The start-up of the third train has made it the country's second-largest liquefaction facility, write Simone Tam and Bachar Halabi
The commissioning of the third liquefaction train at Indonesia's Tangguh LNG terminal is set to bolster exports, which have held below capacity in recent years.
BP shipped its first cargo from the new 3.8mn t/yr liquefaction train last month. The firm's 75pc share of production from the third train is sold to Indonesia's state-owned power utility, PLN, with Japanese utility Kansai Electric taking the other quarter. The start-up of the third train takes Tangguh's total capacity to 11.4mn t/yr, making it the second-largest liquefaction facility in the country after the 11.5mn t/yr Bontang LNG in east Kalimantan.
The expanded Tangguh facility is expected to account for more than a third of Indonesia's gas production, according to BP. The government in December 2022 granted BP a 20-year extension to 2055 to its production-sharing contract at the Tangguh gas field, which feeds the LNG plant. The third Tangguh liquefaction train initially was supposed to start up in late 2019 but it was delayed until the end of this year. BP and Indonesia's upstream regulator, SKK Migas, previously targeted first production in September. BP's Tangguh expansion project included the construction of two offshore platforms, 13 new production wells, an LNG loading facility and supporting infrastructure.
Indonesian LNG exports have remained well below the country's combined liquefaction capacity in recent years because of low feedgas supply. Loadings totalled 11.2mn t last year, up slightly from the 11.1mn t exported a year earlier but still below the 11.4mn t shipped in 2020, ship-tracking figures from oil analytics firm Vortexa show. But loadings this year were already on course to rebound to levels above 2020, after having totalled 9.86mn t in the first 10 months. But this was equivalent to just over half of the country's combined liquefaction capacity of 21.1mn t/yr. Beside Bontang and Tangguh, Indonesia exports LNG through the smaller 2mn t/yr Donggi-Senoro facility. Indonesia has considered restricting LNG exports to reserve gas for domestic consumption. Bontang's existing supply deals are all set to expire by 2027.
New discoveries may lift output
But Italian energy firm Eni last month announced the discovery of a gas reservoir in its North Ganal licence, which could help feed the Bontang terminal.
The Geng North-1 well, located 85km offshore Kalimantan, has an estimated flow rate of 2.2mn-2.7mn m³/d and could contain about 140bn m³ of gas and 400mn bl of condensate, according to the firm.
Eni already has equity production of 80,000 b/d of oil equivalent (boe/d) from its Jangkrik and Merakes fields in East Kalimantan. Last month, the firm signed a new three-year supply agreement with Merakes LNG Sellers for 540,000 t/yr of LNG, starting in January 2024. Eni also has a contract with Jangkrik LNG Sellers for 950,000 t/yr of LNG that has been in place since 2017. Trading company Vitol in June signed a similar three-year deal to buy 550,000 t/yr of LNG from Merakes LNG Sellers on a fob basis starting in 2024.
Eni has been expanding its presence in Indonesia in recent months. In July, it agreed to purchase Chevron's Indonesian gas assets, comprising operating stakes in three blocks in the Kutei basin — Ganal, Rapak and Makassar Strait. And earlier this year, it agreed to buy private equity-backed producer Neptune Energy, a partner in both the Jangkrik and Merakes fields.
By 2026, Eni aims to more than double its contracted LNG supply to more than 18mn t/yr, leveraging integration between upstream and marketing activities. It says this approach is consistent with its energy transition strategy, which aims to gradually increase the share of gas in its overall production to 60pc by 2030.
