Promising giant Tangguh LNG project launched
Promising giant Tangguh LNG project launched
Nethy Dharma Somba and A'an Suryana, The Jakarta Post, Jakarta
President Megawati Soekarnoputri officially opened the giant
Tangguh liquefied natural gas (LNG) project in Papua on Thursday,
promising the local administration huge revenues in the future.
Operated by Anglo-American energy giant BP, construction of
the first two processing trains would start in the middle of 2003
with a combined capacity of seven million tons of LNG per year.
Production will start in 2007, with most of the output to be
exported.
In September, BP and its consortium partners won a contract to
supply 2.6 million tons of LNG annually to China's Fujian
province for 25 years.
Official estimates are that the Fujian contract alone will
generate US$8.5 billion over the 25 years, while the two
processing trains have the potential to generate a total of $21
billion over the same period.
The revenue will be shared by the central government, the
Papua province and BP and its consortium partners.
Under a production sharing contract, BP and its partners would
keep 30 percent of all revenue and give the remaining 70 percent
to the government.
According to the Intergovernmental Fiscal Balance Law No.
25/1999, the central government has to hand over 30 percent of
the revenue to the Papua province.
There is no exact figure on how much money Papua would obtain
from the project, but according to one estimate, the province
would obtain at least $1 billion in revenue from the Fujian
contract alone.
This revenue could jump to more than $3 billion if the plant
runs at full capacity.
The province, home to 2.3 million people, is rich in mineral
resources but is still one of the poorest parts of the world.
Most of the money generated from the province was shipped to
Jakarta during the 32-year rule of former president Soeharto.
U.S.-based Freeport McMoran operates a vast gold mine in Papua
also.
During the ceremony in the Papua capital of Jayapura, Megawati
said the national project would contribute to the wellbeing of
the Papuans.
She urged the provincial administration to avoid corruption
and wisely use the revenue from the project for the welfare of
the people.
The inauguration ceremony was attended by Papua Governor Jaap
Solossa, the British and Chinese ambassadors to Indonesia,
Minister for Energy and Mineral Resources Purnomo Yusgiantoro and
10 other cabinet members.
It was witnessed by about 2,000 people, mostly Papuans.
The Tangguh LNG project will also help create huge employment
opportunities and accelerate the development of the local
economy.
Located in Berau Bintuni Bay area of the Manokwari regency,
the Tangguh gas fields contain 14.4 trillion cubic feet (432
billion cubic meters) of proven reserves, and 18.3 trillion cubic
feet of proven and probable reserves.
The project will become the country's third LNG center after
the Arun LNG plant in Aceh and the Bontang plant in East
Kalimantan.
It is expected to help Indonesia become the leading LNG player
in Asia.
The LNG centers in Bontang and Arun produce about 12 million
tons of LNG a year. The gas is exported to Japan, Taiwan, the
United States and South Korea.
An official at BP said the company was targeting Japan as
another major buyer of the LNG.