LNG delivery to RP starts in 2006

LNG delivery to RP starts in 2006

Dow Jones, Singapore

The state-owned oil and gas firm Pertamina expects to make its first delivery of liquefied natural gas from the Tangguh field to the Philippines in late 2005 or early 2006, a BP Plc. official said Monday.

BP holds a 50 percent stake in the Tangguh gas field project and production is slated to begin in late 2005 or early 2006.

Satya W. Yudha, BP Indonesia's vice president for government and public affairs, said Monday that Pertamina and Philippine company GN Power signed a letter of intent in early November. Under the terms, the Philippine company will import 1.3 million metric tons a year of LNG from the Tangguh field.

Yudha said the LNG sales contract with GN Power will be for a period of 15 to 20 years. He declined to comment on the pricing terms saying they were confidential.

GN Power will use the gas for power generation, he added.

"(GN Power) is our first Tangguh gas buyer," Yudha said. "Once production comes onstream, we'll be exporting LNG to the Philippines."

Tangguh, located in the northwest part of Irian Jaya, holds 18.3 trillion cubic feet of proven gas reserves.

With two LNG processing trains launched, the Tangguh plant will be producing 3 million tons of LNG annually starting late 2005 or early 2006.

By then, Yudha said the Philippines is likely to have constructed a LNG receiving terminal, where the Tangguh gas will be delivered.

The Philippine government has said it is likely to decide early next year whether or not to build a receiving terminal in Bataan.

Construction of the LNG terminal will be part of the Philippine government's efforts to reduce its dependence on imported crude oil and raise natural gas consumption following the start of production from its domestic Malampaya gas field in September.

State-owned Philippine National Oil Co. earlier last month said it may also seek to import LNG from Pertamina to fuel an ethylene cracker and power plants.

BP and Pertamina are also hoping to sell Tangguh LNG to China. BP and Pertamina are competing with LNG suppliers in Qatar, Russia and Australia to supply China with 3 million tons of LNG a year for delivery beginning 2005.