Govt may review Natuna pipeline project nod

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)