BP to go ahead with $8b In­done­sia LNG project ex­pan­sion

Pakistan Observer - - ECONOMY WATCH -

TOKYO/JAKARTA—BP gained fi­nal in­vest­ment ap­proval to an $8 bil­lion ex­pan­sion of the Tang­guh liq­ue­fied nat­u­ral gas (LNG) project in In­done­sia, clear­ing the way for a third train to start op­er­a­tions in 2020. BP is go­ing for­ward with ex­pan­sion of Tang­guh de­spite an­nounc­ing it would rein back on spend­ing this year due to weak oil prices. It also ap­proved in­vest­ment on an Egyp­tian gas field last week.

The in­vest­ment will boost an­nual LNG pro­duc­tion ca­pac­ity at the Tang­guh project in In­done­sia’s West Pa­pua prov­ince by 50 per­cent to 11.4 mil­lion tons. Three-quar­ters of the gas from the new Train 3 will be sup­plied to In­done­sian power util­ity Perusa­haan Listrik Ne­gara , BP said. The rest will go to Ja­pan’s Kan­sai Elec­tric Power Co. Of­fi­cials at In­done­sia’s up­stream en­ergy reg­u­la­tor SKKMi­gas said the project was worth $8 bil­lion, al­though BP de­clined to con­firm that fig­ure.

“We are fi­nal­iz­ing de­tails with po­ten­tial lenders and at this point I’m not able to dis­close who they are,” said Christina Verchere, BP re­gional pres­i­dent Asia Pa­cific. In May BP cut its bud­get for the project to $8-10 bil­lion from $12 bil­lion. “This fi­nal in­vest­ment de­ci­sion was made after con­fir­ma­tion with Tang­guh pro­duc­tion-shar­ing con­trac­tors and is based on com­mer­cial con­sid­er­a­tions,” said In­done­sian En­ergy Min­is­ter Sudirman Said. BP leads the Tang­guh project with a 37.16 per­cent stake. Its part­ners in­clude MI Berau, China Na­tional Off­shore Oil Co. and a ven­ture be­tween Mit­subishi Corp. and In­pex.

Fri­day’s de­ci­sion also sealed a $2.43bil­lion on­shore build­ing con­tract for a con­sor­tium led by Tri­pa­tra, part of In­done­sia’s Indika En­ergy Group, SKKMi­gas chief Amien Su­naryadi said.—AP

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