EMR Minister responds to BP's Demand regarding Train 3 Tangguh

KATADATA - Energy and Mineral Resources (EMR) Minister Sudirman Said has responded the letter from BP Indonesia regarding the certainty of the expansion plan of Train 3 Tangguh project in West Papua. The answer is planned to be delivered to BP by the end of this month. 

“For train 3 [Tangguh], this November the minister responds to the letter from BP Indonesia. The answer is still being thought,” Djoko Siswanto, EMR Ministry’s upstream oil and gas business development director, said in Jakarta, Tuesday (10/11). 

BP has started the planning process, which is known as Front End Engineering Design (FEED) for Train 3 Tangguh. And from the FEED result, BP will make the final investment decision (FID) in the middle of next year to start the construction process. If all goes well, Train 3 will be operational in 2020. 

All this time, the megaproject development worth US$ 12 billion, or IDR 162 trillion, from the BP Plc’s subsidiary is left hanging without any certainty. The problem is, there are no certain purchase contracts from the buyers to purchase the liquefied natural gas (LNG) that the refinery will produce. 

Djoko said that BP’s demands in the letter are not many. The British oil and gas firm only asks for certainty in the long-term purchasing contract for the gas produced in the block. 

EMR Ministry’s oil and gas director general I.G.N. Wiratmadja Puja admitted that until now, BP Indonesia is experiencing difficulties in finding buyers from within the country; even though the government has targeted that the 40 percent of gas produced from Train 3 Tangguh will be dedicated for the domestic needs. 

The EMR Minister has also issued a regulation no. 37 year 2015 about the requirements and management to set the allocation, usage, and price of natural gas. In the ministerial regulation, the obligation for contractors to allocate 25 percent of gas production for the domestic needs has been removed. It means that if there are no more buyers within the country, contractors can export the gas. And so, BP can continue with the development of Train 3. But, this may not run as well as expected. 

EMR Ministry’s program development director Agus Cahyono said that the obligation to allocate 25 percent of gas production has indeed been removed. But, there is still Government Regulation (PP) No. 55 Year 2009 about the second change of PP 35/2004 Article 46, which still make the allocation as a mandatory task. 

“And by seeing the hierarchy of the legislation, ministerial regulation is below the government regulation, and superior regulation must not be violated by the inferior ones,” Agus added.