Report on Tangguh LNG: Big project, huge risks for people and planet

Governments, including Indonesia, and multilateral development banks (MDBs) have committed to the Paris Agreement’s goal of limiting global warming to 1.5℃. This requires phasing out fossil fuels and transitioning to renewable energy systems. By supporting the construction and expansion of Tangguh LNG, Indonesia’s largest natural gas extraction and liquified natural gas (LNG) production site, the Indonesian government and MDBs are not honouring their commitment to the Paris Agreement.

This report examines how MDBs supported Tangguh LNG through direct and indirect finance since 2005:

• 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).
• Indirect finance was also provided by the ADB and the World Bank Group’s private sector arm, the International Finance Corporation (IFC), through their financial intermediary client, the Indonesia Infrastructure Finance. 
• The Asian Infrastructure Investment Bank’s (AIIB) indirect financing for the project was through its investment in the infrastructure debt security Bayfront Infrastructure Capital IV.

Tangguh LNG plays a role in locking Indonesia into dependence on fossil gas, and has negatively impacted communities and the environment: 

• Tangguh LNG exports gas and supplies fuel to several operating gas-fired power plants in Indonesia. It is also set to provide fuel to at least five more proposed LNG power plants in the country.
• The project’s construction phase caused displacement of Indigenous communities and destroyed much of the local environment. 
• Its operations also led to increased greenhouse gas emissions. 
• Despite promises of benefits from the project, recent reports from local government officials reveal that Tangguh LNG failed to meet its social responsibility.

In February 2025, the Indonesian government proposed expansion of Tangguh LNG into a fourth LNG production facility and a carbon capture utilisation and storage (CCUS) facility among the priority projects. Unfortunately, the climate and energy policies of the ADB, AIIB and IFC are not enough to prevent these MDBs from financing the expansion of this mega gas project that will further imperil the climate and people.

Our recommendations:

• MDBs must commit to end funding for all fossil fuels and ​​drop the narrative of ‘gas as a transition fuel’.
• MDBs should support a just renewable energy transition instead of funding Tangguh LNG’s Train 4 and CCUS facility.  
• MDBs should review their financial intermediary 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. 

This report is published by Trend Asia and Recourse in collaboration with Wahana Lingkungan Hidup Indonesia (WALHI / Friends of the Earth Indonesia), debtWATCH Indonesia, Friends of the Earth Japan and the Big Shift Global coalition. It is available in English and Bahasa.