BP Greenlights $7 Billion Indonesian Gas Project with CCUS Facility

BP PLC and its partners have reached a $7 billion final investment decision (FID) on an Indonesian project to develop a gas field to supply feedstock to an existing liquefaction facility and build an associated carbon capture facility. 

In the Ubadari field, BP expects to extract about three trillion cubic feet of natural gas, which will feed Tangguh LNG and “help meet growing energy demand in Asia”, said a statement on the company’s website announcing the launch of the Tangguh Ubadari, CCUS, Compression (UCC) Project.

Ubadari is expected to start production 2028. The liquefaction facility, which went online 2009, has been expanded last year with a third train, bringing total capacity to 11.4 million tons per annum.

Meanwhile the carbon capture, utilization and storage (CCUS) portion of the UCC project is expected to sequester around 15 million metric tons of carbon dioxide in its initial phase. The CCUS component serves to mitigate emissions from the gas portion of the project.

“This project not only unlocks a fantastic gas resource, it also represents an Indonesian first through the use of CCUS to maximize gas recovery”, chief executive Murray Auchincloss said.

Approved by the government August 2021, the UCC project will have three injection wells, one offshore injection platform, one offshore CO2 pipeline and onshore facilities for CO2 removal, processing and compression.

BP is the operator of the Tangguh production sharing contract (PSC) with a 40.22 percent stake. The partners are MI Berau B.V. (16.3 percent), CNOOC Muturi Ltd. (13.9 percent), Nippon Oil Exploration (Berau) Ltd. (12.23 percent), KG Berau Petroleum Ltd. (8.56 percent), Indonesia Natural Gas Resources Muturi Inc. (7.35 percent) and KG Wiriagar Petroleum Ltd. (1.44 percent). The Tangguh PSC encompasses the Berau, Muturi and Wiriagar PSCs.

In 2022 the Southeast Asian country extended the license by 20 years to 2055.

“The investment meets BP's returns hurdle rates and is fully accommodated within BP's disciplined financial framework, reflecting BP's drive to focus on value and returns”, BP said of the UCC project. “Tangguh is in a strategic location to access high-value regional markets, and the investment reflects BP's commitment to continue to meet energy demand for Indonesia and the region”.

BP announced the FID at a meeting with Indonesian President Prabowo Subianto in London. “This major investment highlights BP and partners’ strong confidence in Indonesia’s investment climate and strengthening their business activities in the country”, the company said.

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