BP seeks loan from Bank of China, JBIC for Tangguh finance
BP seeks loan from Bank of China, JBIC for Tangguh finance
Fitri Wulandari, The Jakarta Post, Jakarta
Energy giant BP PLc is seeking US$1.3 billion in loans from
Chinese and Japanese lenders to finance the Tangguh gas project,
a senior official said on Wednesday.
Rachmat Sudibyo, the head of the Oil and Gas Upstream
Regulatory Board (BP Migas) said BP PLC was seeking loans from
the Bank of China and Japan Bank for International Cooperation
(JBIC) for the construction of Indonesia's third liquefied
natural gas (LNG) plant in the Bird's Head area of Papua
province.
"The discussion with international lenders has been resumed
after being delayed because Tangguh had not secured enough market
in the past," Rachmat told The Jakarta Post.
A consortium consisting of Japan's JGC Corp., U.S. Kellog
Brown & Root, and local company Pertafenikki Engineering won the
tender to build the LNG plant with an estimated cost of $1.3
billion, which is expected to enter into full operation in 2007.
To date, Tangguh has secured a total of 7.4 million tons per
annum of LNG, including contracts to supply 2.6 million tons per
annum to China's Fujian province, 1.1 million tons per year to
South Korean buyer (SK and Posco) and a preliminary contract to
supply 3.7 million tons of LNG to U.S.-based Sempra Energy.
Rachmat said the discussion with JBIC was in the final stages,
while discussion with the Bank of China was still in the
preliminary stages.
"But the Bank of China has shown willingness to provide a loan
for the project," Rachmat said.
BP Migas deputy head Kardaya Warnika, however, as quoted by
Dow Jones said that the Bank of China is expected to provide some
$1 billion for the project.
Jacob Kastanja, BP's Tangguh communications manager confirmed
that "the company is talking with the Bank of China and also
continuing its discussion with other potential lenders".
However, he declined to provide further details of the
discussion.
"Our financing arrangements are confidential. While we are
happy with the progress being made, we do not wish to engage in
speculation as to the outcome of our discussion or the timing of
a final decision," Jacob said in his E-mailed reply to the Post.
At present, Indonesia has two LNG plants namely Bontang in
East Kalimantan and Arun in Aceh province, which have a combined
capacity of 31.6 million tons per year.
Indonesia's natural gas reserves, both potential and probable,
stand at 178 trillion cubic feet (TCF).
The Tangguh project will provide significant revenue for
Indonesia, particularly Papua, one of the poorest regions in the
country. Under the contract, the central government will receive
70 percent of Tangguh's before-tax revenue, while Papua will
receive 70 percent of the central government's revenue share.