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.