BP seeks LNG buyers to finance $12 bln Tangguh Train 3 project in Indonesia

(Updates throughout)

By Wilda Asmarini

JAKARTA, April 14 (Reuters) - BP said it would be tough to proceed with financing for a planned third LNG train at its Tangguh project in West Papua, Indonesia, without buyers for the remaining 1.3 million tonnes of annual output from the production plant.

Prospects for new liquefied natural gas (LNG) developments globally have been hammered by the fallout from a 50-percent drop in oil prices since last June. The situation in Asia is set to get worse as two LNG projects in Australia come onstream this year, crowding an already amply supplied market.

"There is still 1.3 million tonnes per year (mtpa) that has not yet (been sold)," said Dharmawan Samsu, country head at BP Indonesia, noting that so far the firm had only found buyers for 2.5 million tonnes of expected output from Train 3.

Without buyers for the remainder it would be "difficult to proceed" with financing the third train project, which is currently expected to be completed by 2020, Samsu said on Tuesday.

BP will review its final investment decision for the $12 billion Train 3 project after a so-called Front End Engineering Design has been completed at the end of 2015 or early 2016, Samsu said.

"We're not looking at difficulties in funding, but more at the economics of the project," he said, declining to comment further on pricing.

Earlier, Samsu said Japan's Kansai Electric Power Co. had agreed to purchase 1 mtpa from Train 3, adding to the 1.5 mtpa committed to Indonesia's state electricity utility PLN.

A total of 7.6 mtpa of LNG from the first two Tangguh trains had been fully committed, he said.

Tables have turned for gas producers in Asia, where little over a year ago, producers including BP were busily renegotiating contracts to take advantage of surging demand.

The start-up of Chevron's giant 15.6 mtpa Gorgon LNG plant in Australia in mid-2015, followed by Santos' 7.8 mtpa Gladstone facility, will add to oversupply, potentially pushing 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 include China National Offshore Oil Corp (CNOOC (NYSE: CEO - news) ), Mitsubishi Corp, Inpex, Sumitomo Corp and Mitsui & Co Ltd. (Additional reporting by Fergus Jensen; Editing by Himani Sarkar and Mark Potter)