BP to Expand Indonesia Gas Plant

BP is believed to be working on a plan to hike four times the size of its $5 billion Tangguh liquified natural gas facility in Indonesia.

The massive expansion of the plant is aimed at taking advantage of future growth in Asia and forms part of BP CEO Bob Dudley's vision to put in place projects by Shell worth billions of dollars having adequate potential to generate long term cash and profits and fund growth in other segments, Bloomberg said on Wednesday.

According to Gde Pradnyana, a spokesman for Indonesian energy regulator BPMigas, the company has been engaged in preparing space for eight trains at Tangguh as against the existing two production lines with a combined capacity of 7.6 million metric tons of LNG a year.

"You can speculate there are still a lot more reserves to be discovered", Pradnyana said.

Growth in demand for LNG in the growing economies of China and India as well as Japan’s higher imports following the Fukishima nuclear disaster were both cited as potential reasons for the British supermajor to mount such a significant expansion.

Gas resources for a third unit at Tangguh are “almost confirmed” and a decision to build the 3.8 million-ton-a-year train may be made this year, the spokesman said.

As for plans for a fourth unit, he said: “We all believe that the resource is there, the potential is there, we just need to do a bit more work.”

BP spokesman David Nicholas however clarified that the company presently has no current plan to quadruple capacity but confirmed it was "looking at the potential" for the site.

"We have two trains up and running at the moment and we're making good progress towards a third train", he said.

Indonesia is the world’s second- largest exporter of LNG after Qatar, but needs new supply to replace shipments from ageing plants in Aceh and Kalimantan provinces.

In May, Dudley announced BP would invest $10 billion in Indonesia to boost output at Tangguh, as well as expand into coal-bed methane, over the next decade.