K Power, BP to sign LNG deal

K Power, BP to sign LNG deal

JAKARTA: South Korean power company K Power is set to sign a final agreement on Tuesday with BP Plc. (BP) to buy liquefied natural gas from BP's Tangguh LNG project in Papua province.

The Oil and Gas Regulatory Body (BP Migas) said on Monday that the company will buy 600,000 metric tons of LNG a year for 20 years. The contract is valued at US$1.5 billion. Under the contract, BP will start supplying the fuel in 2006.

Last month, South Korean steelmaker Posco signed an agreement to buy 550,000 metric tons of LNG from the Tangguh project over a period of 20 years. The contract was valued at $2 billion, and Posco will start taking deliveries in 2005.

BP Migas said that since the Tangguh plant will not come fully onstream until 2007, the firm would source the LNG supplies for K Power and Posco from the Bontang LNG plant in East Kalimantan or from the spot market.--JP