Pipe maker protests W. Natuna pipeline tender stipulations
JAKARTA (JP): Local pipe maker PT KHI Pipe Industries, a unit of state steel maker PT Krakatau Steel, said on Wednesday the West Natuna gas consortium denied it the opportunity to supply pipe for the transmission of natural gas from west of the Natuna islands to Singapore.
Company commercial director Murbiantoro Soemantoro said under the bidding terms the consortium required contractors wishing to join the tender for the project to use longitudinal welded steel pipe, instead of spiral welded steel pipe.
"Local pipe makers can only make spiral welded steel pipe. As no local pipe makers will be able to participate in the megaproject, most of the pipe for the project will have to be imported," he said.
"Therefore, we ask the consortium to change the bidding terms, which is possible if it has goodwill."
The West Natuna gas consortium comprises United States-based Conoco, Britain's Premier Oil and Canada's Gulf Resources.
The consortium will send natural gas from gas fields in the South China Sea to SembawangGas in Singapore via a 665-kilometer underwater pipeline starting in 2001.
Murbiantoro said the pipeline needed about 152,000 tons of steel pipe worth US$120 million.
Murbiantoro said the principal consortium Conoco along with American consultant INTEC Engineering specified in the tender documents that spiral pipe was not durable enough for an underwater gas pipeline. The consortium and the consultancy firm proposed the use of longitudinal pipe, which is popular in the U.S.
Murbiantoro said spiral pipe was not popular in the U.S. but was widely used in many parts of the world, including Nigeria, Libya, France and the Netherlands for underwater pipeline projects.
"The tender documents produced by INTEC ... specify longitudinal pipe as a requirement because the design of the gas pipeline is adjusted to the underwater environment of the North Sea. In fact, the area where the pipeline in Natuna will be laid down has a less hostile underwater environment than the North Sea," Murbiantoro said.
He said spiral pipe was used in some areas of the North Sea.
Murbiantoro said KHI had supplied submarine spiral pipelines for multinational companies, including the 50-kilometer pipeline owned by Argentine's oil and gas company Maxus off the coast of West Java and the 50-kilometer pipeline owned by ARCO off the coast of East Java.
He said KHI had won the tender for the supply of spiral pipe for a 280-kilometer underwater natural gas pipeline owned by state gas distributor PT Perusahaan Gas Negara connecting Sakernan in Jambi and Batam Island. The pipeline is designed to channel natural gas from Sumatra to Singapore.
The tender for the Rp 400 billion ($46 million) project was organized by the Asian Development Bank (ADB), which funds the project.
"Even ADB has no reservations about spiral pipe," he said.
The consortium recently announced that PT McDermott Indonesia, a subsidiary of American contractor McDermott Corporation, would most likely win the project to build the pipeline. It submitted the lowest bid for the project at $335 million during commercial bidding.
Also bidding were ETPM of France, Japan's Nippon Steel and Saipam of Italy.
Analysts say McDermott's bid was undermined by its alleged affiliation with businessman Mohammad "Bob" Hasan, former president Soeharto's golfing partner.
Pertamina has yet to announce the final result of the tender. (jsk)