Supply contracts needed for Tangguh

The Tangguh liquefied natural gas (LNG) project being developed by a consortium led by British firm BP PLC in the Bird's Head area of Papua is expected to become the country's third LNG plant, after ones in Arun and Bontang.

Aside from boosting Indonesia's LNG output, the project also will generate revenue for Papua, one of the poorest region of the country.

The plant is designed to have an installed capacity of seven million tons of LNG per year, but thus far it has only secured a contract to supply 2.6 million tons a year to China's Fujian province starting from 2007.

Efforts to secure additional contracts have thus far failed, and on Friday it lost the bid to supply LNG to the Tatan power plant owned by Taiwan's state-owned Taiwan Power Co., or Taipower.

The government is still working to help BP secure additional contracts, including from Japan, South Korea, the Philippines and Mexico, so development of the plant can begin next year as scheduled, Minister of Energy and Mineral Resources Purnomo Yusgiantoro said on Wednesday.

Purnomo said BP had told the government it was ready to kick off development of the plant.

The International Advisory Panel on the Tangguh Project -- comprising former U.S. senator George Mitchel, Lord Hannay of Britain, Rev. Herman Saud, the head of the Evalengical Christian Church in Papua, and former Indonesian ambassador to Australia Sabam Siagian -- recently made an annual visit to the site to study the social, economic and ecological impacts of the project.

They found that BP had made preparations to begin work on the project. -- JP