BP to Invest Additional US$ 8 billion in Tangguh Train 3

President Joko Widodo’s meeting with BP Chief Executive Officer in the UK last week had great results. One of the world’s largest oil and gas companies has expressed its interest in increasing its investment in Indonesia by US$ 8 billion or around IDR 105 trillion.

“BP’s investment in Tangguh is to fund the expansion of the oil and gas project in Bintuni Bay, Papua,” said Head of the Investment Coordinating Board (BKPM) Franky Sibarani at the State Palace some time ago.

BP is constructing Tangguh Train 3 refinery in Bintuni Bay, to supplement the other two refineries that have commenced operations. The BKPM noted that the Train 3 project is currently being tendered and will enter the construction phase in June.

BP has only expressed an interest in increasing its investment and has yet to apply for a permit in principle from the BKPM. Franky also said that he does not know exactly when the company will actually increase its investment. “It depends on the company’s business plan,” he said.

BP Indonesia did not deny the planned increase in its investment. The company’s Country Head said that BP is currently finalising the Train 3 project, after completion of the EPC (engineering, procurement, and construction) process at the beginning of the year. (See: Bintuni Bay Industrial State Hampered by Tangguh’s Gas Supply)

“We will continue to cooperate with the Tangguh’s partners and the Indonesian government, particularly on the progress of the Train 3 project, which will enter the final investment decision (FID) phase this year,” he said.

With the completion of the FID this year, the project is expected to commence production by the middle of 2020. Agreements are already in place with domestic buyers to purchase gas from the plant.

BP Berau and Perusahaan Listrik Negara (PLN) finally agreed to amend the gas sales and purchase agreement from the Tangguh  plant. Under the revised agreement, PLN will purchase more than half of the Tangguh Train 3 production.

The amendment was signed by the two companies on 15 April, witnessed by the Minister of Energy and Mineral Resources Sudirman Said.

Sudirman immediately approved the revision, which had previously agreed upon on 17 October 2014. He said that the revised contract aims at securing long-term gas supply for gas-fired power plants.

“We need to move fast to secure gas supply for power plants. We must avoid any shortages,” he said during his speech at the Energy Ministry in Jakarta on Friday (15/4). (Read: Two Tangguh Gas Buyers Reduce LNG Orders)

The gas from Tangguh could eventually be used to fuel the 188 MW Arun power plant, the 800 MW Belawan power plant, two blocks of the 1,300 MW Muara Karang power plant, and three blocks of the 2,000 MW Priok power plant.