Pertamina defends Natuna pipeline plan

Pertamina defends Natuna pipeline plan

JAKARTA (JP): State oil and gas company Pertamina denied on
Monday the allegation that the West Natuna consortium had held an
unfair tender to the awarding of the contract for the development
of the underwater pipeline megaproject to channel natural gas
from the gas fields west of the Natuna islands to Singapore.

Pertamina's head of foreign contractor supervision (BPPKA)
Gatot K. Wiroyudo said the tendering process done by the
consortium -- comprising Britain's Premier Oil, Canada's Gulf
Resources and the United States' Conoco -- was transparent and in
compliance with the existing regulations.

"We don't see any irregularities in the tendering process,"
Gatot said in a press conference attended by the representatives
of the three Pertamina production sharing contractors.

Pertamina signed last month the gas sales agreement to supply
Singapore's Sembawang Gas (SembGas) with natural gas extracted
from the consortium's gas fields in the South China Sea for 22
years starting from 2001.

The natural gas will be channeled through a 650-kilometer
underwater pipeline worth US$400 million linking the contractors'
gas fields to Sakra island off Singapore.

Gatot said the consortium had completed the technical
evaluation of the bidders and would hold definitive bidding later
this month.

Several members of the House of Representatives, including
Priyo Budi Santoso and Joeslin Nasution, have expressed their
concerns over the tendering process for the construction involved
in the pipelines.

They said the consortium had intentionally engineered the
terms of the tender to disadvantage the Asian bidders.

The tender's terms which Asian companies complained about
stipulated, among other things, that the contractors should have
a track record of building at least three pipelines of the same
length as the West Natuna pipeline over the past five years.

"All the Asian contractors participating in the bidding only
have experience of building shorter pipelines. But, the
requirements will exclude them despite the fact that they offer
more competitive prices than the others," Priyo said.

Gatot said there were initially eight international
engineering, procurement, construction (EPC) contractors which
were interested in participating in the bidding, but two of them
later backed off.

Only four of the bidders passed the technical evaluation
conducted by the consortium Oct. to Nov last year.

"As part of the technical evaluation, we also visited the
bidders' operation centers in their respective countries to see
their technical capabilities," Conoco's vice president of
development and relations AR Natanegara said.

Natanegara and Gatot however refused to name the four bidders
that passed the technical evaluation.

But according to Joeslin, the four EPC contractors are
France's ETPM, Italy's Saipam, Japan's Nippon Steel and the U.S.'
McDermott.

"Hiding itself behind the current reform spirit, the
consortium uses classical excuses like experience and the urgency
of the project to favor the four contractors," Joeslin said.

"Behind it is a big, systematic and delicate corruption plan,"
he said.

Gatot said BPPKA had approved the strict bidding requirements
made by the consortium given the high risk of the project and the
penalty that would be imposed by SembGas on the consortium in
case of gas supply problems.

"The consortium has to reduce the risk as much as possible,"
Gatot said, adding that the contractors had to finish the
construction of the pipelines in 25 months, otherwise the
consortium would face penalties from SembGas.

He said the bidding requirement did not specify the proportion
of locally-made materials that had to be utilized by the bidders,
but he said the use of such material will be considered a plus
point for bidders. (jsk)