BP Plc (BP) is pondering over its plan to augment the size of its $5 billion Tangguh liquefied natural gas (LNG) plant by almost four times. The company wants to participate in the future growth of the developing nations especially Asia and is thus following the multi billion dollar model established by Royal Dutch Shell Plc (RDS.A) that goes beyond revenue generation and also supports growth in new areas.
The Tangguh LNG plant in West Papua in the east of Indonesia currently has two production lines, called “trains” by the industry people. The total capacity of these two trains is 7.6 million metric tons of LNG a year.
BP has an investment plan of around $10 billion in Indonesia for the next decade. The company mainly aims to enhance productivity and develop coal-bed methane.
Nearly 12 trillion cubic feet of gas is allocated to the first two Tangguh trains with more than 4 trillion assessed for a third planned unit. The plan for building a third train with a capacity of 3.8 million ton a year may be made later in 2011 with gas resources being almost established.
The Indonesian energy regulator known as BPMigas believes that Indonesia being the world’s second largest exporter of LNG has immense potential and many reserves are yet to be discovered. It is also preparing area for eight trains in Tangguh. Indonesia also needs fresh supply to substitute shipments from aging plants in Aceh and Kalimantan provinces.
Tangguh plant expansion would provide BP an opportunity to expand in the LNG market and at the same time feed the growing demand of LNG in India and China. With gas being the least polluting fossil fuel it has an increasing demand when all nations are trying to control pollution to support healthy economies.
For the long term, we remain Neutral on the company.
