2008 with an annual capacity of 7.6 mln tons. Tangguh draws its natural gas supply from six gas fields with proven reserves of 14.4 TCF in the Bintuni area of Papua.

Tangguh has secured contracts for LNG shipments of 2.6 MTPA to Fujian, China, and up to 550,000 and 600,000 TPA to South Korea's steel company POSCO and K-Power respectively. In October 2004 Tangguh closed a deal to ship 3.7 MTPA of LNG per year to Sempra Energy LNG Corp in the US.

BP owns 37.16 percent of the project, making it the biggest investor. CNOOC is the second-largest, with 16.96 percent. Other investors include Mitsubishi Ltd., Japan?s largest trading company, and Inpex Corp., Japan?s biggest oil explorer. They hold a combined 16.3 percent in Tangguh. A Nippon Oil Corp.-led company has a 12.23 percent stake and LNG Japan, owned by Sumitomo Corp. and Sojitz Holdings Corp., holds 7.2 percent. Japan National Oil, Kanematsu Corp. and Mitsui & Co.?s Overseas Petroleum Corp. unit hold a combined 10 percent.(godang)