Tangguh environmental study approved

The Jakarta Post, Jakarta

The Minister of Environment has approved an environmental impact study for the Tangguh LNG project, owned by a consortium led by London-based BP PLC, to be conducted in Papua.

BP Migas, the country's oil and gas upstream authority, said in a statement on Friday that the study contained an analysis on the environmental and social impact of the giant project on surrounding communities as well as the consortium's strategies to oversee and manage any impact it would have on them.

The study, which was approved on Thursday, was the result of a two-year study that involved consultations with the local community.

According to the statement, the Tangguh LNG project is the first in the country to implement Decree No. 08/2000, issued by the head of the Environmental Impact Management Agency (Bapedal), which obliges project owners to consult local communities on their plans.

The project was also the first to involve representatives of local communities to disseminate information on the environmental impact study to locals, the statement said.

In working on the study, BP also sought input from or cooperated with various members of the public in Papua, formerly known as Irian Jaya, including the local government and non- governmental organizations (NGOs).

During consultations, locals voiced their concern that the project could lead to mass migration, disrupt local traditions and create conflict. They also asked that the project give work to locals.

In response to the worries and request, BP and its partners outlined in the study several strategies and special programs, including a diversified growth strategy, workforce resolution procedures, conflict resolution procedures and a social responsibility policy.

The Tangguh LNG plant is located at Berau Bintuni Bay, which contains 14.4 trillion cubic feet of proven gas reserves.

BP and its consortium partners, including Mitsubishi, Nippon Oil Exploration, British Gas, Kanematsu Corp. and LNG Japan, has planned to build two LNG trains in the plant with a combined capacity of seven million tons per year.

Chinese state-owned firm China National Offshore Oil Corporation (CNOOC) has signed a contract to buy 2.6 million tons per year for China's province of Fujian. Following the deal, CNOOC bought a 12.5 percent stake in the project.

The Fujian contract will generate a total of US$8.5 billion in sales revenue to the government throughout the contract period of 25 years, while the two trains, if running at full capacity, will generate $21 billion in revenue.

Analysts have said that Papua, which is entitled to 70 percent of the government's revenue from the project, will receive billions of dollars throughout the project.