McDermott gets go-ahead for Natuna gas pipeline project

JAKARTA (JP): Minister of Mines and Energy Kuntoro Mangkusubroto said on Friday that PT McDermott Indonesia may go ahead with the construction of a natural gas pipeline linking Natuna island in the Southeast China Sea to Singapore despite protests from some legislators.

The construction company should not hesitate to build the 650- kilometer underwater pipeline, Kuntoro said.

"The company can go ahead with the project because it has met all administrative and legal requirements for the project," Kuntoro said on the sidelines of a meeting with the House of Representatives's special team for deliberation of the oil and gas bill.

"Comments from legislators cannot annul the decision (that selected the company for the project)," he added.

Several legislators have voiced concerns over the West Natuna consortium's selection of McDermott for the project. McDermott won the project through open bidding involving four international companies.

The consortium comprises Conoco Corp. of the U.S., Premier Oil of Britain and Gulf Resources of Canada.

The pipeline will be used to transport natural gas extracted from the three's gas fields west of Natuna island to Singapore for 22 years, starting from 2001.

State oil and gas company Pertamina approved the consortium's selection of McDermott for the project last month despite the strong protests from legislators.

The legislators said McDermott was not eligible for the project due to its partnership with former President Soeharto's crony Mohammad Bob Hasan in McDermott Indonesia.

The legislators charged McDermott with abusing its political connections to obtain many projects in the country's oil and gas industry during Soeharto's era.

Legislator Priyo Budi Santoso of the Golkar Party called on the Attorney General's Office early last week to investigate alleged mark-up practices conducted by McDermott Indonesia during Soeharto's era.

Priyo said that if the company was proved to have committed mark-up practices, it should return to the government the profit it had accumulated through these practices.

He also called on Pertamina "to disqualify the company for the sake of justice" due to its collusive practices in the past.

McDermott has refused to talk to the local press as of last year, when the gas pipeline project became a controversy.

Kuntoro called on Pertamina and the House to end the controversy by forming a special team to thoroughly investigate whether there were irregularities in the consortium's selection of McDermott for the project. (jsk)