BP's Tangguh Expansion Project Receives Approval For FID

BP plc (NYSE:BP) , on behalf of Tangguh Production Sharing Contract Partners, declared that its Tangguh Expansion Project in the Papua Barat Province of Indonesia has received approval for the Final Investment Decision (FID).

This FID decision follows the Government of Indonesia’s approval of the Plan of Development II in late 2012. The contracts for the project’s key engineering, procurement and construction (EPC) are anticipated in the third quarter of 2016, while the construction is expected to begin soon afterward. The project is scheduled to come online in 2020.

The scope of the project includes construction of a third LNG process train (Train 3). The production capacity will also be augmented by 3.8 million tons per annum (mtpa), thereby increasing the total plant capacity to 11.4 mtpa. This apart, the project has two offshore platforms, 13 new production wells, an expanded LNG loading facility and supporting infrastructure.

The Tangguh Expansion Project will be vital for fulfilling the growing energy demand of Indonesia. Notably, Indonesian state electricity company PT. PLN (“Persero”) will purchase 75% of the Train 3 annual LNG production. The remaining volumes are under contract with Japan-based Kansai Electric Power Company, the other foundation buyer for Train 3.

The Tangguh Expansion Project will also contribute substantially to the economic growth of Indonesia and the Papua Barat Province. In addition, the project is expected to create 10,000 valuable jobs over its tenure.

Currently, Tangguh Expansion Contract is supporting progress through its several community development programs and supplying the much-needed electricity to Teluk Bintuni Regency. Train 3 will boost these initiatives with a portion of the gas dedicated for the electrification of Papua Barat, and further development of Tangguh’s Papuan workforce to meet the 85% Papuan skilled workforce commitment by 2029.

Other players from the energy sector that are worth considering include Braskem S.A. (NYSE:BAK) , FutureFuel Corp. (NYSE:FF) and ReneSola Ltd. (NYSE:SOL) .

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