BP signs natural gas deal with Sempra

BP signs natural gas deal with Sempra

The Jakarta Post, Jakarta

Anglo-American energy giant BP Plc has signed a sales and
purchase agreement with U.S.-based Sempra Energy LNG Corp. to
supply up to 3.7 million tons per year of liquefied natural gas
(LNG) to Mexico from the Tangguh field in the province of Papua,
Indonesia.

BP, which signed the 20-year contract as a partner of
Indonesian oil and gas regulator agency BPMigas in the Tangguh
LNG project, will start supplying LNG in 2008 to Sempra's
proposed LNG import and re-gasification facilities in Baja
California, Mexico.

"Working in collaboration with BP, the agreement represents
the first long-term LNG supply from Indonesia to the North
American market," BPMigas said in a statement on Monday.

The signing is a significant step forward for the Tangguh LNG
project, as it will mean that the project has enough sales
commitments to start the plant construction, which is slated to
be completed in 2008.

The project is now seeking financing from a consortium of
foreign banks, estimated to cost about US$5 billion, of which BP
and partners will cover $2 billion with the remaining $3 billion
expected to come from lenders.

The contract with Sempra is the fourth for the Tangguh
project. BP has previously signed deals with South Korea's steel
maker POSCO and power firm K Power, and China's Fujian province
to supply LNG starting 2005 and 2007, respectively. BP is
seeking supply from other producers to meet the export
commitments while its plant is under construction.

Indonesia has been struggling to maintain its position as a
top LNG producer in the increasingly competitive market. Last
year, Indonesia exported 26.5 million tons of LNG to Japan, South
Korea, and Taiwan.

Indonesia has already two LNG plants, located in Arun, Aceh
and in Bontang, East Kalimantan.

Located in Berau-Bintuni region in Papua province, the Tangguh
LNG plant is expected to produce 8 million tons per annum in the
first phase of production. Gas fields that will feed the plant
have certified reserves of 14.4 trillion cubic feet (TCF).

BP holds a 37.16 percent stake in the project in partnership
with MI Berau BV (16.30 percent), CNOOC Ltd (16.96 percent),
Nippon Oil Exploration Berau (12.23 percent), KG Companies (10.0
percent) and LNG Japan Corporation (7.35 percent).