Pertamina denies Kuntoro's claim about Natuna project

JAKARTA (JP): State oil and gas company Pertamina defended on Monday its final decision on the underwater Natuna pipeline project, despite a grumble from the mines and energy minister.

The spokesman for Pertamina's foreign contractors management body, Sidick Nitikusuma, denied the allegation by minister Kuntoro Mangkusubroto that the company had not consulted the ministry in making the final decision.

Sidick said Pertamina had sent a report to Kuntoro prior to giving approval to the selection of PT McDermott Indonesia as the contractor for the construction of the natural gas pipeline connecting the fields west of the Natuna islands with Singapore.

"Pertamina sent a report (to the minister) on May 7, 1999, to explain the progress of the tender for the construction of the natural gas pipeline held by the West Natuna Gas consortium.

"And (in the report) Pertamina nominated McDermott as the winner of the tender," Sidick said.

Pertamina's president, Martiono Hadianto, approved the selection of McDermott on May 14, one week after sending the report.

After the selection was made, Kuntoro expressed his disappointment, saying he had not been consulted by Pertamina over the matter.

"I only learned about the final decision from the newspaper." Kuntoro said.

He acknowledged that Pertamina was not obliged by law to report the tender's result to him, but said the company was morally obliged to do so because the project had become a public controversy.

Kuntoro sent a letter to Pertamina last Tuesday asking for a report of the tender process and of former president Soeharto's golfing partner Mohammad "Bob" Hasan's interests in McDermott Indonesia.

In answering Kuntoro's letter, Sidick said, Pertamina again sent a report to Kuntoro last Friday explaining the process that led to the selection of McDermott for the construction of the project.

According to Pertamina's evaluation, Sidick said, the tender for the giant project had been transparently conducted by the West Natuna Gas consortium.

He said the consortium selected McDermott as it presented the lowest bid, at US$265 million, undercutting its competitors France's ETPM, Italy's Saipem and Japan's Nippon Steel.

The consortium comprises the United States's Conoco, Britain's Premier Oil and Canada's Gulf Resources, which have signed contracts with Pertamina to develop gas fields in the South China Sea.

Pertamina made a deal early this year to supply natural gas from the consortium's gas fields in Natuna to Singapore's Sembawang Gas (SembGas) through a 650-kilometer underwater gas pipeline for 22 years starting from 2001.

Several legislators, dismissing the tender process as smacking of KKN (collusion, corruption and nepotism), believed the consortium had intentionally helped McDermott to win the tender.

But Sidick said there was no evidence to indicate that the consortium had given special treatment to McDermott.

McDermott was in the past affiliated to Bob Hasan, but Sidick said there was no evidence indicating it had received favor due to the affiliation.

"It needs to be emphasized that (awarding a tender to) an economic unit or legal entity owned by friends of officials could not be categorized as being practicing KKN as long as it doesn't receive special facilities," Sidick said, referring to the decree issued by Coordinating Minister of Developmental Supervision and Administrative Reform Hartarto Sastrosoenarto in 1998.

Sidick also said Pertamina had received a statement from notary public R. Arie Soetardjo last year stipulating that Bob Hasan had resigned as McDermott's commissioner on March 16, 1998.

"McDermott Indonesia has also informed us that Bob Hasan is offering its shares for sale but the negotiation for that purpose is now in progress.

"But, it is beyond Pertamina's authority to ask about the acquisition process and to whom Bob Hasan's shares are being offered," said Sidick. (jsk)