Former BPMIGAS chairman calls on Pertamina, Medco to dump Mitsubishi

Former head of oil and gas upstream sector watchdog BPMIGAS called on state owned oil and gas company PT Pertamina and PT Medco Energi Internasional to dump Japanese firm Mitsubishi Corp. as a potential partner to build a liquefied natural gas (LNG) terminal in Central Sulawesi, citing that the development costs proposed by the Japanese firm was too high.

?It?s better (for Pertamina and Medco) to hold another tender to find (a contractor) that is willing to build the LNG plant at lower cost,? Kardya Warnika said in a discussion with reporters on Monday.

Kardaya, who was recently replaced by R Priyono as BPMIGAS? chairman, said Mitsubishi initially set the construction costs at $700 million. It later revised upwards the cost to $1 billion on the grounds that the prices of all raw materials have increased.

As a consequence of the rising construction cost, Mitsubishi asked for Pertamina and Medco to lower the prices of the gas that both will supply, Kardaya said.

Lukman Mahfoedz, President Director of PT Medco E&P, the upstream subsidiary of Medco, denied that Mitsubishi had initially set the construction cost at $700 million.

?From the beginning, the cost is between $1.3 billion and $1.4 billion,? Loekman told Petromindo via cell phone.

Mitsubishi plans to build an LNG plant with a capacity of 2 million tons per year. Gas for the project will be sourced from Pertamina?s 100 percent-owned Donggi block and Senoro-Toili block, which is equally owned by Pertamina and MedcoEnergi. Both blocks have combined certified reserves of 3.7 trillion cubic feet. (Godang)