BP Selects KBR-led Consortium for Tangguh LNG Project

BP has selected a consortium consisting of Kellogg, Brown & Root, JGC Corporation and PT Pertafenikki Engineering (KJP) for the engineering, procurement and construction (EPC) contract for the Tangguh liquefied natural gas (LNG) facilities. The consortium submitted a commercial bid worth approximately $1.4 billion USD.

Indonesia's Oil and Gas Implementing Agency (BPMIGAS) oversaw the tender process and agreed on the winning bid.

BP and KJP will now move to close the final EPC contract. The completion of this tender process maintains the Tangguh Project's progress towards starting operations in 2007.

The bid work scope is to construct a two-train LNG processing plant and associated support facilities in Teluk Bintuni, Papua Province, Indonesia. It is anticipated that the technical and commercial proposal presented by KJP will enable the Tangguh Project to achieve world-class LNG facilities development costs.

The tender process included three bidders, all of whom possess world-class expertise in the construction of LNG facilities in remote greenfield locations. All of the bidders submitted high-quality proposals that met the technical requirements of the project.

The two other bidding consortia were: PT Purna Bina Indonesia, PT Bechtel Indonesia and Bechtel Overseas Corporation; and Technip France, Technip Far East SDN BHD, PT Technip Indonesia and Chiyoda Corporation.

The EPC tender process commenced in December 2001. The technical evaluation was completed in October 2002, and the commercial evaluation took place in March 2003.

BP's partners in the Tangguh Project are BG Group, Mitsubishi Corporation, INPEX Corporation, Nippon Oil Corporation, Japan National Oil Corporation, Kanematsu Corporation, Overseas Petroleum Corporation, LNG Japan Corporation (held by Nissho Iwai Corporation and Sumitomo Corporation) and China National Offshore Oil Corporation.

The Tangguh Liquefied Natural Gas (LNG) project is a significant development for the Republic of Indonesia and will play a crucial role in maintaining Indonesia's global leadership position in the LNG industry. Tangguh will significantly replenish the country's marketable LNG reserves.

The project is located in the Berau-Bintuni Bay region of Teluk Bintuni Regency, in the Indonesian province of Papua (formerly called Irian Jaya). The Tangguh LNG project is operated by BP Indonesia as a PSC contractor to BPMIGAS. The Tangguh gas fields contain 14.4 tcf of proved and certified natural gas reserves. The LNG processing plant will be able to produce seven million tons of LNG per annum from two initial processing trains.