BP signs $884 mln loans for Indonesia’s Tangguh

The oil major has been seeking loans to complete the project in Papua province in eastern Indonesia, which is expected to launch production in late 2008.

‘With the signing of these loan agreements, the financing for Tangguh LNG project in Papua has been completed,’ Kardaya Warnika, the head of energy watchdog, BPMIGAS, told reporters.

‘There is no doubt that this project will be finished as scheduled, which is in October, 2008,’ added Warnika, noting that more than 80 percent of the project had been completed.

In August 2006, BP signed deals with international banks for $2.6 billon in loans, part of a total of $3.5 billion in loans it needs for the $5 billion project.

Tangguh is due to produce 7.6 million tonnes of liquefied natural gas a year from two trains.

The multi-billion dollar project has secured contracts to supply 2.6 million tonnes per year (tpy) to China over 25 years, 3.7 million tpy to the US West Coast via Mexico and 1.1 million tpy to South Korea.

BP holds a 37.16 percent stake in Tangguh. The other partners include China’s CNOOC CEO.N0883.HK, which has 16.96 percent, and several Japanese firms, including Mitsubishi Corp. 8058.T, INPEX 1605.T, Sumitomo Corp. 8053.T and Kanematsu Corp. 8020.T.

For Indonesia, the world’s second biggest supplier of the super-cooled gas, the Tangguh project will help offset declining output from other LNG facilities and provide much-needed revenue.

Tangguh will take gas from the Wiriagar, Muturi and Berau blocks, which together have combined reserves of 14.4 trillion cubic feet (tcf). BP is the operator of the three blocks.

The Tangguh project is about 3,000 km (1,880 miles) east of Jakarta.

Indonesia, Asia Pacific’s only OPEC member, is far richer in gas than in oil.