Huge Asian market awaits Tangguh gas: BP Amoco

Huge Asian market awaits Tangguh gas: BP Amoco

JAKARTA (JP): Oil and gas company BP Amoco Plc said on Tuesday
growing gas consumption in the Asian region gave its Tangguh LNG
gas project in Irian Jaya vast potential markets.

The head of energy analysis at BP Amoco, Andrew Barton, said
that along with China's huge gas market, the Asian region led the
world's liquefied natural gas (LNG) market, which grew by 7
percent to 8 percent last year.

"There is a tremendous potential for natural gas consumption
in Asia, because it's such a small percentage of the overall
energy mix (energy types in use)," Barton said following his
presentation of a statistical review of the global energy
industry.

The Tangguh LNG project, located in Berau Bay in Irian Jaya,
is being jointly developed by BP Amoco and state oil and gas
company Pertamina.

However, construction on the project awaits the signing of a
contract, which Pertamina and BP Amoco expect to come from China
by the end of this year.

Pertamina expects gas demand in China to reach four to five
million tons per year.

But Barton said that aside from the Chinese market, Indonesia
could sell its Tangguh gas to Taiwan, South Korea and India, as
well to Japan, its traditional market.

According to him, improving economies in several Asian
countries was boosting energy consumption, which in turn required
more power plants to meet demand.

He said the current energy mix in Asia -- the energy types
used to power electricity plants -- comprised mostly oil and
coal.

"As economies grow they will tend to build power gas stations
rather than coal," Barton said, adding as an example that 95
percent of new power plants in the United States use gas.

Gas, he said, was not only environmentally cleaner but also
cheaper compared to other energy sources. "Gas is the cheapest
way of generating power."

He said natural gas was Asia's fastest growing fuel, driven
mostly by major infrastructure projects linking gas in the Middle
East, Southeast Asia and Russia, with Asian urban centers.

In Japan, he said, the arrival of newly contracted gas from
Qatar had stimulated gas use for power and industrial
cogeneration power plants.

Whereas gas consumption in Korea and China, he said, had
outstripped their 10-year average annual growth rates of 20
percent and 5 percent, respectively.

Barton attributed the growing gas demand in Korea to the
increasing use of gas for power plants and household use.

He said that in China gas was increasingly used to replace
coal for power generation in a bid to cut air pollution in urban
centers.

He added that the completion of the gas separation project in
Vung Tau, Vietnam, had caused gas consumption to grow rapidly
from a low base.

He said that gas consumption in the world grew by at least 2.4
percent in 1999, as compared to the annual average of 1.8 percent
growth over the last 10 years.

He cited Asia, South America and Europe as among the regions
with the strongest consumption growths in 1999.

Barton said key changes in LNG trade throughout 1999 were the
emergence of Trinidad and Nigeria as major exporters, the 70
percent increase in Qatar gas exports and the increase in gas
exports from Indonesia and Malaysia, which showed 7.5 percent and
6 percent growth, respectively.

Meanwhile, BP Amoco senior external affairs officer John
O'Reilly expressed optimism that Indonesia would be able to sell
its Tangguh gas to China.

However, he stated Asia had numerous alternative markets for
the sale of the Tangguh gas, saying BP Amoco and Pertamina also
were considering seeking contracts with Korea, Japan and possibly
India.

"But China is clearly a very attractive option," he said,
adding that Minister of Mines and Energy Susilo Bambang Yudhoyono
was currently in China seeking a gas contract.

O'Reilly further estimated the Tangguh gas project would bring
in some US$60 billion over a period of about 30 years.

Pertamina expects construction of the project to begin by
2001, with its completion by 2005.

The project was first developed by Pertamina and oil and gas
company Arco, before the latter's recent merger with BP Amoco.

The Tangguh project has a proven reserve of 14.4 trillion
cubic feet. It will have an initial yearly production capacity of
two trains, the equivalent of six million tons of gas, which will
come from the Wiriager, Berau and Muturi areas.

Pertamina and its partners will invest some $1.5 billion to
develop the two trains.(bkm)