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BP and PLN gas agreement triggers Tangguh Expansion Project

BP to go for FEED on Indonesia Tangguh LNG Train-3

2B1st_Project_Smart_Explorer_Sales_Pursuit_ToolThe UK-based major company BP and its partners China National Offshore Oil Corporation Muturi Ltd (CNOOC), MitsubishiInpex Berau BV (MitsubishiInpex), Nippon Oil Exploration Berau Ltd ( Nippon Oil), KG Berau Petroleum Ltd (KG Berau) in joint venture with KG Wiriagar Petroleum Ltd (KG Wiriagar), Indonesia Natural Gas Resources Mutiri Inc. (Indonesia Natural Gas Resources) and Talisman Wiriagar Overseas Ltd (Talisman), have signed an agreement with the Indonesia national electrical utility company PT. PLN (Persero) for the supply of 1.5 million tonnes per year (t/y) of liquefied natural gas (LNG) out of the third LNG train planned in the Tangguh Expansion Project in the Papua Province of Indonesia.

BP_Tangguh_Expansion_Project_LNG_Train-3_MapFor Indonesia this agreement is critical as it will help to convert $10 billion transportation fuel into gas for the high speed diesel engines in trains, trucks and ships.

In addition it will produce the equivalent of $9 billion electricity revenues.

Valid until 2033, this agreement represents for BP and its partners 40% of the capacity of the third LNG train planned in Tangguh designed for a capacity of 3.8 million t/y of LNG.

BP had submitted this Tangguh Expansion Project to Indonesia Authorities as early as August 2012, but offshore gas production had to be built up to supply this Tangguh Train-3 and an agreement had to be found on the gas price.

BP Tangguh LNG Train-3 in competitive FEED

Expecting to execute the Tangguh Expansion Project on fast-track as soon as an agreement could signed, BP and its partners had decided from start to organize a competitive front end engineering and design (FEED).

With this concept, no bid is called for the award of the engineering, procurement and construction (EPC) contract, saving one year of time from FEED to full completion.

BP_Tangguh_LNG_Third-TrainBut in this scenario, the teams in competition had to include local contractors associated with international engineering companies in order to guaranty the local Authorities the required local content.

In June 2013, BP and its partners qualified three consortia which could meet the minimum requirements to be invited to bid (ITB) for the competitive FEED of this onshore part of the Tangguh Expansion Project.

From these three teams, BP and its partners MitsubishiInpex, CNOOC, Nippon Oil, KG Berau, Indonesia Natural Resources and Talisman, selected only two to perform Tangguh LNG train-3 FEED work.

The selected joint ventures of engineering companies and local contractors are expected to submit their basic design and recommendations for the EPC phase by end of 2014 in order to make the final investment decision (FID) and start the first shipment by 2018.

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