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Tangguh LNG cargo might ship to Fujian this week

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, Oct. 27 -- The BP PLC-led Tangguh gas liquefaction plant in Indonesia might dispatch a single cargo of LNG to China's Fujian receiving terminal this week, according to a state oil and gas official.

Raden Priyono, chairman of upstream oil and gas regulator BPMigas, said that loading is still continuing, and should be finished in time to depart before the end of this week.

BP Indonesia country head Nico Kanter said Tangguh is on track to meet revised LNG delivery commitments for the rest of the year despite a leak in one of its two storage tanks. Kanter said the tank is being prepped for repairs, and would restart in a matter of days.

Two weeks ago, uncertainty over future cargoes arose when the second production facility of the two-train Tangguh facility stopped operation reportedly due to a problem in its screener.

At the time, however, a deputy at the Upstream Oil and Gas Regulator Budi Indianto guaranteed that the fourth shipment of 150,000 tonnes of LNG by the end of October to China's Fujian province, one of its contract buyers, would not be delayed.

This year, Tangguh’s shipment target was reduced to 16 cargoes from 56 cargoes set earlier as the first train had to undergo repair in its tanks (OGJ Online, Sept. 4, 2009).

According to Budi, LNG shipments from Tangguh are expected to reach 51 cargoes next year, assuming that both trains are fully operational.

Even as the Tangguh shipments will increase next year, the volume is considered modest, according to energy consultant Tony Regan of Tri-Zen International who said Indonesia is following a policy of running slowly this year and constraining volumes next year.

Regan was referring to remarks made on Oct. 8 by BP Chief Executive Officer Tony Hayward, who said that BP is taking its time in bringing the Tangguh plant into full operation because of weakness in the global LNG market.

"We have been taking a more relaxed approach to commissioning than we otherwise might have done, given a very depressed market," Hayward told journalists on the sidelines of the World Gas Conference.

So far this year, Indonesia shipped two LNG cargoes from Tangguh to South Korea and China in July, a cargo to Mexico in August and a cargo to South Korea in September.

Tangguh has long-term supply contracts with CNOOC for 2.6 million tpy for 25 years, with Posco for 550,000 tpy for 20 years, with K-Power for 600,000 tpy for 20 years and with Sempra for 3.7 million tpy for 20 years.

BP has a 37.16% interest. Other interest holders are CNOOC 13.9%, MI Berau BV 16.3%, Nippon Oil Exploration 12.23%, KG Cos. 10%, LNG Japan 7.35%, and Talisman Energy Inc. 3.06%.

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