Chiyoda-Mitsubishi wins LNG plant design contract

Chiyoda-Mitsubishi wins LNG plant design contract

JAKARTA (JP): State oil and gas company Pertamina and its
American contractor Atlantic Richfield Company (ARCO) awarded the
contract to make the blueprint for the Tangguh liquefied natural
gas (LNG) in Irian Jaya to Japanese consortium Chiyoda-
Mitsubishi, Pertamina said on Thursday.

The Japanese consortium beat American firm Bechtel in the
final phase of the bidding process for the so-called "front-end
engineering design" (FEED) contract.

"The contract award to Chiyoda-Mitsubishi is one contract in
multiple FEED strategy selected by Pertamina and ARCO to promote
competition and to achieve a competitive project cost," Pertamina
said in a statement.

Initially, there were seven companies participating in the
bidding. But only Chiyoda-Mitsubishi and Bechtel passed the first
phase of the selection process conducted by Pertamina.

Chiyoda-Mitsubishi then won the final phase of the bidding.

The five companies who lost the first phase of the selection
process are Inti Karya Persada Teknik (IKPT) and its American
partner Kellog Brown & Root; French firm Technip; Japanese firm
JGC and its local partner Pertafinikki; American firm Flour
Daniel and its partner Black and Veatch; and British firm Foster
Wheeler and its local partner Tripatra.

IKPT, controlled by Mohammad Bob Hasan, a close friend of
former president Soeharto, has built several LNG trains in Badak,
East Kalimantan, and had been appointed to design the Tangguh
project during the Soeharto era. But, the contract was revoked
after the resignation of Soeharto in mid-1998.

Documents obtained by The Jakarta Post reveal Chiyoda-
Mitsubishi proposed a design based on Air Products and Chemicals
Inc.'s (APCI) propane pre-cooled-C3/MR technology, while Bechtel
proposed a design based on Philip's optimized cascade process
technology.

APCI's technology is being used in LNG plants in Arun, Aceh
and Badak.

The documents further say Chiyoda submitted the best technical
proposal and the best commercial terms with a bid price of US$2.6
million, as against the owners' estimated price of $10 million.
The company will work on the FEED in Indonesia.

Bechtel submitted a bid of $8 million.

Most analysts praised the bidding process as having been
conducted transparently.

"Pertamina has demonstrated its commitment to fair and
transparent business practices through the process used to award
Tangguh FEED," Djoko Subekti, executive coordinator of
Pertamina's refinery projects, said.

"The result of the process speaks for itself: a world-class
contractor conducting the work in Indonesia using local technical
expertise at an extremely competitive price," he added.

The Tangguh LNG project will be supplied with natural gas from
Wiriagar, Berau and Muturi areas which contain more than 14
trillion cubic feet of proven gas reserves. The gas fields are
owned by ARCO, BG Exploration and Production and several
partners.

Pertamina, ARCO and partners plan to build a two-train LNG
plant worth $1.5 billion with a annual output of 6 million tons
of LNG.

They have yet to find buyers for the LNG, but they have been
doing preparatory work for the project to ensure that the LNG
plant can be constructed quickly once they find one. (jsk)