Pertamina to choose three designs for Tangguh LNG plant
Thursday, April 20 2000 - 04:00 AM WIB
State oil and gas company Pertamina will choose three front-end engineering design (FEED) for the construction of the Tangguh liquefied natural gas (LNG) plant in Berau Bay, Irian Jaya, rather then only one design, a Pertamina senior official said.
Pertamina's processing director Ariffi Nawawi made the statement on Wednesday following reports that the state company and its American production sharing contractor Atlantic Richfield Company (Arco) had selected Japanese consortium Chiyoda-Mitsubishi to make the design for the LNG plant.
"The Japanese consortium is not the only winner of the bidding for the plant's design. There will be three winners of the bidding, each offering different technologies," Nawawi told Petromindo. Com.
Documents obtained by Petromindo revealed that seven companies had participated in the bidding proposing FEED based on three different technologies.
Chiyoda-Mitsubishi, Kellog Brown & Root, JGC, Technip proposes a FEED based on the Air Products and Chemicals Inc.'s technology.
Two other participants of the bidding, that is Foster Wheeler and Flour Daniels, proposed a FEED based on the technology of PRICO II.
Bechtel proposed a FEED based on Phillips' technology.
Earlier, Pertamina said it had selected Chiyoda-Mitsubishi and Becthel as the winners of the bidding and proposed the names to the Ministry of Mines and Energy for approval.
The state company however later announced that Chiyoda-Mitsubishi had been chosen as the winner of the bidding.
Chiyoda-Mitsubishi reportedly made a bid proposal of US$2.6 million, 78 percent lower than the owner's estimated price of $10 million, while Bechtel proposed the bid price of $8 million, 12 percent lower than the owner's estimate.
None of the companies proposing FEED based on the PRICO II technology was selected in the first phase of the bidding because their bid prices are higher than the owner' estimate. Forster Wheeler and Flour Daniels proposed the bid prices of $27.5 million and $17.9 million respectively.
The industry community however raised eyebrows over the selection of Chiyoda-Mitsubishi as Minister of Mines and Energy Susilo Bambang Yudhoyono has insisted that Pertamina had to select three companies representing each of the three technologies to make the FEED.
"Minister of Mines and Energy/Chairman of Pertamina's board of commissioners instructs Pertamina ? to carry out the FEED making works in line with the initial plan, that is there is a winner for each of the LNG liquefaction technology proposed during the FEED tender," Bambang said in a letter sent to Pertamina's president on Feb. 29, whose copy was made available to Petromindo.
Bambang also asked in the letter that the selection of the winners should be conducted "in consideration of the owner's estimate".
Bambang noted that the selection of winners representing each technology would ensure Pertamina and Arco would get the most competitive price during the engineering, procurement and construction (EPC) tender.
"The main purpose of the multiple FEED tender, is that with the participation of the three LNG liquefaction technologies proposed during the FEED tender, a tight competition will occur during the EPC tender. As such, the amount of investment could be reduced as much as possible," Bambang said in his letter.
Nawawi said the press release on the selection of Chiyoda-Mitsubishi contained "mistakes".
"The draft press release sent by Arco to Pertamina also mentioned Bechtel as the winner of the bidding but Becthel was no longer mentioned in the final statement sent to the press," Nawawi said, adding Pertamina would send the correction of the press release.
"We apologize for the incorrect press release," Nawawi said.
The Tangguh LNG project is being developed by a consortium of international companies led by Pertamina. The plant will be supplied with natural gas from the Berau and Wiriagar fields operated by Arco and the Muturi field operated by British Gas.
The plant will be able to produce 6 million tons of LNG per year from two processing trains. (*)