McDermott's Natuna success receives lukewarm welcome

McDermott's Natuna success receives lukewarm welcome

JAKARTA (JP): The success of PT McDermott Indonesia, a
subsidiary of American construction company J Ray McDermott SA,
in winning the contract to build an underwater pipeline to
transport natural gas from the Natuna islands to Singapore has
received a lukewarm response.

Priyo Budi Santoso, a member of the House of Representatives
(DPR), said he was surprised to learn that McDermott won the
project, but added he would not challenge Pertamina's decision to
name the company.

"Please go ahead, as long as the company (PT McDermott
Indonesia) can maintain its professionalism," Priyo said.

"I am surprised though that the company -- which is known to
have obtained a lot of projects during former president
Soeharto's era, due to its connection with strong people -- could
come out as the winner of the project with the lowest bid."

Priyo is one of several legislators who have often criticized
the West Natuna Gas Group which owns the project for "disfavoring
Asian contractors" in the bidding.

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

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

Legislators have also called for retendering of the project,
arguing that McDermott did not deserve the project due to its
partnership with Soeharto's golfing partner Mohammad "Bob" Hasan.

But, Pertamina's president Martiono Hadianto rejected the
plea, approving the consortium's decision to award the contract
to McDermott on May 14.

To appease the legislators' anger, Martiono and other top
governmental officials put pressure on McDermott to end its
partnership with Bob Hasan.

Priyo said he would ask Minister of Mines and Energy Kuntoro
Mangkusubroto and Martiono to clarify the report about
termination of the partnership.

"My question is, Is it true that there are no more strong
people in the company,?" Priyo said.

Secretary-General of the Ministry of Mines Djoko Darmono said
he had been informed that Bob Hasan no longer held stakes in the
company, but was unable to provide any further information.

"I don't know who bought his shares, what was the price of the
shares? The company must have documents to answer that," Djoko
said.

The 650-kilometer underwater pipeline will be used to channel
natural gas from fields owned by the consortium's members west of
the Natuna island to Singapore for 22 years starting from 2001.

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.
(jsk)