Amoco to splurge on Tangguh gas fields

BP Amoco plc, the world's third-largest publicly traded oil company, will spend about $US2 billion ($A3.7 billion) developing Indonesian gas and oil fields, aiming to sell the natural gas to China.

Most of the money will be spent on the Tangguh gas deposit in the eastern-most province of Irian Jaya. London-based BP aims to start pumping gas from Tangguh in 2005.

"In Tangguh, this country has one of the world's great, yet undeveloped gas resources with over 20 trillion cubic feet of high-quality gas," John Browne, the company's chief executive, told the Indonesian Oil, Gas & Energy Conference & Exhibition in Jakarta.

BP Amoco hopes to win a contract to supply three million tonnes of liquefied natural gas from Tangguh to China, as the country plans to have natural gas meet 8 per cent of its energy needs in 10 years from the current rate of 2 per cent. BP aims to build a liquefied natural gas receiving terminal in Shenzhen, near Hong Kong.

"This ties in with BP Amoco's natural gas strategy in Asia," said Enrico Sismondo, managing director of Muse, Stancil & Co.

"They want to be in a business that will yield them good profits in the long term. Natural gas may offer just that."

Mr Browne said developing Tangguh will "provide over 5000 construction and 350 permanent operating jobs". The field will have a life of over 30 years, he said.

The Tangguh fields, developed under two separate production-sharing contracts with the Indonesian government by BP Amoco and BG Group plc, could hold as much as 23.7 trillion cubic feet of gas.

While BP Amoco operates Tangguh, Pertamina has a 70 per cent stake in the field.

BP Amoco's move to develop Tangguh coincides with Jakarta's efforts to maintain its position as the world's leading liquefied natural gas (LNG) exporter as supplies dwindle at Arun, Indonesia's second largest LNG centre.

Indonesia is trying to sell more of its natural resources abroad to rebuild the country's economy and replace revenue from dwindling oil income. The country is the only net oil importer in the Organisation of Petroleum Exporting Countries.

BP Amoco's plans to boost investment in exploring and producing oil and gas in Indonesia comes as the company is looking to reduce its exposure to Asia's unprofitable oil-refining industry.

BP Amoco said earlier this year it planned to sell its one-third stake in Singapore Refining Co, a 285,000 barrel-a-day facility on the city-state.

BP Amoco's stake is worth at least $US200 million, analysts said. (*)