BP and its partners have decided to develop a $7 billion gas project in Indonesia that will use CO₂ capture technology in the future. The move shows that leading energy companies are continuing to bet on growing demand for gas in the region.
The project is an expansion of the existing Tangguh LNG project in Papua, which has been supplying liquefied natural gas (LNG) to Asia, particularly Japan and China, since 2009. BP holds a 40 percent stake in Tangguh and will accordingly bear nearly 2.8 billion dollars of the total costs.
The project includes the development of the Ubadari field, which will supply gas to the existing LNG facility. At the same time, BP plans to capture, compress, and reinject CO₂ emissions from production into a nearby reservoir to maintain pressure. This marks BP's first project in the field of carbon capture, utilization, and storage (CCUS). Production is scheduled to begin in 2028.
Other partners include China's CNOOC and Japan's Nippon Oil Exploration.
The decision comes at a time when BP, like other oil companies, is scaling back its renewable ambitions and betting on a longer role for fossil fuels. Under CEO Murray Auchincloss, BP has refocused on oil and gas, and in September put its U.S. wind energy business up for sale. Analysts also expect a further weakening of the company's climate targets.
Oil companies like BP and Shell are increasingly relying on LNG as a transition fuel. In February, Shell predicted that global demand would increase by 50 percent by 2040 as China and other Asian countries replace coal with the comparatively cleaner gas.
Nevertheless, climate protectors view natural gas critically. They argue that LNG, despite lower CO₂ emissions, still contributes significantly to global warming, particularly through methane, which, as the main component of natural gas, has a stronger short-term climate impact than CO₂.
Indonesia is one of the world's largest LNG exporters and ranks third in Asia after Australia and Malaysia. The Tangguh project currently has a production capacity of 11.4 million tons of LNG per year. Another major project, Abadi LNG, with a capacity of 9.5 million tons, is expected to commence operations in 2030.
