ARCO denies deal with U.S. Circle group

JAKARTA (JP): The Indonesian arm of American oil and gas firm Atlantic Richfield Company (ARCO) has denied signing a deal with American service contractor Circle International Group Inc., a spokesman of state oil and gas company Pertamina said on Friday.

Spokesman for Pertamina's foreign contractors management body Sidick Nitikusuma said ARCO admitted there was a deal between ARCO International and Circle for the provision of transportation and logistics for ARCO's international upstream oil and gas operations.

But ARCO Indonesia, which is on a Pertamina production sharing contract, said it was exempted from the deal.

"The deal does not bind and/or oblige ARCO Indonesia to use Circle services," Sidick said.

Circle did not consult with ARCO before releasing a press statement claiming ARCO Indonesia's operations were covered in the deal, he said.

"Circle issued the press release prior to a consultation with ARCO," he said.

Circle was quoted by Dow Jones last Friday as saying in the United States that it had a multiyear contract with ARCO to provide full-service global transportation and logistics services for ARCO's upstream international oil and gas operations.

It said the contract would generate four million kilograms of ocean freight, 750,000 kilos of air freight and customs brokerage and logistics services revenue annually.

The company claimed it had begun managing the movement of materials and equipment to ARCO's field operations in Algeria, and it would add services to China, Indonesia and other sites in the coming months, as well as managing the import of geological samples.

In response to the report, Pertamina sent a letter to ARCO asking for clarification of whether the contract had been awarded to Circle according to regulations.

Presidential Decree No. 16/1994 on the spending of the state budget stipulated that oil and gas contractors should hold tenders for their projects in Indonesia.

Foreign companies are allowed to participate in the tender process but priority is given to Indonesian companies and foreign companies which have representatives in the country.

Sidick said he was not aware that Circle had a representative in Indonesia. (jsk)