BP Plans to Invest $10 Billion in Indonesia in Next 10 Years

BP Plc (BP/) will invest $10 billion in Indonesia in the next 10 years to boost output at the Tangguh liquefied natural gas plant and expand into coal-bed methane, Chief Executive Officer Bob Dudley said. 

London-based BP plans to build a third LNG production line, or train, at Tangguh and possibly a fourth, Dudley told reporters after meeting Indonesia’s President Susilo Bambang Yudhoyono in Jakarta today. BP, which has operated for more than 35 years in Indonesia, has invested $7 billion in the country to date, he said. 

Indonesia, Southeast Asia’s biggest crude producer that turned into a net importer after output declined due to aging fields, is trying to lure investment in its energy industry and switch to natural gas to ease dependence on imports. 

“Our focus in investment is Tangguh in Papua, which we know we handle with great care as that’s already a very large project for BP,” Dudley said. BP will submit a proposal to the Indonesian government in the next two months for the construction of the third train.

Production Capacity

BP will develop coal-bed methane blocks in Kalimantan, on the Indonesian side of Borneo island, Dudley said. BP said in April it had signed four coal-bed methane production sharing contracts in the Barito basin. 

The Tangguh LNG plant in West Papua province currently has two trains with a combined production capacity of 7.6 million metric tons of LNG a year, London-based BP said on its website. 

The $5 billion Tangguh project, which shipped its first LNG cargoes in 2009, has multi-year contracts to supply 2.6 million tons a year to China, 1.15 million tons a year to South Korea and an agreement to supply as much as 3.7 million tons a year to Sempra Energy, BP said.

LNG is natural gas chilled to liquid form for transportation by ships to places not connected by pipelines. Indonesia is the world’s largest LNG exporter after Qatar and Malaysia. Source: Bloomberg