Tangguh plant may supply LNG to the U.S.

Tangguh plant may supply LNG to the U.S.

Moch. N. Kurniawan, The Jakarta Post, Jakarta

Indonesia, the world's largest liquefied natural gas (LNG)
producer, is likely to expand its market in East Asia into the
United States.

State oil and gas company Pertamina is currently negotiating
with U.S. energy company El Paso Corp to sell Indonesia's LNG
from Tangguh plant in Irian Jaya, to U.S. consumers.

Pertamina's upstream director Iin Arifin Takhyan said last
week that Pertamina was considering taking LNG from Tangguh due
to its shorter distance to the U.S as compared to other plants.

"We think we will take LNG from Tangguh because of the shorter
distance," Iin said.

Indonesia currently has two LNG processing plants: one in
Arun, Aceh province and the other in Bontang, East Kalimantan.

Currently, Pertamina, together with BP Indonesia, is
developing a third LNG plant in Tangguh, Irian Jaya, which is
expected to start production in the next couple of years.

BP Indonesia's vice president for government and public
affairs Satya W. Yudha said his company supported Pertamina's
move to market LNG from Tangguh to the U.S. in addition to China.

"We will support Pertamina in negotiations with El Paso,"
Satya told the Jakarta Post over the weekend, but refused to go
into details.

El Paso is reportedly planning to build three LNG receiving
terminals on the west coast of the United States, should it reach
an agreement with Pertamina to get Tangguh LNG.

The company has turned to Indonesia due to its relatively low
LNG prices. It will likely sell LNG from Tangguh to a number of
power plants on the west coast.

Pertamina and BP Indonesia are currently gearing up marketing
efforts to sell LNG from Tangguh to a number of countries,
including the U.S. and China.

Pertamina has entrusted BP Indonesia to participate in an LNG
supply tender in China's Guangdong province, where BP Indonesia's
parent company BP Plc had won a tender to build an LNG receiving
terminal.

If BP Indonesia wins the tender in Guangdong, which will be
announced in the last quarter of this year, the company will be
required to supply the province with about three million tons of
LNG per annum starting in 2005.

The Tangguh project will have two LNG processing trains worth
US$1.5 billion, with a combined production capacity of six
million tons of LNG per annum.

Natural gas to be processed by the Tangguh plant would be
supplied from Wiriagar, Berau and Muturi production sharing
contract blocks in Irian Jaya.

The blocks contain more than 14 trillion cubic feet of proven
gas reserves.