BP wraps up $12bn Indonesia gas deal

The Indonesian subsidiary of the British oil giant BP yesterday said a US$12.1 billion (Dh44.44bn) deal to expand its liquid natural gas operations in the country had been given final approval.

The deal, announced during a recent state visit to London by Susilo Bambang Yudhoyono, the president, will allow BP to develop a third liquefied natural gas (LNG) liquefaction train at its Tangguh project in West Papua province, the company said yesterday.

"The plan of development for a third LNG train at Tangguh has now been fully approved," said William Lin, BP's Asia-Pacific regional president. "This is an important milestone towards realising this significant development and we appreciate the government granting full approval."

BP is one of Indonesia's largest foreign investors and holds a 37.16 per cent stake in the Tangguh plant, which began operations in mid-2009.

Indonesian Papua, in the eastern part of the archipelago, is rich in resources, drawing big investments from foreign firms.

But the local population, which is mostly ethnic Melanesian, is claiming a bigger share of the profit, which has led to a low-level insurgency by separatist groups.

Meanwhile, swaps prices for thermal coal for loading next year from Indonesia, the world's largest exporter of the fuel for electricity generation, climbed for a sixth day yesterday, according to Ginga Petroleum Singapore.

The swap for Indonesian sub-bituminous coal with a calorific value of 4,900 kilocalories per kilogramme in the first quarter of next year rose 5 cents to $62.75 a tonne on a net-as-received basis on Friday, Ginga said yesterday.

A commodity swap is a financial agreement whereby a floating price is exchanged for a fixed rate over a specified contract period.

* compiled from AFP and Bloomberg News