BP Indonesia Hopes to Secure Another $900M for Tangguh

BP Indonesia hopes to secure the remaining US$900 million needed for the Tangguh liquefied natural gas project by the end of next year, according to the company's executive vice president in charge of the Tangguh enterprise, Budiman Parhusip.

"We're currently in talks with a consortium led by Chinese banks," Parhusip told journalists.

BP had said previously that it expected to secure the US$900 million by the end of this year.

Parhusip said the delay "will not disturb the development of the LNG project," but otherwise declined to comment on it.

"The Tangguh project is now more than 50 percent complete and on schedule to begin operations in the last quarter of 2008," Parhusip said.

In August, BP and its partners signed a US$2.6-billion loan agreement with the Japan Bank for International Cooperation, the Asian Development Bank and several international commercial banks to finance the Tangguh LNG project.

Parhusip said drilling would start in May next year, with 15 wells to be sunk initially.

The Tangguh LNG project has secured long-term LNG sales deals with four customers: 2.6 million tons per year will be sold to the Fujian LNG project in China, up to 0.6 million tons to K-Power in South Korea,I0.55 million tons to POSCO in South Korea and 3.6Imillion tons to Sempra Energy LNG Marketing Corp in Mexico.

BP has a stake of 37.16 percent in the LNG project through wholly owned units BP Breau Ltd, BP Muturi Holds BV and BP Wiriagar Ltd, while CNOOC Ltd owns 16.96 percent MI Berau BV 16.3 percent, Nippon Oil Exploration (Berau) Ltd 12.23 percent, KG Berau/KG Wiriagar 10 percent and LNG Japan Corp (a joint venture between Sumitomo Corp and Sojitz Holdings Corp) 7.35 percent.

The Tangguh enterprise, which is expected to last 30 years, entails the production of natural gas from the Bintuni Bay area in the easternmost province of Irian Jaya Barat, or Papua. The area has proven reserves of 14.4 trillion cubic feet.

(US$1 = 9,095 rupiah)

(C) 2006 Xinhua Financial News. All Rights Reserved.