04 July 2016
London-based BP, one of the world’s leading oil and gas companies, submitted its final investment development decision to expand the Tangguh liquefied natural gas (LNG) facility (the Train III project) in West Papua, Indonesia. According to a statement from BP, this decision will create 10,000 new jobs, boost the local economy in West Papua and will contribute to meet Indonesia’s energy needs. Construction is scheduled to start in the fourth quarter of 2016 and is targeted to be completed by 2020.
The Tangguh expansion project involves the construction of an additional LNG process train (Train 3) and is designed to add 3.8 million tons per annum (mtpa) of production capacity to the existing facility. After completion of Train 3 the total plant capacity at Tangguh will reach 11.4 mtpa. The expansion project includes two offshore platforms, 13 new production wells, an expanded LNG loading facility as well as additional supporting infrastructure. Construction of Train 3 is estimated to require some USD $8 billion worth of funds. Initially, the investment was estimated at USD $12 billion but due to the decline in global oil prices, the company can manage to adjust engineering, procurement and construction (EPC) services.
Indonesia’s state-owned electricity company Perusahaan Listrik Negara (PLN) is the largest buyer of the Tangguh expansion project’s output. PLN will buy 75 percent of LNG produced by Train 3. The remaining output of the additional facility will be sold to Japan-based Kansai Electric Power Company.
Indonesian authorities warmly welcomed the news that BP submitted its final investment development decision. Sudirman Said, Indonesian Minister of Energy and Mineral Resources, said the expansion project (Train 3) is a key project for Indonesia as the nation is in need of energy. Recently, the government announced its ambitious 35,000 MW program (aiming to add 35,000 MW to the nation’s power capacity by 2020). Moreover, the government supports direct investment in eastern Indonesia in order to see a more just economy (traditionally investment – both foreign and domestic direct investment – tends to be focused on the islands of Java, Bali and Sumatra, all located in the western part of the country).
The Tangguh LNG facility is located in Teluk Bintuni Regency (West Papua). It currently still consists of offshore gas production facilities that supply two 3.8 mtpa liquefaction trains. The project is operated by BP Berau Ltd on behalf of the other production sharing contract partners. BP Berau Ltd and its affiliates in Indonesia hold a 37.16 percent stake in the project, followed by MI Berau B.V. (16.30 percent), CNOOC Muturi Ltd. (13.90 percent), Nippon Oil Exploration (Berau) Ltd. (12.23 percent), KG Berau Petroleum Ltd and KG Wiriagar Petroleum Ltd (10.00 percent), Indonesia Natural Gas Resources Muturi Inc. (7.35 percent), and Talisman Wiriagar Overseas Ltd. (3.06 percent).