West Natuna pipeline project to be bid soon

JAKARTA (JP): The West Natuna gas contractors will soon hold a tender for the construction of the underwater pipeline megaproject to channel natural gas from the gas fields west of the Natuna islands to Singapore.

Rab Speirs, president of Premier Oil Natuna Sea Ltd, a subsidiary of Britain's Premier Oil, one of the contractors, said on Friday that the invitation for the tender would be sent to prospective bidders later this month.

"The technical evaluation of the bidders has already been completed and the invitation for the commercial tender will be going out in two weeks," Speirs said on the sidelines of the ceremony to sign the gas sales agreement between state oil and gas company Pertamina and Singapore's Sembawang Gas (SembGas).

Speirs said the final tender would be held here but he refused to name the contractors which had passed the technical evaluation and now qualify for the tender.

A legislator of the ruling Golkar group, Priyo Budi Santoso, said earlier that eight companies had qualified for the final tender.

They are McDermott, Global, Allseas of the United States; Saipem of Italy; EPPM of France; Japan's Nippon Steel; South Korea's Hyundai and Daewoo.

Priyo earlier blasted the West Natuna consortium for intentionally engineering tender requirements to disadvantage bidders from Asia.

Priyo said the tender's terms which Asian companies complained about stipulated, among other things, that the contractors should have a track record of building at least three pipelines of the same length as the West Natuna pipeline over the past five years.

"All the Asian contractors participating in the bidding only have experience of building shorter pipelines. But, the requirements will exclude them despite the fact that they offer more competitive prices than the others," Priyo said.

Director General of Oil and Gas Soepraptono Soelaiman, in a hearing with the House of Representatives' Commission V for mines and energy, industry and trade and investment, said that the ministry had sent a letter to the consortium calling on them to make "reasonable" tender requirements.

Speirs said the consortium would not change the tender requirements to secure the quality of the pipeline and to prevent penalties being applied by SembGas for gas supply problems.

"We didn't change the requirements and we communicated back to the ministry the reasons why the requirements were critical to the contract," Speirs said.

Under the gas sales contract, Pertamina will supply SembGas with natural gas for 22 years from 2001 to 2023 with a possible five year extension.

The natural gas will be extracted from the gas fields in the South China Sea owned by Premier Oil, Canada's Gulf Resources, and Conoco of the United States and will be channeled from the West Natuna gas fields to Sakra island off Singapore through a 650-kilometer pipeline with a diameter of 28 inches.

The West Natuna Group consortium will reportedly invest US$400 million to build the pipeline.

The government has extended the production sharing contracts (PSC) held by the three contractors up to 2029 to secure the gas supply to SembGas throughout the sales contract period.

The gas will be used to feed Singapore's power plants and petrochemical plants.

Premier's chief executive Charles Jamieson, who was present at the ceremony, said the gas sales agreement between Pertamina and SembGas showed that international companies remained confident about Indonesia's prospects in the oil and gas sector despite the current economic and political crises.

Sales of the West Natuna gas will reportedly generate total revenue of about $8 billion over 22 years, $2.7 billion of which -- or $123 million per year -- will go to the government in taxes and profit sharing. (jsk)