Govt to establish team for Tangguh LNG project<\/p>\n
Fitri Wulandari, Jakarta<\/p>\n
The government is establishing a team to set up policies
\nrelated to the Tangguh liquefied natural gas (LNG) plant being
\ndeveloped in Papua.<\/p>\n
Minister of Energy and Mineral Resources Purnomo Yusgiantoro
\nsaid the establishment of the team will set up guidelines to
\nsolve any issues that may arise once the country's third LNG
\nplant comes on stream in the future.<\/p>\n
"This is a huge project and it requires an integrated policy,"
\nPurnomo told reporters on Tuesday, adding that his office would
\nsoon issue a decree on the establishment of the team.<\/p>\n
Headed by an official from the Oil and Gas Implementing Body
\n(BP Migas), the team will consist of officials from the energy
\nministry, the finance ministry, the office of Coordinating
\nMinister for the Economy and state oil and gas firm PT Pertamina.<\/p>\n
The LNG project is being built by a consortium led by British
\nenergy giant BP PLC.<\/p>\n
The team will be tasked with setting up a strategy to solve
\nproblems related to securing supply to Tangguh's buyers, among
\nother responsibilities.<\/p>\n
"Once the Tangguh plant becomes operational, we should already
\nhave a clear policy on how to solve problems like the one that
\nhit the Arun plant," Purnomo said.<\/p>\n
The Arun plant recently faced difficulties meeting its
\ncommitment to buyers due to a shortage of gas supplies from
\nAmerican firm ExxonMobil. In the past, ExxonMobil supplied its
\ngas to the plant and local fertilizer firms. It could not,
\nhowever, continue to supply both because of a decline in its
\nnatural gas source.<\/p>\n
In order to resolve the situation, the government bought LNG
\nfrom other producers to meet Arun's obligation to foreign buyers
\nand asked ExxonMobil to supply its gas to local fertilizer firms.<\/p>\n
Another aspect that will be studied by the joint team concerns
\nthe distribution of the Tangguh plant's revenue between the
\ngovernment and the consortium that owns the project.<\/p>\n
Purnomo said the government would like part of the revenue
\nfrom the outset of the LNG plant's operation, rather than after
\nthe consortium paid all their costs.<\/p>\n
Under the current production sharing contract (PSC), a
\ncontractor retains its revenue to repay investment costs and will
\nshare its revenue with the government after repayment.<\/p>\n
In the case of the Tangguh plant, the government will receive
\nsome revenue from the plant only after the consortium reimburses
\nall their expenses, including bank loans, for the development of
\nthe project.<\/p>\n
Under a standard PSC, the government receives about 70 percent
\nof the contractors' gas revenue.<\/p>\n
"Tangguh has a huge investment of US$2.5 billion. We
\nunderstand that investors have put a lot of money in it. But if
\nwe have to wait (until they repay all their investment costs),
\nthe government won't get anything," he said.<\/p>\n
Located in Bintuni Bay, the Tangguh plant will draw from gas
\nfields with proven reserves of 14.4 trillion cubic feet (TCF).<\/p>\n
The plant is designed to have two trains with a combined
\nproduction capacity of 7 million tons in its initial production.<\/p>\n
The Tangguh consortium has secured deals to supply 3.15
\nmillion tons of LNG per annum to China's Fujian province and
\nSouth Korean steel maker Posco.<\/p>\n
It expects to clinch deals to supply another 600,000 tons to
\nSouth Korean power company K Power and 3.7 million tons to U.S.
\nenergy company Sempra Energy.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-to-establish-team-for-tangguh-lng-project-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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