T

he Tangguh LNG project in Papua Barat may only be able to deliver a total of 16 cargoes of liquefied natural gas (LNG) this year, a much lower figure than the 56 cargoes it has committed to, partly as a result of problems in its production line.

Ngurah Kresnawan, a spokesman for energy giant BP - which operates the massive plant - said Thursday that problems at the plant's production units had resulted in lower production.

The Tangguh LNG plant consists of two production units, each with a production capacity of 3.8 million tons of LNG per year.

BP started the first production unit, called train 1 , in February and the second one, train 2, in July this year, but both are now under repair or examination.

"When we launched train 2 in July, we initially found quite a few problems, which we fixed right away. We expect to reopen train 2 in the next few days."

"As we are concerned that an identical problem will occur in train 1, we shut it down in August.

"We are carrying out the same maintenance at the first production unit *train 1*, and we expect to reopen train 1 in October," Ngurah told lawmakers from commission VII overseeing energy.

In July, upstream regulator BPMigas's chairman R. Priyono said the Tangguh project could deliver up to 56 cargoes of LNG this year, but production problems were expected to lower the shipment to 16 cargoes of LNG.

"To address the shortage, we are to negotiating with buyers in order to reschedule," BP Indonesia country head Nico Kanter said.

The Tangguh LNG plant operator has signed a 20-year LNG purchase agreement with Korean companies POSCO and K-Power for a total shipment of 1.15 million tons of LNG per year.

The operator also signed a 25-year contract to supply 2.6 million tons per year of LNG to CNOOC for China's Fujian LNG terminal.

It has also signed a flexible contract to supply up to 3.7 million tons of LNG per year to the Sempra LNG Terminal in Baja California, Mexico.

The Tangguh plant has so far sent three cargoes of LNG altogether, to Posco, Fujian and Sempra.

BPMigas said the government this year might book initial revenues of up to US$3 million in the so-called "first tranche petroleum" (FTP) payment from the Tangguh project.

The government's main revenue from the project actually comes from a production split agreement, which will be paid after investment spending is recovered.

But, prior to this, the government will also receive FTP payment of about 5 percent of the LNG sales.

An FTP payment has to be made anytime a cargo sails.

"We estimate that the government will obtain between $2 million and $3 million this year from FTP payments of the Tangguh LNG project.