BP Migas under fire for 'irregular tender'

BP Migas under fire for 'irregular tender'

The Jakarta Post, Jakarta

The Upstream Oil and Gas Implementing Body (BP Migas), the
country's top oil and gas regulator, has come under fire for
selling government oil at a price deemed too low.

Some even suspect irregularities in the tender process.

Two Singapore-based trading companies Novaco and Goldmanor
recently won a contract from BP Migas to buy condensate, a type
of oil that is produced along with natural gas.

The firms will pay a premium of 10 U.S. cents per barrel of
condensate above the so-called Indonesian Crude Price. Novaco
will get 300,000 barrels of condensate produced by PT Badak NGL,
the country's largest liquefied natural gas center in Bontang,
East Kalimantan; while Goldmanor will purchase condensate from
the Arun NGL project in Aceh.

The condensate will be sent a over six-month period which
began this month.

But critics said that the price obtained by BP Migas was too
low as state-owned oil and gas company Pertamina last year paid a
premium of 30 U.S. cents per barrel.

"The government suffered a loss. If we were invited we would
have won because we would have offered a 30-cent premium,"
Pertamina spokesman Ridwan Nyak Baik, was quoted by Bloomberg on
Thursday.

This raised allegations that the tender process may have been
tainted with irregularities. Industry analyst Kurtubi called on
the government to cancel the contract, otherwise the state would
suffer great losses.

The country produces around 100,000 barrels of condensate per
day, of which some 85 percent belongs to the government. Some of
the government's portion is being exported.

This is BP Migas' first experience in selling government
condensate. Previously, Pertamina assumed this marketing role.
It was transferred in 2001 following the enactment of the new oil
and gas law.

There is now a suggestion that the authority to sell
condensate should be handed back to Pertamina.

But BP Migas marketing official Djoko Arsono maintained that
the tender process was conducted in a transparent manner.

The regulatory body initially said that there were five
bidders participating in the tender including Pertamina, Mitsui
Co., Concord Energy, Novaco and Goldmanor.

But the agency retracted this statement on Thursday after
Pertamina denied participating in the bid.

Pertamina admitted that its Singapore-based subsidiary Petral
was invited to join the tender at the last minute on April 17.
But because of the lack of preparation, Petral decided not to
take part in the tender.

Minister of Mineral Resources and Energy Purnomo Yusgiantoro
was expected to meet with BP Migas' top officials on Friday to
seek clarification of the issue.