House member finds fault with Natuna pipeline project
House member finds fault with Natuna pipeline project
JAKARTA (JP): A legislator lambasted on Friday alleged
irregularities in the bidding for the development of a 650-
kilometer underwater pipeline to channel natural gas from the gas
fields west of the Natuna islands to Singapore.
Joeslin Nasution of ruling Golkar party announced he did not
believe that the consortium which owned the project -- the West
Natuna Group -- would hold transparent bidding for the
construction of the US$400 million pipeline.
He said the consortium had engineered bidding terms to give an
advantage to a group of four contractors -- ETPM of France,
Saipam of Italy, Nippon Steel of Japan and McDermott of the
United States -- to win contracts despite the high cost of
construction they charge.
He said South Korean contractors, including Hyundai and
Daewoo, had high skills and had offered very competitive prices,
but he said they would predictably lose the bidding due to unfair
bidding terms.
According to the bidding terms, only contractors which have
experience in building underwater pipelines of the same length
qualify for the project.
The West Natuna Group consortium is made up of Britain's
Premier Oil, Conoco of the United States and Gulf Resources of
Canada.
The gas contractors will supply Singapore's SembGas for 22
years from 2001 with natural gas extracted from their West Natuna
gas fields. The gas will be used to feed Singapore's power plants
and petrochemical plants.
Pertamina signed the gas sales agreement on Jan. 15 this year.
Sales of the West Natuna gas will reportedly generate total
revenue of about $8 billion over 22 years, $2.7 billion of which
-- or $123 million per year -- will go to the government in taxes
and profit sharing.
Another Golkar legislator, Priyo Budi Santoso, has on several
occasions expressed similar concerns as Joeslin.
In response to the complaint, the director general of oil and
gas at the Ministry of Mines and Energy asked the West Natuna
Group to make the bidding terms more reasonable.
But the consortium has refused to change the bidding terms,
arguing that the strict bidding terms were made to ensure the
quality of the pipeline and to prevent penalties being applied by
SembGas for supply problems.
"We didn't change the requirements and we communicated back to
the ministry the reasons why the requirements were critical to
the contract," Rab Speirs, president of Premier Oil Natuna Sea
Ltd, a subsidiary of Premier Oil, said recently.
Speirs said the West Natuna Group had completed the technical
evaluation of the bidders last year and it would invite the
bidders for the commercial tender next week. (jsk)