Update 2: Tangguh consortium signs $2.6b loan deals
Tuesday, August 1 2006 - 04:48 AM WIB
The consortium that is building the Tangguh LNG plant in Papua signed on Tuesday agreements with a number of lenders on the provision of US$2.6 billion loan for the project.
The lenders are Asian Development Bank (ADB), JBIC, Bank of Tokyo-Mitsubishi UFJ, BNP Paribas, Fortis Banque, Sandard Chartered, ING, Sumitomo Mitsui Banking Corp, Mizuho and BNP Paribas. HSBC acts as trustee and paying agent. Of the $2.6 billion loans, $1.2 billion will be provided by JBIC, $350 million by ADB and the remaining $1.066 billion by the rest of the lenders.
?Tangguh is the largest single Indonesian project since financial crisis,? ADB Indonesia chief Edgar A Kwang said.
The consortium led by British energy giant BP PLC will build two trains with a combined production capacity of 7.6 million tons per year. The LNG plant is being built in Papua?s new province of West Irian Jaya.
?The Tangguh LNG project will generate $12 billion in revenue in 25 years,? Kardaya Warnika, chairman of oil and gas upstream regulator BP Migas, said.
"This is a real achievement for all of us and also serves as significant proof that Indonesia remains a promising business ground for international investor," Kardaya said..
BP Indonesia President Anne Drinkwater underlined that the deal is a significant milestone for Tangguh LNG project.
"BP appreciates the trust and confidence shown by international lenders to finance the third major LNG facility in Indonesia," she said.
According to the press statement distributed during the event, total loan financing for the $5 billion project will amount to $3.5 billion. The balance of the loan financing $0.9 billion is being finalized and is expected to be in place by the end of the year. The remainder of the project cost is being funded by BP and partners.
The Government of Indonesia approved the Tangguh LNG project in 2005.The project construction is currently 44 percent complete. The construction of the project is on schedule to deliver gas by late 2008 to its four customers: Fujian LNG Project in China K-Power Co,Ltd in Korea; and Sempra Energy LNG Marketing Corp in Mexico.
Minister of Energy and Mineral Resources Purnomo Yusgiantoro said the government has officially approved the revision of the sales and purchase agreement between the Tangguh consortium and CNOOC that will supply Tangguh LNG to China?s Fujian province.
Based on the agreement signed in 2002, the consortium and CNOOC agreed on the price on the LNG based on the movement of crude price. They set the ceiling price of crude at $25 per barrel. The benchmark however does no longer reflect the reality as the price of crude oil has risen to above $70 barrel this year. After a round of negotiations, CNOOC and the Tangguh consortium recently agreed to revise upwards the crude oil ceiling price to $38 per barrel. (Alex/Godang)