Bidders balk at Chinese Petroleum's LNG contract

Chinese Petroleum Corp's (中油) inability to sell liquified natural gas to firms bidding for the NT$395-billion contract to supply the northern Tatan (大潭) power station may force the tender to be extended yet again, according to Chinese-language media reports over the weekend.

Bidding for the 25-year contract to supply Taiwan Power Co (台電) with LNG will close on Aug. 16, but with only Tung Ting Gas Corp (東鼎液化瓦斯), and a consortium led by Kaohsiung-based Hung Chung Construction Co (宏總建設) (one short of the number to be considered valid) the tender looks set to be passed on yet again, the reports said.

The closing date for the previous tender period, which was extended from November of last year to Jan. 15 of this year, was also passed on when too few firms lodged a bid.

The major bone of contention is the condition that bidders must submit a plan to supply the plant with an alternative fuel from Oct. 1, 2003 until October 2005, the reports said.

By starting construction of the plant early, it is hoped that the cost of building the LNG receiving terminal can be offset, the report said.

Construction of the plant is expected to be completed by 2003 and will have an installed capacity of 4,000MW.

But the alternative supply contract has backed into a corner firms interested in bidding for the project, as the only other viable option would be importing LNG through Chinese Petroleum's receiving dock at Yungan (永安), in Kaohsiung which is linked to Tatan in Taoyuan via a 300km pipe.

Yungan currently has inadequate storage facilities because the refrigerated storage tanks are faulty. Chinese Petroleum is currently seeking compensation in the Taipei District Court from Mitsubishi Heavy Industries Ltd of Japan for supplying leaking gas storage tanks for use at the Yungan facility.

France-based TotalFinaElf, which had formed a bidding group along with Asia Cement Corp (亞泥)and British Petroleum have reportedly decided against bidding for the contract.