BP awards Tangguh construction to JGC
BP awards Tangguh construction to JGC
Agencies, Jakarta
British oil giant BP Plc. (BP) said on Friday it has selected a consortium including Japan's JGC Corp. to develop its Tangguh liquefied natural gas project in the remote Indonesian province of Papua.
BP will pay the consortium - which also includes U.S. firm Kellog Brown & Root and local company PT Pertafenikki Engineering - US$1.4 billion to develop two LNG processing plants, the European energy company said in a statement.
The consortium beat two other bids: one led by Technip- Coflexip SA with Chiyoda Corp. and the other by Bechtel Group Inc.
The Tangguh development - which would produce LNG for export to China and other Asian markets - is Indonesia's largest new investment. BP expects to spend around $2.6 billion on the development, including the contract awarded on Friday.
BP plans to begin construction at Tangguh next year, with the first gas due to be piped out around 2007. The fields will eventually be able to produce around 7 million metric tons of LNG a year.
The project suffered a setback when it lost out on a contract last year to supply an annual 3 million tons of LNG to China's Guangdong province from 2005. Instead, BP won a contract to sell 2.6 million tons yearly to China's Fujian province from 2007.
The company is currently trying to market its LNG to clients across Asia so that it can begin full production in 2007.
Industry experts say BP is one of two shortlisted bidders, along with Malaysia's state-owned Petronas , to supply 1.1 million tons of LNG a year to Posco and SK Corp. of South Korea. BP also has a contract to supply about 1 million tons annually to the Philippines.
Indonesia is Asia's largest LNG exporter, with long term contracts with Japan, Taiwan, South Korea and China.
It has reserves of 170.3 trillion cubic feet. Export revenue from LNG and liquefied petroleum gas in 2000 was $7.2 billion.
It also hosts a large facility in Aceh which is run by Exxon Mobil Corp. BP said the project "is expected to play a crucial role in maintaining Indonesia's global leadership position in the LNG industry."
BP has taken a new approach to developing the field, meeting with local leaders to avoid the kind of social opposition that has plagued other foreign energy investments in Indonesia.
But in trying to bring social benefits to Papua - Indonesia's least-developed province - the company has been hampered by the project's long lead time and setbacks in lining up buyers for its gas.