BP Inks LNG Supply Deal with Sempra Energy

BP and its partners in the Tangguh Liquefied Natural Gas Project have signed a long term sales and purchase agreement with Sempra Energy LNG to supply liquefied natural gas (LNG) from Indonesia to markets in Mexico and the US.

Developed with BPMIGAS, Indonesia's executive agency for oil and gas, the agreement represents the first long term supply of Asia Pacific gas to North American markets.

Under the agreement, up to 3.7 million tonnes of LNG a year will be delivered from the BP-operated Tangguh LNG project in Indonesia over a period of 20 years beginning in 2008 to Sempra Energy's proposed LNG receiving terminal near Ensenada in Baja California, Mexico.

The terminal, when completed, will have the capacity to process up to 1 billion cubic feet per day of natural gas – approximately 7.5 million tonnes per year of LNG inputs. Sempra will market the gas to Mexico and the west coast of the US.

The agreement will be highly flexible in nature allowing LNG cargoes to be diverted to capture value in other markets while providing substantial base volumes and revenues to the Sempra Energy LNG terminal.

Vivienne Cox, Chief Executive of BP's Gas, Power & Renewables division, said: "This is an important deal for a number of reasons. It secures a high value market for Indonesia's gas resources and connects gas users in Mexico and the US to a significant new energy supply source. It completes our portfolio of markets for a two-train launch of the Tangguh project by taking the level of agreed sales beyond 7.5 million tonnes per year. And with its highly distinctive flexibility, it will allow us to continue offering Tangguh gas to other important markets in Asia Pacific such as Japan."

The Tangguh LNG project, located in Papua, Indonesia, has previously secured LNG sales contracts with customers in China and South Korea.

Donald E. Felsinger, president and chief operating officer of Sempra Energy, said: "This landmark agreement represents a significant, positive step forward for LNG projects in North America and Asia. The agreement enables the further development of the first new LNG receiving terminal along North America's west coast, while allowing a new LNG supply project to move forward in Indonesia."