UK's BP and the Upstream Oil and Gas Regulatory Special Task Force (SKKMigas) signed a loan agreement worth US$3.74 billion with a consortium of international and domestic banks to fund the expansion of BP’s Tangguh liquefied natural gas (LNG) plant in West Papua.
The signing of the loan facility follows the final investment decision taken by the partners July 1 to proceed with the development of the Tangguh LNG Expansion Project.
The Tangguh expansion project, worth around $8 billion, will add a third LNG processing train, dubbed Train 3, with a production capacity of 3.8 million tons per annum (mtpa), bringing total plant capacity to 11.5 mtpa.
Domestic financial institutions involved in the agreement are state-owned lenders Bank Mandiri, Bank Rakyat Indonesia (BRI) and Bank Negara Indonesia (BNI) and infrastructure financing company Indonesia Infrastructure Finance (IIF), all committed to jointly provide $100 million of the total loan.
“This is the first time that we have involved domestic financing institutions in Indonesia for these projects and is a good start to cooperation between the finance sector and the upstream oil and gas industry. We hope that it continues further into the future,” SKKMigas Amien Sunaryadi said.
Bank Mandiri president director Kartika Wiroatmodjo said: “Upstream projects in Indonesia need investment. Although several sectors, such as coal, have decreased, the energy sector still has a good prospective. We must invest in the upstream sector in order to improve our national energy security,” he said following the ceremony.
Foreign banks involved in the Tangguh project financing comprises affiliates of Japan's Mizuho Bank, The Bank of Tokyo-Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation and Shinsei Bank.
About 20 million standard cubic feet per day (mmscfd) of gas will be dedicated solely to electrifying West Papua, amounting to electricity generation of 100 MW. The remaining product will be sold to Japan-based Kansai Electric Power.