Mon, 24 Apr 2000

Pertamina to select 3 designs for Tangguh

JAKARTA (JP): State oil and gas company PT Pertamina said it would select three designs for its Tangguh natural liquefied gas (LNG) plant in Berau Bay, Irian Jaya, to obtain the most competitive cost for the construction of the LNG plant.

Pertamina processing director Ariffi Nawawi said aside from the front end engineering design made by Japanese consortium Chiyoda-Mitsubishi, Pertamina would also use two more designs from different companies.

"The Japanese consortium is not the only winner of the bidding process for the plant's design. There will be three winners, each offering different technologies," Ariffi was quoted as saying by mines and energy specialist web last week.

Ariffi was responding to earlier media reports, which named Chiyoda-Mitsubishi as the only design which Pertamina and its American contractor Atlantic Richfield Company (ARCO) had chosen for their LNG plant.

Initial reports cited that Pertamina selected two designs by Chiyoda-Mitsubishi and the American firm Bechtel, pending approval by the mines and energy minister.

Ariffi, however, acknowledged that Pertamina's last statement to the media failed to mention Bechtel as among the winners, giving the impression that Chiyoda-Mitsubishi had won the final bid.

"We apologize for the incorrect news release," he said.

He said the draft news release sent by ARCO to Pertamina also mentioned Bechtel as another winner of the bid, but Bechtel was not mentioned in the final statement sent to the media.

Documents obtained by The Jakarta Post disclosed that Chiyoda- Mitsubishi's design is based on Air Products and Chemicals Inc.'s propane and pre-cooled-C3/MR technology.

It further said that Chiyoda submitted the best technical proposal and the best commercial terms with a bid price of US$2.6 million for its design.

Bechtel proposed an $8 million design based on Phillip's optimized cascade process technology.

The cost of each of these two designs was lower than Pertamina's estimated price of $10 million.

Another technology, called PRICO II, was offered by British firm Foster Wheeler and the American firm Flour Daniels, but they both failed to pass the first phase of the tender since they submitted too high a price for their designs, which was $27.5 million and $17.9 million respectively.

Reports on Chiyoda-Mitsubishi's win contravened with the government's demand that three designs be selected for the construction of the LNG plant.

Minister of Mines and Energy Susilo Bambang Yudhoyono has reportedly instructed Pertamina to choose a winner from each of the LNG liquefication technologies during the tender process.

Bambang has said the selection of winners representing each technology would ensure Pertamina and its contractor gain the most competitive price for the construction.

Pertamina, ARCO and its partners plan to build a two-train LNG plant worth $1.5 billion with an annual output of 6 million tons of LNG.

Companies that are interested in taking part in the bidding for the construction of the LNG plant are free to choose from each of the designs and Pertamina will select the company which offers the lowest construction price.

"The main purpose of the multiple tender is that a tight competition will occur, thus reducing the investment cost," Bambang was quoted by the website as saying in his letter dated Feb. 29.

The Tangguh LNG project will be supplied with natural gas from the Wiriagar, Berau and Muturi areas, which contain more than 14 trillion cubic feet (tcf) of proven gas reserves.

These gas fields are owned by ARCO, BG Exploration and Production and several partners. (bkm)