BP may build more LNG processing units at company's Tangguh plant

Ika Krismantari, The Jakarta Post, Babo, Papua

Amid surging domestic and foreign demand, the Indonesian subsidiary of Anglo-American energy giant BP is considering constructing more liquefied natural gas (LNG) processing units at the company's Tangguh plant in Papua.

Tangguh project executive vice president David Clarkson said here Tuesday the company had set up a special team to study the possibility of new trains, as LNG production lines are called, at the existing plant.

"We have determined a site that can be used for up to eight trains," he told journalists visiting Tangguh.

Clarkson said the new trains would be built to increase LNG production from two other trains currently nearing completion.

"We are concentrating on getting these (two trains) finished. We are also looking at further development and opportunities for building more trains," Clarkson said.

BP began construction of the two trains in March 2005. The first is expected to begin commercial operation in January 2009 and the second is to come online five months later. As of September, the project stands 82 percent completed.

Tangguh will sell LNG to four overseas buyers -- China's Fujian (2.6 million tons a year), South Korean K-Power and Posco (1.11 million tons a year) and Sempra Energy on the western coast of Mexico (3.6 million tons a year).

Energy and Mineral Resources Minister Purnomo Yusgiantoro has said he would like to see BP sell LNG from the trains under consideration.

Upstream Oil and Gas Regulatory Agency (BPMIGAS) chairman Kardaya Warnika has said that some domestic companies -including state-owned electric company Perusahaan Listrik Negara (PLN) and state gas distributor Perusahaan Gas Negara (PGN) -- have shown interest in buying gas from Tangguh.

In response, Clarkson said BP had not yet decided where it would sell LNG from the planned trains. "We still want to see where the best business opportunity is."

Tangguh is a major multinational project with a lifespan of more than 30 years that exploits gas fields in the rugged, mountainous Bintuni Bay region. The gas fields, with proven reserves of 14.4 trillion cubic feet, were discovered in the mid-1990s.

The project's operator is BP Berau Ltd, which also owns a 37.16 percent stake in the project. The other owners are China's CNOOC (16.9 percent), MI Berau (16.30 percent), Nippon Oil Exploration of Japan (12.23 percent), KG Berau (10 percent) and LNG Japan Corporation (7.35 percent).

Meanwhile, BP group reported Tuesday a 29 percent slump in third-quarter net profit due to higher maintenance costs and outages at key refineries.

The company posted a net profit of US$4.4 billion for the three months ending Sept. 30, down from its $6.2 billion profit for the same period in 2006. Revenue rose 2.7 percent to $72.6 billion.