(Updates throughout)
By Wilda Asmarini
JAKARTA, April 14 (Reuters) - BP said it would betough to proceed with financing for a planned third LNG train atits Tangguh project in West Papua, Indonesia, without buyers forthe remaining 1.3 million tonnes of annual output from theproduction plant.
Prospects for new liquefied natural gas (LNG) developmentsglobally have been hammered by the fallout from a 50-percentdrop in oil prices since last June. The situation in Asia is setto get worse as two LNG projects in Australia come onstream thisyear, crowding an already amply supplied market.
"There is still 1.3 million tonnes per year (mtpa) that hasnot yet (been sold)," said Dharmawan Samsu, country head at BPIndonesia, noting that so far the firm had only found buyers for2.5 million tonnes of expected output from Train 3.
Without buyers for the remainder it would be "difficult toproceed" with financing the third train project, which iscurrently expected to be completed by 2020, Samsu said onTuesday.
BP will review its final investment decision for the $12billion Train 3 project after a so-called Front End EngineeringDesign has been completed at the end of 2015 or early 2016,Samsu said.
"We're not looking at difficulties in funding, but more atthe economics of the project," he said, declining to commentfurther on pricing.
Earlier, Samsu said Japan's Kansai Electric Power Co. had agreed to purchase 1 mtpa from Train 3, adding tothe 1.5 mtpa committed to Indonesia's state electricity utilityPLN.
A total of 7.6 mtpa of LNG from the first two Tangguh trainshad been fully committed, he said.
Tables have turned for gas producers in Asia, where littleover a year ago, producers including BP were busilyrenegotiating contracts to take advantage of surging demand.
The start-up of Chevron's giant 15.6 mtpa Gorgon LNGplant in Australia in mid-2015, followed by Santos' 7.8mtpa Gladstone facility, will add to oversupply, potentiallypushing spot prices below $6 per million British thermal units(mmBtu) from $7 per mmBtu at present, some analysts say.
Other partners in the Tangguh project in Bintuni Bay includeChina National Offshore Oil Corp (CNOOC), MitsubishiCorp, Inpex, Sumitomo Corp and Mitsui& Co Ltd. (Additional reporting by Fergus Jensen; Editing by HimaniSarkar and Mark Potter)
BP (BP.)
