BP At Forefront Of China's LNG Strategy As Fujian Chooses Tangguh

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26 September 2002

BP and its partners in Indonesia's Tangguh natural gas project today signed an agreement to supply liquefied natural gas (LNG) to China's Fujian LNG terminal.

The agreement now sees BP in all three legs of China's LNG strategy. Last month, China selected Australia's North West Shelf consortium - in which BP is an equal (16.7%) shareholder - to supply three million tonnes of LNG a year to China's first LNG terminal in Guangdong Province. BP was also chosen last year as China's foreign partner in the construction of the Guangdong LNG terminal and pipeline, which will access a market that is forecast to grow rapidly. Gas currently meets just 2% of China's energy needs, but this is projected to increase to between 7 and 8% by 2010.

The 25-year LNG Sales and Purchase Agreement signed in Jakarta today between Tangguh and the China National Offshore Oil Corporation (CNOOC), will involve the supply of up to 2.6 million tonnes of LNG a year to Fujian. An agreement in principle for CNOOC participation in Tangguh was also signed. Construction of the Fujian terminal is expected to start in 2004 and operations are scheduled to begin by 2007, shortly after completion of the Guangdong terminal. The agreements are subject to usual regulatory and other conditions and the development of further detailed terms.

BP Group Chief Executive Lord Browne said BP was honoured to be a leading participant in all three major LNG projects in China, one of the fastest growing energy markets in the world and the second largest energy consumer after the United States. "Gas - the world's cleanest fossil fuel - currently accounts for just over 2% of China's energy consumption and the Fujian and Guangdong LNG terminals will play pivotal roles in achieving China's goal of a four-fold increase in natural gas consumption by 2010," he said. "The agreement is also good news for Indonesia and for the Tangguh project which will add significantly to the country's marketable LNG reserves and play a major role in maintaining Indonesia's global leadership position in the LNG industry."
Located in the Berau-Bintuni Bay region of Indonesia's Papua province, Tangguh is being designed with a capacity to produce seven million tonnes of LNG per annum from two initial processing trains. The Tangguh gas fields contain 14.4 trillion cubic feet of certified proved natural gas reserves plus potential additional resources. The project will set high technical, environmental and social standards and bring significant benefits to the Indonesian economy and the people of Papua province.

Notes to Editors:

The Tangguh Project is currently in discussion with major international financial institutions to provide funding for construction of the Tangguh LNG facilities. Japan has traditionally been the premier source of financing in support of Indonesian LNG, and, with a 40% working interest in Tangguh production sharing contracts held by Japanese companies, Japan is expected to represent the most substantial long term market for future Tangguh LNG sales.

The percentage shares of Tangguh proved reserves attributable to the production sharing contractor interests are: BP 50%, Mitsubishi 16%, Nippon 12%, BG 11%, KG (Kanematsu Corp, Japan National Oil Corp and Overseas Petroleum) 10%, and Nissho Iwai 1%.

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