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| Borrower/Equity Investment Name | HSBC BANK USA, NATIONAL ASSOCIATION | |||||||||
| Country | Indonesia | |||||||||
| Location | Irian Jaya Barat, Indonesia. | |||||||||
| Project Number | 38919-01 | |||||||||
| Approval Number | 7224 | |||||||||
| Type of ADB Assistance |
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| Sector/Subsector | Energy /Convent Energy | |||||||||
| Thematic Classification | Private Sector Development Environmental Sustainability Economic growth |
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| Responsible ADB Department | Private Sector Operations Department | |||||||||
| Responsible ADB Division | Infrastructure Finance Division 2 | |||||||||
| Responsible ADB Officer | Masayuki Kanda | |||||||||
| Project Sponsor(s) |
BP PLC
CHINA NATIONAL OFFSHORE OIL CORP. |
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| Description | The Project, which is located in Irian Jaya Barat, Indonesia, is to develop, build and operate gas production wells, platforms and a liquefied natural gas (LNG) facility to export gas initially to the People's Republic of China (PRC), Korea and the West Coast of North America. The LNG facility will initially consist of two "trains" (equipment units that purify and liquefy gas) with name-plate capacity of 7.6 million metric tons per annum of LNG.
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| Objectives and Scope | The Project is critical for Indonesia in its energy development and export efforts and will help Indonesia maintain its position globally as a key LNG export centre. The Project is in accordance with the government policy of maintaining security of LNG supply and engouraging the development of foreign-exchange earning projects. It is also in line with ADB's energy policy that emphasizes support for the development of cleaner fuels with the private sector participation and will provide environmentally benign LNG to support the sustainable economic growth and promote usage of cleaner fuel in the region especially in PRC and Korea. ADB's participation will catalyze significant amount of long-term debt to support Indonesia's energy sector. Since the Project is ADB's first private sector project in Indonesia's oil and gas sector, it has the potential to provide significant demonstration impacts for subsequent projects not only in Indonesia but also in the region.
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| Status of Development Objectives | Will be evaluated upon completion of the Project. | |||||||||
| Linkage to Country/Regional Strategy | The Project supports and contributes to the promotion of ADB's operational priorities, particularly (i) generating substantial financial benefits for both the central and local governments to enable sustainable economic growth, which can reduce poverty, as well as directly assisting various poverty reduction initiatives in Irian Jaya Barat; (ii) supporting government policy of restructuring the oil and gas subsector with the largest private sector investment since the financial crisis in 1997; (iii) supplying clean energy to countries in the region, e.g., PRC, where serious environmental degradation including acid rain have resulted from the overuse of coal as a primary fuel; and (iv) promoting regional cooperation through increased energy trade in the region. | |||||||||
Safeguard Categories
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| Environment | A | |||||||||
| Resettlement | A | |||||||||
| Indigenous People | A | |||||||||
| Summary of Environmental and Social Issues | Key environmental issues include the need to protect air and water quality, and effects on terrestrial, freshwater aquatic, intertidal, and marine ecosystems. Extensive and intensive environmental inputs were included in project planning. The Project, as designed, minimizes the risk of adverse environmental impacts. A wide range of environmental protection measures and safeguards have been incorporated to protect against adverse impacts to the physical, biological, and social components of the environment. The siting of the plant required the
resettlement of 127 families from Tanah Merah village. An Integrated Social Program (ISP) (the equivalent of an Indigenous Peoples Development Plan) was prepared to address anticipated indigenous peoples' (IP) issues and other social development issues during project construction period and transition to the project operations period (2006-2010). Planning for the second ISP will continue. An Indigenous Peoples Development Framework (IPDF) was also prepared to address unanticipated IP issues and other possible social development issues over the lifetime of the Project. An IPDF is required in recognition that the project lifespan and project loan maturity extends beyond the current ISP planning period, and the long-term socio-economic environment, in which the project is being developed, is relatively unpredictable. |
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| Consultations Planned or Carried Out | BP, as operator, maintains an ongoing dialogue with the people who are directly and indirectly affected by the project in order to understand the impact and become more aware of the risks the external environment present.
The Tangguh Independent Advisory Panel (TIAP) stakeholder meetings were conducted in London and Washington DC in May 2009. In June 2009, regional close out meeting of LGSP was held in Manokwari, attended by USAID, BP, NGOs, Media and local government. Tangguh conducted Education Stakeholder Workshop in Bintuni in July 2009 and workshops on oil and gas industry and revenue management in Bintuni and Fakfak in Aug/Oct 2009 which was attended by local government officials, speakers from ITB and representatives of BPMIGAS and Tangguh. NGO meetings were also held in Jayapura and Manokwari to provide update on Tangguh and Security Forum meeting is planned in Bintuni and Fakfak in Nov 2009, which involves local community leaders, authorities and other leaders. |
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| Timetable for assistance design, processing and implementation | ||||||||||
| Concept Clearance | 18 Jun 2004 | |||||||||
| Due Diligence Mission | 11 Dec 2004 to 16 Aug 2005 | |||||||||
| Private Sector Credit Committee Meeting | 28 Oct 2005 | |||||||||
| Board Approval | 14 Dec 2005 | |||||||||
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