BP Indonesia Tangguh LNG project to supply two South Korean companies

Petroleum News

BP said Aug. 14 that its Tangguh liquefied natural gas project in the Indonesian province of Papua, formerly called Irian Jaya, has been selected as the preferred supplier of LNG to two South Korean companies, SK Power Co. and Posco, the world's second largest steel maker. SK Power is 100 percent owned by SK, South Korea's largest oil refiner.

The supply contract is for up to 1.35 million tonnes per annum of LNG for a 20-year term starting in 2005. BP said the bid process to purchase LNG was the first undertaken by Korea's private sector.

Posco, which has two gas-fired power plants at steel mills in Pohang and Gwangyang in South Korea, and will construct a third power station at Gwangyang, is building an LNG terminal at Gwangyang.

The Tangguh project will have two trains at startup, and has already secured an LNG sales contract for 2.6 million tonnes per annum for the Fujian LNG project in China commencing in 2007, BP said.

BP, the Tangguh operator, has a 37.16 percent stake in the project. The other partners are: MI Berau B.V (held by Mitsubishi and Inpex) with 16.3 percent; Cnooc with 12.5 percent; Nippon Oil Exploration Berau with 12.23 percent; BG Group with 10.73 percent; KG Cos. (held by Japan National Oil, Kanematsu and Overseas Petroleum) with 10 percent; and LNG Japan (held by Nissho Iwai and Sumitomo) with 1.07 percent.

BP said the Tangguh gas fields contain 14.4 trillion cubic feet of proved and certified natural gas reserves. The planned LNG processing plant will produce 7 million tonnes per annum from two initial processing trains.