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Supply deal puts Tangguh closer to start line.

Europe Intelligence Wire

| September 01, 2004 | COPYRIGHT 2004 Financial Times Ltd. This material is published under license from the publisher through the Gale Group, Farmington Hills, Michigan.  All inquiries regarding rights should be directed to the Gale Group. (Hide copyright information)Copyright

(From Lloyds List)

Byline: Tony Gray

THE $3bn BP Tangguh liquefied natural gas project in Indonesia has moved closer to lift off with the finalisation of a second deal to supply South Korea.

But problems are pushing back first production of LNG by a year to 2008.

South Korean utility K-Power has agreed to purchase 600,000 tonnes a year of LNG over 20 years, starting in 2006.

K-Power, a joint venture between SK Corp and BP, also has an option to buy an extra 200,000 tonnes a year to 2010. The Tangguh project now has firm sales commitments for 3.75m tonnes a year.

It has previously secured a contract for 2.6m tonnes a year for the Fujian LNG project in China, while South Korean steelmaker Posco has inked a deal for 550,000 tonnes over 20 years starting in 2005. The contracts represent more than half the design output of the project's two 3.5m tonnes a year LNG trains.

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