BP to develop Tangguh project in time for Fujian sale

BP to develop Tangguh project in time for Fujian sale

Dow Jones, Singapore

BP PLC will complete development of the greenfield Tangguh liquefied natural gas project in West Papua, Indonesia, in time to meet its first LNG sale to southern China's Fujian province by 2007, a company spokesman said Monday.

The "project will come onstream by 2007," in time to meet the Fujian LNG sale contract, which calls for the first LNG delivery in 2007, John O'Reilly said in response to a question by Dow Jones Newswires.

The 2007 project completion date is one year later than 2006 reported previously.

But O'Reilly stressed that it had been the plan for BP to bring the project onstream in 2007 when Indonesia announced the Fujian win in September last year.

Prior to the awarding of the Fujian contract, the Tangguh project was tipped to win a bigger US$13 billion LNG supply deal to Guangdong province. The latter was awarded instead to Australia, while Indonesia had to settle for the $8.5 billion deal.

Under the deal, BP will deliver 2.5 million metric tons of LNG to Fujian starting in 2007. The Tangguh project, when developed, is capable of producing up to 7 million tons of LNG annually, more than its sale commitment so far.

BP and its Indonesian partner, state-owned oil and gas company Pertamina, are aggressively marketing Tangguh gas to Japan so that the development of the LNG project, worth over US$2 billion, can become economically viable.

"Actual construction on (the) site of Tangguh will begin next year," said O'Reilly of the LNG project.

"Thereafter, it takes about three years (for the project to be completed)," he added.

Besides BP and Pertamina, CNOOC Ltd., a unit of China National Offshore Oil Corp., holds stakes in the Tangguh LNG project.