Projects

Tangguh Expansion Project, Papua Barat

The Tangguh Expansion Project is a proposed expansion of the existing Tangguh LNG facility located on the southern shores of Bintuni Bay in Teluk Bintuni Regency of Papua Barat Province.

Project Type

Offshore gas production facilities expansion

Location

Bintuni Bay, Papua Barat, Indonesia

Operator

BP Berau (37.16%)

Estimated Investment

$8bn

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The Tangguh Expansion is an expansion project of the existing Tangguh liquefied natural gas (LNG) facility located on the southern shores of Bintuni Bay in Teluk Bintuni Regency of Papua Barat Province, Indonesia.

BP Berau (37.16%) operates the project on behalf of the other partners, including MI Berau (16.3%), CNOOC Muturi (13.9%), Nippon Oil Exploration (Berau) (12.23%), KG Berau Petroleum and KG Wiriagar Petroleum (10%), Indonesia Natural Gas Resources Muturi (7.35%), and Talisman Wiriagar Overseas (3.06%).

The offshore gas production facilities will be modified, along with the addition of an onshore LNG train with LNG liquefaction capacity of 3.8 million tonnes per year (Mtpa) as part of the expansion.

The expansion plan for the LNG plant was approved by the Indonesian Government in 2012. The project received AMDAL approval and environmental permit in August 2014. The final investment decision was taken in July 2016 and the third train was initially scheduled to become operational in Q3 2020. The project suffered delays after natural disasters rocked Indonesia in 2018 and affected the shipment of construction materials required for the Tangguh Expansion, pushing the start-up of Train 3 to the third quarter of 2021.

The expansion is facing further delays and the project partners are not expected to meet the new deadline as the ongoing Covid-19 pandemic has caused a significant reduction in the workforce due to the social distancing norms in place. The project is anticipated to witness cost overruns as a result of the interruptions.

BP signed a sale and purchase agreement with PT PLN (Persero), a state-owned power company, for 75% of the annual LNG production from Train 3. The rest of the production will be provided to Kansai Electric Power.

An estimated 10,000 jobs are expected to be generated during different phases of the project, giving a boost to both the Indonesian and Papua Barat Province economies. The project will help to meet the rising energy demand in the country as most of the produced LNG will be sold to the state electricity company.

Tangguh LNG project offshore infrastructure

Tangguh gas field was discovered in 1994. The gas for the LNG plant is sourced from six natural gas fields, including Vorwata, Wiriagar Deep, Ofaweri, Roabiba, Ubadari, and Wos.

The offshore production facilities supply natural gas to two 3.8Mtpa liquefaction trains and feature natural gas and associated liquids production, collection and transmission facilities.

Gas is procured from 14 production wells situated at two offshore platforms, VR-A and VR-B, at the Vorwata gas field. The onshore LNG plant receives the produced gas via two subsea pipelines where it is purified and processed before being exported by LNG tankers.

The multi-phase subsea pipelines are 19km and 18km-long and 24in in diameter. Power supply, control and chemical injection are managed from onshore.

Tangguh Expansion Project details

The expansion project includes the construction of two offshore platforms, 13 new production wells, an expanded loading facility, a new LNG jetty, and associated infrastructure. With the addition of the third train, the production capacity of the LNG plant will increase by approximately 50% to 11.4Mtpa.

An increase in the Vorwata gas field reserves to 16.9 trillion cubic feet (Tcf) will benefit the expansion project with the potential reserves of Wiriagar Deep, Roabiba, Ofaweri and Ubadari fields expected to increase the total reserves to 20.8Tcf.

An expandable hub platform will be installed at the field for easy mixing of liquids from the fields and to enable processing from any future tie-ins. Infill wells from the existing two platforms will provide additional feed gas to the two LNG trains.

A fourth LNG train is also planned to be constructed as part of the future development and will comprise nine offshore platforms with 16 well slots each, nine subsea pipelines, supporting facilities, and a condensate tank.

Integrated subsea power and fibre-optic cables will be installed on the ring-main topology as part of the offshore development and will provide electricity, communication and control for platform operations.

Financing

The project is estimated to cost $8bn and will be financed by both international and domestic banks. JBIC will provide a direct loan of $1.2bn, while ADB will grant $400m. A consortium of international commercial banks will lend $2.045bn, and domestic banks will provide $100m taking the total debt to $3.75bn.

The international banks participating in the project include BTMU, Mizuho Bank, SMBC, Shinsei Bank, DBS, OCBC, UOB, Bank of China, China Construction Bank, BNP Paribas, Credit Agricole, KDB and KfW. The domestic banks include four Indonesian banks such as BNI, BRI, BTN, and Bank Mandiri.

Japan Oil, Gas and Metals National Corporation (JOGMEC) extended support for the project by entering into loan guarantee deals with Nippon Oil Exploration, KG Berau Petroleum and KG Wiriagar in August 2016.

Contractors involved

Saipem won the engineering, procurement, construction and installation contract, encompassing the unmanned platforms and subsea pipelines for the offshore facilities. CSTS, a consortium comprising Chiyoda, Saipem, Tripatra and Suluh Ardhi Engineering received an EPC contract for marine construction work of the project. McConnell Dowell Indonesia will conduct the detailed design and construction of the jetty. It subcontracted HR Wallingford to perform the navigation simulation studies to determine the jetty design sustainability.

A joint venture of KBR, PT Rekayasa Industri, JGC Corporation, and PT JGC Indonesia, received the contract to provide onshore front-end engineering and design (FEED) services for the third liquefaction train of the project in October 2014. Luxsolar received a contract to provide LED Aircraft Warning Light systems for dangerous area.

Other contractors include PT Pelayaran Taruna Kusan Jaya, Clough, Sojitz, Fls, PT Synergy Engineering, Add Energy, Sucoot, Junttan, ABB, Flenco Fluid System, Mechademy, PT. Multipanel Intermitra Mandiri, Jare Industries, Butting. PT Samudera Bahana, Entrepose Group.

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