Indonesia, BP Sign 20-Year Contract Extension for LNG Operations in Papua
(Reuters) — Indonesia has extended by 20 years a production sharing contract (PSC) with BP and its partners for Berau, Muturi, and Wiriagar working areas in West Papua, government officials and the company said on Friday.
The extension would allow BP and its partners to operate on the fields until 2055, BP said in a statement. The working areas supply to Tangguh LNG plant.
BP is trying to increase Tangguh's production capacity from the current 7.6 million tonnes per annum (MTPA) to around 11.4 MTPA by adding a new, Train-3 plant which is expected to come onstream in March 2023, SKK Migas said earlier this year.
Indonesia usually extends a PSC two to 10 years before it expires, but BP needed to secure a longer contract to guarantee its long-term investment plan, according to Dwi Soetjipto, chairman of Indonesia's upstream regulator SKK Migas.
"In order to maintain production for LNG Train-3, BP is committed to conducting further exploration activities at several sites ... BP also committed to preparing a 2x90 MMscf/d gas pipe to support industry development in Papua," said Dwi.
Output from LNG Tangguh plant is estimated to drop before 2030 if there is no new exploration.
Energy minister Arifin Tasrif said Tangguh gas production is needed to supply Indonesia's increasing energy demand as the country will rely on gas while transitioning to cleaner energy.
Separately, Indonesia also said on Friday that development of BP's Ubadari field, also in West Papua, and its carbon capture, utilisation and storage (CCUS) project would be included in the country's list of National Strategic Projects.
Wahyu Utomo of the Acceleration of Priority Infrastructure Committee told reporters that such CCUS projects are needed for the country's energy industry to become cleaner and that Indonesia would benefit from the technology.
Indonesia usually puts important projects in the National Strategic Projects to accelerate their realisation, Wahyu said.
Projects in the list sometimes get special treatment such as tax breaks.
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