"Tangguh LNG: Big project, huge risks" September 2025

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Tangguh LNG is a natural gas extraction and LNG production project located in Bintuni Bay, West Papua province... The project is majority-owned and wholly-operated by British Petroleum Berau (BP Berau). Its parent company, British Petroleum (BP), has one of the highest historical greenhouse gas (GHG) emissions of any private sector entity. Tangguh LNG’s construction in 2005 caused the displacement of local Indigenous communities from their villages and loss of access to their traditional fishing and hunting grounds...

... Emissions from Tangguh LNG are exacerbating climate change, which is already threatening one of Papua’s most iconic natural landmarks — the only remaining glacier on the peak of the Jayawijaya Mountains, located between Central Papua and Papua Pegunungan Provinces....

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...In February 2025, the Indonesian government announced that it would be prioritising the completion of several large-scale oil and gas projects, including the fourth liquefied natural gas (LNG) production facility (Train 4) of the Tangguh LNG Project. Further expanding this project will increase the facility’s LNG production capacity, increase Indonesia’s dependence on fossil fuels, block the transition to renewable energy and worsen the climate crisis.

... The Asian Development Bank (ADB) provided a $350m loan in 2005 to support the construction phase, and another $400m loan in 2016 to support the building of the third LNG production facility (Train 3). The World Bank Group’s private sector arm, the International Finance Corporation (IFC), and the Asian Infrastructure Investment Bank (AIIB), on the other hand, indirectly supported the construction of Train 3 between 2016 and 2024 through investments made by their financial intermediary (FI) clients.

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Tangguh LNG is Indonesia’s largest natural gas extraction and LNG production site. It currently operates three LNG production trains (see Box 1) in Bintuni, West Papua. The project is part of an integrated development initiative across six gas fields located in Berau, Muturi, and Wiriagar.

The construction and expansion of the Tangguh LNG project was financed by three MDBs — the ADB, IFC and AIIB. Export credit agencies such as the Japan Bank for International Cooperation and KfW, as well as other international commercial banks such as Mizuho Bank, Bank of China, China Construction Bank, The Bank of Tokyo- Mitsubishi UFJ, Sumitomo Mitsui Banking Corporation, DBS Bank, United Overseas Bank, BNP Paribas, Credit Agricole Corporate and Investment Bank and Oversea-Chinese Banking Corporation, have also been involved.

The ADB’s direct project loans

In December 2005, the ADB supported the construction of the Tangguh LNG through a $350m loan to the Hongkong and Shanghai Banking Corporation USA, National Association (HSBC Bank USA, N. A.)... Indonesian and Papuan civil society opposed the project and raised concerns about pollution, loss of access to traditional fishing grounds and militarisation, among others, in West Papua, to the ADB’s management and shareholders. However, management justified the loan, citing contributions to “sustainable economic growth” for Indonesia and stating that it would supply “environmentally benign LNG” to neighbouring countries.

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The ADB, IFC and the AIIB have all indirectly supported the expansion of the Tangguh LNG project between 2016 to 2024. The ADB and IFC indirectly supported the Tangguh LNG project expansion through their financial intermediary, PT Indonesia Infrastructure Finance. Meanwhile, the AIIB’s indirect financing for the project was through its investment in the infrastructure debt security Bayfront Infrastructure Capital IV.

PT Indonesia Infrastructure Finance (IIF) was established in 2010 by the Government of Indonesia to attract investments in public- private partnership infrastructure projects in the country. It was set up with shareholding investments from PT Sarana Multi Infrastruktur, ADB, IFC and Deutsche Investitions-und Entwicklungsgesellschaft (DEG), which is owned by KfW. In 2009, both the ADB and IFC signed separate $40m equity investments to contribute to establishing the IIF. In 2012, Sumitomo Mitsui Banking Corporation joined the list of shareholders...

IIF has financed several oil and gas projects in Indonesia, including Train 3 of the Tangguh LNG Project. In 2016, IIF participated in a $3.75bn loan package to finance the project, together with other banks such as PT. Bank Mandiri (Persero) Tbk., PT. Bank Negara Indonesia (Persero) Tbk., and PT. Bank Rakyat Indonesia (Persero) Tbk.

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Impacts of Tangguh LNG

...the cascading environmental and social consequences — particularly in the Bintuni Bay region — cannot be overlooked. Indigenous communities were resettled from their ancestral village of Old Tanah Merah to a new site renamed Tanah Merah Baru and to Onar Baru Village. The Indigenous communities formerly relied on fishing, hunting and processing sago from local palm trees. Now, many members of the community have had to shift to farming because of the loss of access to these resources when the Tangguh LNG project was built and fenced.

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Bintuni Bay is home to an estimated 2.25m hectares of mangrove forests — the largest expanse in Southeast Asia... The construction of the Tangguh LNG Project has significantly damaged these mangrove forests. Commenting on the draft version of this report, the ADB confirmed that 11 hectares had been cleared.

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Increased greenhouse gas emissions

BP, the global parent of BP Berau, which operates Tangguh LNG, reported a notable increase in its methane emissions in 2023, up by 10% from 2022, due primarily to increased flaring in its Azerbaijan-Georgia-Türkiye region and Tangguh operations.

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... These are the actions that will set MDBs on the right course :

• MDBs should not fund the further expansion of Tangguh LNG to Train 4 and associated CCUS facilities...
• MDBs should review their FI clients’ portfolios and encourage exit from all fossil fuels, including fossil gas...
• MDBs should strengthen their safeguards and accountability mechanisms to uphold the rights of affected communities and protect the climate...

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