Pertamina picks Chiyoda, Bechtel designs for plant
Pertamina picks Chiyoda, Bechtel designs for plant
JAKARTA (JP): State oil and gas company Pertamina has chosen
Japanese joint venture Chiyoda-Mitsubishi and American firm
Bechtel to design the blueprint for its Tangguh liquefied natural
gas (LNG) giant project in Wiriagar, Irian Jaya, industrial
sources say.
However, the selection has yet to be approved by Minister of
Mines and Energy Susilo Bambang Yudhoyono, the sources said on
Thursday.
They said both companies had came out as winners in the
competitive bidding process held by Pertamina, beating five
competitors.
The five competitors were Inti Karya Persada Teknik (IKPT) and
its American partner Kellog Brown & Root; French firm Technip;
Japanese firm JGC and its local partner Pertafinikki; American
firm Flour Daniel and its partner Black and Veatch; and British
firm Foster Wheeler and its local partner Tripatra.
IKPT, controlled by Mohammad Bob Hasan, a close friend of
former president Soeharto, has built several LNG trains in Badak,
East Kalimantan, and had been appointed to design the Tangguh
project during the Soeharto era. However, the contract was
revoked after the resignation of Soeharto in mid-1998.
Documents obtained by The Jakarta Post reveal Chiyoda-
Mitsubishi proposed a design -- which is termed in the industry
"a front end engineering design" (FEED) -- based on Shell's air
product and chemicals international (APCI) technology, while
Bechtel proposed a design based on Philip's optimized cascade
process technology.
APCI technology is being used in LNG plants in Arun, Aceh and
Badak.
The documents say Chiyoda submitted the best technical
proposal and the best commercial terms with a bid price of US$2.6
million, 78 percent lower than the estimated price of $10 million
set by project owners Pertamina and American firm Atlantic
Richfield Company (ARCO) and partners.
Bechtel ranked second with a $8 million proposal, 12 percent
lower than the estimate of the project's owners.
Director general of oil and gas at the mines and energy
ministry Rachmat Sudibyo earlier told The Post the government was
likely to approve two designs, based on APCI and Phillips'
technologies respectively, to ensure greater competition in the
bidding process for the construction of the project.
"By offering two designs, rather than one design, we expect
the contractors to propose the lowest construction cost for the
best technology," Rachmat said.
Many analysts praised Pertamina for conducting a transparent
bidding process for the design, but some oil and gas executives
regretted the selection of Chiyoda, saying the price proposed by
the Japanese firm was "unreasonably low".
Spokesman for Pertamina's foreign contractors management body
(BPPKA) Sidick A. Nitikusuma maintained that the bidding process
for the design making was transparent.
"The entire process has been totally transparent and all
Indonesian government regulations have been followed. This
transparency has ensured that the international respect for the
integrity of Indonesia's LNG industry has been maintained,"
Sidick told The Post on Thursday.
Sidick refused to name the winners of the bidding.
The Tangguh LNG project will be supplied with natural gas from
Wiriagar, Berau and Muturi areas, which contain more than 14
trillion cubic feet of proven gas reserves. The gas fields are
owned by Arco, BG Exploration and Production and several
partners.
Pertamina estimates the construction cost of the project at
$600 million.
Pertamina and Arco have yet to find buyers for the LNG, but
have done preparatory works for the project to ensure that the
LNG plant could be quickly constructed once they do. (jsk)