Tangguh, Posco sign LNG contract<\/p>\n
Fitri Wulandari, Denpasar<\/p>\n
British energy giant BP PLC signed on Thursday a contract with
\nSouth Korean steel company Posco for the supply of US$2 billion
\nworth of liquefied natural gas (LNG) to South Korea from the
\nTangguh LNG project, which is being built by a consortium led by
\nBP.<\/p>\n
Under the sales and purchase agreement, the LNG project
\nlocated in Papua will supply Posco with 550,000 tons of LNG for
\n20 years, starting from 2005.<\/p>\n
Posco is building an LNG terminal at Gwangyang, South Korea
\nwhere the LNG will be converted into gas before being used by
\nPosco. Posco has two gas-fired power plants, with a total
\ngenerating capacity of 845 megawatts, at their steel mills in
\nPohang.<\/p>\n
The contract was signed by BP Group's vice president for gas,
\npower and renewables Anne C. Quinn and Posco's senior vice
\npresident Young Tae Kwon in Nusa Dua, Bali. Present at the
\nsigning ceremony were Minister of Energy and Mineral Resources
\nPurnomo Yusgiantoro and head of the Oil and Gas Upstream
\nRegulatory Body (BP Migas) Rachmat Sudibyo.<\/p>\n
BP's senior vice president for the Tangguh LNG project Lukman
\nMahfoedz said the deal would make it easier for the consortium to
\nsecure financing for the project.<\/p>\n
\"The contract will help us get support from lenders (for
\nfinancing) the project. The project is not only important to us,
\nbut also development in eastern Indonesia,\" Lukman said after the
\nceremony.<\/p>\n
As the Tangguh LNG plant would not be operational before 2008,
\nthe consortium would seek supply from LNG plants in Arun, Aceh or
\nBontang, East Kalimantan or overseas to meet its contractual
\nobligation to Posco.<\/p>\n
Rachmat described the price that Posco would pay for the
\nTangguh LNG as \"better\", without mentioning the comparison.<\/p>\n
\"The price is pegged to the price of crude oil, but we get a
\nbetter price (in the deal),\" Rachmat said.<\/p>\n
Aside from the deal with Posco, BP has signed a deal with
\nChina's Fujian province to supply 2.6 million tons of LNG from
\nTangguh for 20 years starting 2007.<\/p>\n
The firm is also expecting to close a deal later this month
\nwith South Korea's power company SK Corp (K Power), to supply
\nsome 600,000 tons of LNG for 20 years, and with U.S. energy
\ncompany Sempra Energy in August, to supply 3.7 million tons per
\nannum to Sempra's LNG terminal in Costa Azul, Mexico.<\/p>\n
Located in Berau-Bintuni region in Papua province, the Tangguh
\nLNG plant is expected to produce 7 million tons per annum in the
\nfirst phase of production. Gas fields, which will feed the plant,
\nhave certified reserves of 14.4 trillion cubic feet (TCF).<\/p>\n
BP holds a 37.16 percent stake in the project in partnership
\nwith MI Berau BV (16.30 percent), CNOOC Ltd (16.96 percent),
\nNippon Oil Exploration Berau (12.23 percent), KG Companies (10.0
\npercent) and LNG Japan Corporation (7.35 percent).<\/p>\n
Lukman admitted that the project had been struggling amid
\ntougher market competition to secure enough orders to make it
\nfeasible.<\/p>\n
\"The world is now facing an oversupply of LNG. So selling the
\ncommodity is not as easy as it was when Arun and Bontang were
\nbuilt,\" Lukman said.<\/p>\n
Indonesia, one of the world's top LNG producers, puts out a
\ntotal of 30 million tons per annum from Arun and Bontang.<\/p>\n
However, it has been facing difficulties in marketing LNG, due
\nto an increasingly competitive market with the emergence of new
\nplayers, such as Oman, Qatar and Australia.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/tangguh-posco-sign-lng-contract-1447893297",
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