Kuntoro supports Pertamina's decision on pipeline project

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto supported on Tuesday state oil and gas company Pertamina's decision to name PT McDermott Indonesia to build a natural gas underwater pipeline linking west of Natuna island to Singapore.

Kuntoro said based on a report from Pertamina, the awarding of the pipeline contract to PT McDermott Indonesia, the Indonesian unit of the American construction company J Ray McDermott SA, had been conducted in a process consistent with the prevailing regulation.

"The report that was submitted (by Pertamina) to me indicates the bidding of the project was conducted transparently," Kuntoro said on the sidelines of a seminar on environmental protection and community development in the mining and energy sector.

The seminar was held to commemorate environmental day.

Pertamina's president Martiono Hadianto endorsed the selection of McDermott for the construction of a 650-kilometer underwater pipeline on May 14 after finding no faults at the bidding held by the West Natuna gas consortium and won by McDermott.

In the bidding, McDermott offered the lowest bid at US$225 million, undercutting its competitors, namely ETPM of France, Saipem of Italy, and Nippon Steel of Japan.

The gas consortium consists of the United States's Conoco Corp., Britain's Premier Oil and Canada's Gulf Resources.

Pertamina has signed a deal to channel gas from the consortium's gas fields in the Southeast China sea to Sembawang Gas in Singapore through the pipeline for 22 years starting from 2001.

The selection of McDermott for the project, however, angered several legislators who charged the consortium with favoring Western companies from the outset of the bidding process.

The legislators also criticized the affiliation of McDermott with former president Soeharto's golfing partner Mohammad Bob Hasan.

Pertamina earlier said Bob Hasan resigned from his post as a commissioner in McDermott Indonesia and he had put his stake in the company for sale.

Legislator Priyo Budi Santoso earlier said the House of Representatives' Commission V for mines and energy, industry and trade, environment, investment and manpower would summon Martiono and Kuntoro to explain the deal.

"We demand the tender result be canceled or annulled until Pertamina and the minister submit the report to the House," Priyo said.

Kuntoro said Pertamina had no legal obligation to report to the House about the project, but it was ethically obliged to do so given the controversies caused by the project.

"With regards to the call for retendering the project, I call on the House to express their opinion after meeting with Pertamina," Kuntoro said. (jsk)