Tue, 13 Jun 2000

BP Amoco says Tangguh project to benefit locals

BALTIMORE, United States (JP): Oil and gas company BP Amoco promised that its planned Tangguh liquefied natural gas (LNG) project in Irian Jaya would bring benefits to the locals.

"We are sure the citizens and communities of Irian Jaya will benefit from the project along with the Indonesians.

"The revenue eventually flowing into Irian Jaya from the project will be significant and the challenge will be to improve the living standards, health and education of the people," company vice president John C. Gore said during a meeting with President Abdurrahman Wahid in Baltimore, Maryland, on Sunday (local time).

Gore made the statement amid growing demands from the residents for larger shares in the revenues from the development of their natural resources.

Many oil and gas companies operating in the country have often been criticized for their small contributions to the people living around their operating sites.

BP Amoco has become the majority shareholder in the Tangguh LNG project after recently acquiring Atlantic Richfield Company (ARCO), which was the lead consortium of the project.

Gore, who led BP Amoco's four executives in the meeting, also expressed gratitude for the President's personal interest and active involvement in finding long-term export markets for the Tangguh gas.

Gore cited that Wahid had declared Tangguh was Indonesia's priority LNG project and he consistently championed the project in his discussions with Asian heads of state.

He also thanked the Minister of Mines and Energy and the Minister of Foreign Affairs for actively marketing the project.

The Indonesian government together with state oil and gas company Pertamina are approaching several countries, including China, to buy Tangguh LNG.

The project will be built near several gas fields in the Wiriagar, Berau and Muturi areas with a total certified proved and probable reserve of 18.3 trillion cubic feet (tcf).

Gore said the initial investment for the project could reach some US$2 billion, potentially leading to over $4 billion to $5 billion in the longer term.

Indonesia currently has two LNG production centers, which are respectively located in the Arun area in Aceh and the Bontang area in East Kalimantan.

Gore said BP Amoco together with ARCO have been operating in Indonesia for 30 years as a production sharing contractor to Pertamina, and investors in the country's petrochemicals and coal industries.

Together with its partners, the BP Amoco-ARCO combination has spent over $7 billion in Indonesia.

BP Amoco now produces 10 percent of Indonesian oil output, supplies 65 percent of Java's gas needs and generates $1.3 billion per year in revenue.

BP Amoco also has a 50 percent stake in the country's largest coal mining company PT Kaltim Prima Coal in Sangatta, East Kalimantan.

During the meeting with the President, BP Amoco executives expressed the company's commitment to the highest ethical standards; partnership with Pertamina, the Indonesian government, contractors and non-governmental organizations; active engagement with the local communities; environmental protection and good treatment of employees.

Wahid, who is on a five-day visit to the United States for a medical checkup, also met with members of the U.S. Chamber of Commerce on Sunday in Baltimore and planned to meet rating agencies and the top management of giant Internet firm American Online (AOL) on Monday evening in New York. (byg/jsk)