The agreement now sees BP in all three legs of China's LNG strategy. Last month, China selected Australia's North West Shelf consortium - in which BP is an equal (16.7 percent) shareholder - to supply three million tons of LNG a year to China's first LNG terminal in Guangdong Province. BP was also chosen last year as China's foreign partner in the construction of the Guangdong LNG terminal and pipeline, which will access a market that is forecast to grow rapidly. Gas currently meets just two per cent of China's energy needs, but this is projected to increase to between seven and eight percent by 2010.
The 25-year LNG Sales and Purchase Agreement signed in Jakarta today between Tangguh and CNOOC, will involve the supply of up to 2.6 million tons of LNG a year to Fujian. An agreement in principle for CNOOC participation in Tangguh was also signed. Construction of the Fujian terminal is expected to start in 2004 and operations are scheduled to begin by 2007, shortly after completion of the Guangdong terminal. The agreements are subject to usual regulatory and other conditions and the development of further detailed terms.
BP Group Chief Executive Lord Browne said BP was honored to be a leading participant in all three major LNG projects in China, one of the fastest growing energy markets in the world and the second largest energy consumer after the United States. "Gas - the world's cleanest fossil fuel - currently accounts for just over two percent of China's energy consumption and the Fujian and Guangdong LNG terminals will play pivotal roles in achieving China's goal of a four-fold increase in natural gas consumption by 2010," he said. "The agreement is also good news for Indonesia and for the Tangguh project which will add significantly to the country's marketable LNG reserves and play a major role in maintaining Indonesia's global leadership position in the LNG industry."
Located in the Berau-Bintuni Bay region of Indonesia's Papua province, Tangguh is being designed with a capacity to produce seven million tons of LNG per annum from two initial processing trains. The Tangguh gas fields contain 14.4 trillion cubic feet of certified proved natural gas reserves plus potential additional resources. The project will set high technical, environmental and social standards and bring significant benefits to the Indonesian economy and the people of Papua province.
The percentage shares of Tangguh proved reserves attributable to the production sharing contractor interests are: BP 50 percent, Mitsubishi 16 percent, Nippon 12 percent, BG 11 percent, KG (Kanematsu Corp, Japan National Oil Corp and Overseas Petroleum) 10 percent, and Nissho Iwai one percent.
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