McDermott tipped for Natuna pipeline plan
JAKARTA (JP): The West Natuna gas consortium has recommended that PT McDermott Indonesia construct the 650-kilometer underwater pipeline to channel natural gas from west of the Natuna islands to Singapore, a source said on Monday.
A official of state oil and gas company Pertamina who insisted on anonymity said the consortium named the Indonesian unit of American contractor McDermott Corp. the winner of the tender in a letter sent to Pertamina on Monday.
"Pertamina will make the final decision on the recommendation by the end of the month," he said.
Vice president of development and relations of Conoco Indonesia Inc., which is one of the consortium members, A.R. "Dudung" Natanegara refused to confirm if the letter was submitted to Pertamina on Monday, but added "it was scheduled to be done early this week".
Consortium members are Conoco of the U.S., Britain's Premier Oil and Canada's Gulf Resources.
The consortium and Pertamina signed an agreement last January on piping natural gas from the Southeast China Sea to Singapore's Sembawang Gas (SembGas) for 22 years starting from 2001.
The consortium earlier announced McDermott was most likely to win the project because its US$335 million was the lowest bid submitted two weeks ago.
It was required to evaluate the tender's result before submitting it to Pertamina for approval.
Other bidders included Saipam of Italy, ETPM of France and Japan's Nippon Steel.
Legislator Priyo Budi Santoso of the ruling Golkar Party blasted the consortium's recommendation. He said on Monday he would question Minister of Mines and Energy Kuntoro Mangkusubroto and Pertamina's president Martiono Hadianto on the alleged connection between McDermott and former president Soeharto's associate Mohamad "Bob" Hasan.
"It is so strange that McDermott could propose the lowest bid this time considering in the past it won many projects from Pertamina despite expensive bids, due to its connection with Bob Hasan," Priyo said.
Although McDermott was widely known as close to Hasan during Soeharto's era, there is no documented evidence available.
Pipe supply
In a related development, local pipemaker PT South East Asia Pipe Industries (PT SEAPI), a subsidiary of the Bakrie Group, announced on Monday it was ready to supply 35,000 tons of the 152,000 tons of pipe needed for the construction of the pipeline.
Under the bidding terms, the consortium obliges contractors to use longitudinal welded steel pipe, instead of spiral welded steel pipe, for the construction of the submarine pipeline to secure quality.
Major local pipemaker PT KHI Pipe Industries earlier claimed the consortium had denied local pipemakers the chance to supply pipe for the project through the requirement because most of them only produce spiral welded steel.
KHI director Moerbiantoro Soemantoro said only SEAPI of the country's pipemakers produced longitudinal pipe. However, he did not believe the company was able to supply pipe for the project because its plant in Lampung was still at the commissioning stage.
Although admitting its plant was still in commissioning, SEAPI believed it would be able to supply pipe on time and with the standard quality required by the American Petroleum Association and ISO 9002.
"PT Sucofindo, at the request of the director general of oil and gas at the Ministry of Mines and Energy, as well as contractors which took part in the bidding for the project, audited the plant in January 1999," the company said.
SEAPI said it was scheduled to conduct trial production in May and June and commercial production was expected in July.
It said Japan's leading steelmaker Itochu helped finance the development of its plant and would provide raw material for the making of the pipe.
It said its plant was installed with machinery made by Germany's Mannesman Demag-Meer, which is used by international pipemakers for pipes for submarine gas pipelines in the North Sea and for transmission of gas from Russia to Europe. (jsk)