Govt may review Natuna pipeline project nod
JAKARTA (JP): The government is considering reviewing the controversial recommendation for construction of a 650-kilometer underwater pipeline to supply natural gas from west of the Natuna island group to Singapore, an official said on Friday.
"We shall evaluate this possibility and this will be in line with recommendations from the House's Commission V (for mines and energy, industry and trade, cooperatives, investment and environment) some time ago," secretary-general of the Ministry of Mines and Energy Djoko Darmono said on Friday.
The West Natuna gas consortium announced on Thursday that PT McDermott Indonesia, the Indonesian unit of the American contractor McDermott Corporation, was most likely to win the tender for the megaproject.
The consortium, including the U.S.-based Conoco, Britain's Premier Oil and Canada's Gulf Resources, said McDermott's US$335 million proposal was the lowest submitted in the final commercial tender held here on Monday.
Also bidding were ETPM of France, Japan's Nippon Steel and Saipam of Italy, which submitted proposals of $382 million, $415 million and $372 million respectively.
Singapore's SembGas will buy the gas for 22 years from 2001.
The consortium said it would soon decide the winner and submit its recommendation to state oil and gas company Pertamina for a final decision.
Analysts say McDermott's bid is undermined by its alleged affiliation with former president Soeharto's golfing partner Mohamad "Bob" Hasan. Pertamina has canceled most of its contracts with Bob Hasan as part of a company drive to eliminate corruption, collusion and nepotism.
The consortium refused to respond to questions concerning McDermott's affiliation with Hasan and whether the connection would undermine the company's bid.
"The right to make a political decision lies with Pertamina. We only evaluate the bidders's technical ability and commercial proposal," Conoco Indonesia Inc.'s vice president of development and relations A.R "Dudung" Natanegara said.
The bidding process itself sparked controversy following the failure of Allseas of the Netherlands and Hyundai Heavy Industries of South Korea to pass the technical evaluation phase.
Several Commission V members accused the consortium of unfairly pushing the companies aside by engineering bidding terms which were difficult for them to fulfill.
In response to the outcry, secretary-general of oil and gas at the Ministry of Mines and Energy Soepraptono Soelaiman asked the consortium to eliminate the disputed bidding terms.
The consortium responded by relaxing several terms, but refused to change the requirement that bidders have experience in building 2.5 kilometers of pipeline per day, something Hyundai lacked.
Commission chairman Muhsin Bafadal said the government should annul the tender results since the process was carried out dubiously and in conflict with the agreement between the government and the House.
Djoko said the government should also evaluate the tender result with the objective to produce the best results for the public's benefit.
"Whatever we are going to do is for the best interest of the public. If the public's interest is not served by the tender's result, every possibility can take place, including the annulment of the tender's result," Djoko was quoted by Antara as saying on the sidelines of a seminar on the oil and gas bill at Bandung's Padjadjaran University. (jsk)