BP looking for other LNG markets aside from China

JAKARTA (JP): BP Indonesia, a unit of the British-American oil and gas company BP Plc., said aside from China, it was also looking for market opportunities in the United States, South Korea and Japan for its Tangguh liquefied natural gas (LNG) plant in Irian Jaya.

"Aside from China, we are looking for chances to market our LNG products in California, South Korea and Japan.

"But, thus far only China has shown clear prospects," company vice president for government and public affairs Satya W. Yudha said.

He noted that BP was optimistic to win the future tender for the contract to supply LNG to the world's largest nation given the numerous advantages possessed by Indonesia as well as BP over other competitors.

One of the advantages, he said, was the fact that BP had been selected to build the LNG receiving terminal in the southern Chinese province of Guangdong.

"So far, China has given positive signals that it is satisfied with our work so far in building the terminal at the Guangdong LNG plant," Satya said following a press conference on BP's world energy review.

China is planning to hold a tender to buy three million tons of LNG per year for the Guangdong province. It will be the country's first LNG import.

Among Indonesia's competitors are Qatar, Malaysia, Brunei, Australia, Iran and Russia.

He said BP had recently sent officials to China to accompany Minister of Energy and Mineral Resources Purnomo Yusgiantoro and top officials from state oil and gas company Pertamina to demonstrate BP and Indonesia's strong interest in the Chinese LNG supply contract.

The LNG price BP had offered China was competitive compared with other contenders during the visit, he said, but he did not specify.

Should China chose the Tangguh LNG plant in the bidding, BP was ready to sell to Chinese state oil and gas company China National Overseas Oil Corporation about 5 percent of its stake in the gas reserves that will supply the Tangguh LNG plant, Satya said.

BP owned 50 percent stakes in the Wiriagar, Berau and Muturi production sharing contract (PSC) blocks, which will provide the Tangguh project with natural gas.

BP and its partners have found proven gas reserves of 14.4 tcf in the blocks.

Satya said BP Indonesia had allocated between $3 billion and $4 billion to complete the Tangguh project, adding that the firm had spent about $500 million on the Tangguh project up until 2000.

Aside from the Tangguh LNG project, Satya said, BP was also planning to develop the Terang Sirasun gas fields on Madura Island in East Java, this year.

The development of the gas fields was important to maintain BP's gas supplies to buyers in East Java, including gas distribution company PT Perusahaan Gas Negara (PGN) and state- owned chemical firm PT Petrokimia Gresik.

Thus far, BP supplies the East Java buyers with natural gas from its nearby Pagerungan field but gas reserves at the field have been dwindling.

"If we don't start the construction of the Terang Sirasun project this year, our customers will have a shortage in LNG supplies starting 2004," he told the Jakarta Post.

He noted however that the government had yet to issue the permit for the development of the Terang Sirasun gas project.

Satya said that BP had allocated about US$300 million to develop the Terang Sirasun field, which contained proven gas reserves of about 1 trillion cubic feet (tcf). (05)