Tangguh project will go on despite loan problem: BP Migas

The plan to build the Tangguh LNG plant in Papua will go one despite a problem on the disbursement of loan from the Asian Development Bank (ADB) and Japan Bank for International Corporation, Investor Daily reported on Thursday.

"BP as the contractor will use its own funds to finance the project, if there is a problem with the disbursement of the loan. So the project will continue," Kardaya Warnika, the head of the regulatory body for upstream oil and gas industry BP Migas, said in Jakarta on Wednesday.

According to him, negotiation on the disbursement of the loan was still continuing and he hoped the decision could be made soon. But Kardaya assured that BP and its partners would be able to finance the project with their own funds, if there was a problem with the loan.

Executive Vice President for BP's Tangguh LNG project, Budiman Parhusip, said that BP and its partners such as CNOOC Ltd, MI Berau Bv, Nippon Oil Exploration, KG Berau/KG Wiriagar and LNG Japan Corporation had agreed to cover the cost for the construction of the Tangguh LNG plant, if ADB and JBIC failed to provide the loan.

The construction of the Tangguh LNG plant which is expected to begin commercial operation in 2008, is estimated to cost BP about US$3.5 billion. (*)