Indonesian Banks Join Global Lenders to Provide Finance for Tangguh Project

Indonesia's upstream regulator Special Task Force for Upstream Oil and Gas Business Activities (SKK Migas) reported Friday that the BP plc-led consortium signed the financing deal Wednesday for the $3.745 billion (IDR 50.557 trillion) Tangguh liquefied natural gas (LNG) Expansion Project in the country's Papua Barat Province with local and international banks as well as financial institutions at its office in Jakarta.

The signing of the loan facility follows the final investment decision taken by the partners July 1 to proceed with the development of the Tangguh LNG Expansion Project.

"This is the first time an LNG project financing involves domestic financial institutions in Indonesia," Head of SKK Migas Amien Sunaryadi said during the signing ceremony, as quoted in the press release.

Amien said that increased local participation by Indonesian lenders in the upstream oil and gas industry is in accord with the government's plans to boost local participation in strategic national projects, while growing these financial institutions' experience in global project financing.

Local financial institutions participating in the loan facility include PT Bank Mandiri (Persero) Tbk., PT Bank Negara Indonesia (Persero) Tbk, PT Bank Rakyat Indonesia (Persero) Tbk. and PT Indonesia Infrastructure Finance. Foreign banks involved in the Tangguh project financing comprises affiliates of Japan's Mizuho Bank, The Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation and Shinsei Bank.

China's Bank of China and China Construction Bank and Singapore's DBS Bank, United Overseas Bank and Oversea Chinese Banking Corporation were among the international lenders, while Europe's BNP Paribas, Credit Agricole Corporate and Investment Bank and KfW Bank as well as Korea Development Bank were also among signatories. 

Japan Bank for International Cooperation (JBIC) and multilateral agencies will inked the financing agreement at a later date.

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