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 However, the contract was revoked after the resignation of Soeharto in mid-1998.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)