Upstream oil and gas regulator BPMigas is asking BP Berau Ltd for a detailed cost recovery plan for construction of a third liquefied natural gas (LNG) train in Tangguh, Papua.
BPMigas deputy for planning Widhyawan Prawiraatmadja said that the
government wanted to pay for the Train 3 project in installments, to
reduce the pressure on the state budger.
“We do not want the
annual state revenue from the existing Trains 1 and 2 at the Tangguh
plant to be reduced [to pay for Train 3],” Widhyawan said last week.
UK-based
oil and gas giant BP started production on Train 1 in February 2009 and
on Train 2 in July 2009. Both trains have a maximum output of 7.6
million tons of LNG a year.
BP Berau is the local unit of British
oil and gas giant BP Plc., which holds a 37.16 percent stake in the
Tangguh plant in Teluk Bintuni, West Papua.
BP submitted its plan
of further development (POFD) for a third train to BPMigas on Sept. 10,
providing economic and technical details of the expansion plan to be
used as a foundation for building the third train.
As previously
reported, the company said that the POFD was an important step in
preparing for a final investment decision in 2014 so that Train 3 could
commence operation by late 2018.
With an estimated production
capacity of 3.8 million tons of LNG per annum (MTPA), Train 3 would
bring the total production capacity of Tangguh plant to 11.4 MTPA. The
total investment in the Train 3 by BP and its partners is estimated to
be up to US$12 billion.
According to Widhyawan, BPMigas would
approve the POFD for the third train “after all the clarifications we
need, including on the scheme for the cost charging of the project, are
submitted to us”.
Separately, BP Asia-Pacific regional president
William Lin said negotiations on the POFD have been ongoing. “We are
still having discussions with BPMigas to try to reach an agreement and
finalize the approval of the POFD,” Lin said in an email sent to The
Jakarta Post.
BP’s partners in Tangguh include MI Berau BV, which
holds a 16.3 percent stake in the plant; CNOOC Ltd. (13.9 percent);
Nippon Oil Exploration (Berau) Ltd.; (12.23 percent); KG Berau/KG
Wiriagar (10 percent); LNG Japan Corporation (7.35 percent) and the
Australia-based Talisman (3.06 percent).
All of the LNG currently
produced by the plant is exported, with 3.6 MTPA sent to Sempra Energy
in the US, 2.6 MTPA to China and 1 MTPA to South Korea.
In May,
BP, the Energy and Mineral Resources Ministry’s Oil and Gas Directorate
and BPMigas agreed that up to 40 percent of the LNG from the third train
would be allocated to the Indonesian domestic market, include a supply
of LNG for the state electricity firm PT PLN.
In addition,
starting in January, BP and its partners will sell 4 megawatts (MW) of
electricity from the Tangguh plant to PLN to be distributed to local
communities.