McDermott wins Natuna gas pipeline contract

McDermott wins Natuna gas pipeline contract

JAKARTA (JP): State oil and gas company Pertamina has approved
the West Natuna consortium's selection of PT McDermott Indonesia
for the construction of the underwater pipeline to transport
natural gas from the Natuna islands to Singapore.

Spokesman for Pertamina's foreign contractors management body
(BPPKA) Sidick Nitikusuma confirmed Monday evening that Pertamina
president Martiono Hadianto had approved McDermott's contract on
May 14.

"That's right. Pak Martiono has approved the contract," Sidick
told The Jakarta Post via telephone.

According to Sidick, Martiono approved the West Natuna Gas
Group's decision to award the contract to McDermott after
learning that the March bidding in which McDermott won the
project was held transparently and consistent with the existing
regulations.

McDermott offered the lowest bid of US$335 million, beating
out four competitors, including ETPM of France, Saipem of Italy
and Nippon Steel of Japan.

McDermott signed a deal with the consortium on Friday in
Jakarta, Sidick said.

The West Natuna Gas Group comprises Conoco Inc. of the United
States, Canada's Gulf Resources and Britain's Premier Oil.

The pipeline will be jointly constructed by McDermott
Indonesia and McDermott Singapore's unit McDermott Asia Pacific.

Pertamina had long delayed making its final approval on the
contract following strong criticism from various quarters,
including legislators, over the result of the tender held by the
consortium.

Legislators repeatedly called for retendering of the project,
arguing that McDermott did not deserve the project due to its
partnership with former president Soeharto's golfing partner
Mohammad Bob Hasan who was charged with corruption, collusion and
nepotism during Soeharto's 32 years of presidency.

But, Pertamina rejected the legislators' plea, saying that the
tender held by the consortium was transparent and in line with
existing regulations.

Sources said Martiono and several top government officials had
put pressure on McDermott to end the partnership with Bob Hasan
to meet the legislators' demands.

Secretary-General of Ministry of Mines and Energy Djoko
Darmono confirmed on Monday that McDermott eventually bowed to
the pressure.

"Bob Hasan has no longer had any stakes in PT McDermott
Indonesia since two weeks ago. You can check for yourself with
(lead consortium) Conoco," Djoko said.

Early this year, Pertamina signed an agreement to sell natural
gas from Premier, Conoco and Gulf gas fields in the South China
Sea to Sembawang Gas (SembGas), for 22 years starting from the
year 2001. The gas supplies could be extended for another five
years.

Under the contract, SembGas will import 325 million cubic feet
of gas per day (MMSCFD) to feed its power plant and petrochemical
plants.

SembGas is a consortium led by Sembawang Engineering and
Construction and includes Singapore's Tuas Power, Tractebel SA of
Belgium and Singapore's Economic Development Board Investments
Pte Ltd.

The gas sales will reportedly generate a total revenue of $7.5
billion for 22 years, $2.4 billion of which -- or $180 million
per year -- will go to the government in taxes and profit shares.

The West Natuna consortium said earlier they would invest $1.5
billion to develop gas fields, build transportation facilities
and construct pipelines.

Pertamina has also been negotiating with Singapore Power for a
supply of natural gas from Central Sumatra to the country through
an underwater pipeline starting from 2001.

Indonesia is currently the world's largest exporter of
liquefied natural gas (LNG). Most LNG exports are directed toward
South Korea, Japan and Taiwan. (jsk)