BP-led consortium makes progress in Tangguh project

The Jakarta Post, Jakarta

Concern about the treatment of directly affected villages, local procurements and the employment of Papuans continue to surround the development of the massive Tangguh project in Papua.

Despite these issues, the BP-led consortium has shown impressive progress in its project development, Senator George Mitchell, a member of the Tangguh Independent Advisory Panel (TIAP) said recently.

"The visit confirms to us the enormous potential benefit to the people of Bintuni, Papua, and Indonesia in general if the project meets its full potential," said the former U.S. senator.

The team -- comprising Mitchell, former Indonesian Ambassador to Australia Sabam Siagian, Lord Hannay and the Rev. Herman Saud -- has recently completed its annual visit to the project and spoke to stakeholders in the province.

The Tangguh project is located in Bintuni Bay area, while the gas fields are located in the bay and the liquefied natural gas (LNG) plant complex is being built on the south shores of the former Tanah Merah village.

Villagers in the north shore feel that the early benefits of the project are being disproportionally given to the south shore. BP has responded by developing clean water, school and health care projects, Mitchell said.

Although BP has met the requirement that 30 percent of the goods procured should be made domestically, locals want more to be purchased from their areas.

"These will be continuing efforts that will go on through the process of construction and the operation plan that BP and the government will have to manage and work at and continue to do," Mitchell said.

The team will complete a comprehensive report, which will include recommendations for BP and its partners, early next year.

The project -- the country's third LNG plant -- is estimated to cost up to US$5.5 billion, including the construction of the LNG plant and other infrastructure. The construction of the complex commenced this year and the plant is expected to start production in 2008.

The plant is estimated to produce more than 7 million tons of LNG per annum in the first phase of production. The government expects the plant to offset the declining production at existing plants in Bontang, East Kalimantan; and Arun, Aceh, which have been operating for more than 20 years.

The fields in Bintuni Bay that will feed Tangguh have certified reserves of 14.4 trillion cubic feet.