Tangguh project has huge gas reserves

Tangguh project has huge gas reserves

TOKYO (Dow Jones): Japan's Nippon Oil Co. announced yesterday
the Tangguh liquefied natural gas project in Irian Jaya,
Indonesia -- in which it holds a stake -- has proven and probable
reserves in its three production sharing contract blocks, of 18.3
trillion cubic feet.

Following a 12-month exploration program, the Tangguh project
partners announced proven reserves are 14.4 trillion cubic feet
of natural gas, with probable reserves of 3.9 trillion cubic
feet, a Nippon Oil official said.

The Tangguh LNG project consists of three production-sharing
blocks in Irian Jaya including Muturi Block which is operated by
BG PLC (BRG) and Wiriagar and Berau blocks which are both
operated by Atlantic Richfield Co., or Arco (ARC).

Nippon Oil has a 17.144 percent stake in the Berau Block whose
combined proven and probable reserves are about 12.4 trillion
cubic feet.

Under the contract with Indonesia's state-run oil company
Pertamina, the international project partners will supply the
entire amount of liquefied natural gas from the blocks to
Pertamina, the official said.

The total proven and probable reserves of 18.3 trillion cubic
feet of natural gas at the three blocks mean that the Tangguh
project will be able to yield more than 9.0 million tons a year
of LNG, the Nippon Oil official said.

Given the successful development efforts so far, the project
partners plan to commence commercial production of 6.0 million
tons a year of LNG in 2003-2004, the official said.

Pertamina has been targeting its LNG supplies from the Tangguh
project to three main potential buyers: Japanese utilities, South
Korean utilities, and China's state-owned China National Offshore
Oil Corp.

Aiming to exploit upstream energy businesses in the Asian-
Pacific region, Nippon Oil has been involved in several major oil
and gas development projects in the region, including a
concession stake off northwestern Australia, the Yetagun gas
project in Myanmar, a liquefied natural gas project at Irian
Jaya, Indonesia, as well as the two liquefied natural gas
projects -- Tiga and Deepwater Sarawak -- in Malaysia.

"The projects that we have been engaged in are set to move
forward soon one after another... Myanmar in 2000, Malaysia Tiga
in 2001, and Irian Jaya possibly in 2003," said the Nippon Oil
official. "Those upstream projects will benefit Nippon Oil
significantly in the next century," he added.

Meanwhile Malaysia's Genting Bhd., through its subsidiary
Cairns Ltd., and British Gas Plc (BRG) said that they have raised
their stake in the Muturi production-sharing contract off the
coast of Irian Jaya, Indonesia.

The companies acquired the 5 percent stake held in the Muturi
block by P.T. Sapta Patra Wisesa for an undisclosed amount,
sharing the stake equally in proportion to their stakes in the
block.

BG Exploration & Production Ltd. now holds a 52.63 percent
stake in the block, for which it acts as operator, while Cairns
holds 47.37 percent.

Genting announced Tuesday that the Muturi block holds proven
gas reserves of 3.1 trillion cubic feet and proven and probable
reserves of 3.8 trillion cubic feet.

Muturi is one of three blocks in Irian Jaya being jointly
explored and developed by operators BG and Atlantic Richfield Co.
(ARC). Reserves in the three blocks were upgraded by engineering
firm DeGloyer & MacNaughton on July 31. The companies plan to
develop the reserves through Indonesian state oil and gas company
Pertamina's Tangguh liquefied natural gas project, scheduled to
begin LNG deliveries in 2003-2004.

Genting officials said the Vorwata field located on the Irian
Jaya blocks ranks as the third-largest gas field in Indonesia
behind the Natuna D-Alpha and Arun fields, and it may exceed Arun
in reserves as development continues.