INDONESIA - Pepua - BP.

The frontier province of West Papua (ex-Irian Jaya), where an exploration well can cost up to $40m, has become an important gas zone. Arco, taken over by BP in 1999, found gas fields in the Wiriagar and Berau Blocks in Bintuni Bay, in the west of Papua. The most important is Wiriagar Deep, a super-giant with over 13 TCF of gas in a Pre-Tertiary formation which only has 10% CO2, found in 1995. In 1997, Arco teamed up with British Gas (BGI) which found a huge gas field at Vorwata, adjacent to Wiriagar in the Muturi Block. The two fields are connected. In 1998, Arco took another two blocks off Irian Jaya. The three blocks - Wiriagar, Berau and Muturi - make up the Tangguh LNG project. In mid-2001, the Japanese trading giant Mitsubishi Corp. bought Occidental Petroleum's 22.856% stake in Berau for $480m which gave it 16.3% in Tangguh LNG. This gave Tangguh a big boost, with Mitsubishi having pioneered LNG imports into Japan. That followed an increase in BP's stake in Tangguh from 40 to 50% through acquisition of Malaysian player Cairns Ltd for an immediate lump sum of $107m and a deferred future share equivalent to about 3% of Tangguh net profit. Cairns, a unit of Malaysian investment holding and management company Genting Berhad, holds 9.7% in Tangguh. Now, shares in Tangguh's proved and certified 14.4 TCF of gas reserves, derived from the three PSCs are: BP 40%, Mitsubishi 16%, Nippon Oil 12%, BGI 11%, Kanematsu Gosho (KG) 10%, Cairns 10%, and Nissho Iwai 1%. BP will receive 47% of Tangguh net profit after the 3% payment to Genting. Partnerships in the three PSAs are as follows:

Wiriagar: BP (operator) 80%, KG 20%. Berau: BP (operator) 48%, Mitsubishi 22.856%, Nippon 17.144%, and KG 12%. Muturi: BGI (operator) 50%, Cairns 45% and Nissho Iwai 5%.

The proven, probable and possible gas reserves of the three blocks now are close to 24 TCF (see background in Vol. 56, No. 10). China's CNOOC, which agreed to import 2.6m t/y of the LNG from 2007, will have a stake in the Tangguh export project (see Gas Market Trends No. 11).