Indonesia watchdog clears Mitsubishi of 'unfair practices'

Indonesian government business watchdog Komisi Pengawas Persaingan Usaha (KPPU) has cleared Mitsubishi Corp. of alleged unfair practices in the $1.4 billion Donggi-Senoro LNG project.

Eric Watkins
OGJ Oil Diplomacy Editor

LOS ANGELES, June 11 -- Indonesian government business watchdog Komisi Pengawas Persaingan Usaha (KPPU) has cleared Mitsubishi Corp. of alleged unfair practices in the $1.4 billion Donggi-Senoro LNG project.

“Our internal clarification did not find enough evidence to prove that violations had occurred,” said KPPU Commissioner Didik Akhmadi, adding, “Therefore, the KPPU decided to close the report.”

The KPPU launched its investigation in April after LNG Energi Utama, a joint venture of Maleo Energi Utama and Australian LNG International Ltd., filed suit against Mitsubishi.

The JV claimed Mitsubishi used unfair business practices in its involvement in the Donggi-Senoro LNG project in Indonesia's Central Sulawesi province.

At the time, LNG Energi Utama said it had signed an agreement to join state-owned PT Pertamina and privately held PT Medco E&P in the project, but Mitsubishi—due to its alleged interference—was appointed the two firms’ partner instead.

LNG Energi Utama, which accused Mitsubishi of stealing sensitive data, claimed the Japanese firm boosted the value of the Senoro project to $1.8 billion from $700 million after a tender was announced—effectively eliminating the Indonesian firm from the competition.

However, the KPPU said Mitusbishi was not responsible for any upward tick in the value of the project. "The figure of $700 million was not from Mitsubishi, but an estimated project value mentioned by Pertamina," said KPPU reporting division head Gopprera, who added no indications of any false offer had been found in the project.

However, despite deciding to drop its investigation of Mitsubishi, the KPPU said Pertamina and Medco failed to carry out good corporate governance practices in appointing partners for the project.

"The two companies should have worked in a transparent way among themselves to avoid potential problems as have happened now," said KPPU Commissioner Dedie S. Martadisastra.

The KPPU also blamed weak supervision from the Indonesian government and upstream oil and gas regulator BPMigas, saying lack of oversight contributed to the dispute, resulting in a delay in the project’s development.

LNG Energi Utama’s lawyer, Rikrik Rizkiana, rejected the KPPU's decision and said his client might file a civil suit against Pertamina and Medco, who held the tender for the project.

Meanwhile, plans are moving ahead for production from the Donggi Senoro plant, which will produce LNG from natural gas supplied from the Matindok and Senoro fields in Central Sulawesi.

Pertamina 100% owns the Matindok field, which will produce 250 MMcfd of gas for the Dongg-Senoro LNG project, and is a 50% partner with Medco E&P in Senoro field, which will produce 85 MMcfd for project.

In the Donggi-Senoro LNG project, Mitsubishi Corp holds a 51% controlling stake, while Pertamina holds 29% and Medco holds the remaining 20%.

Contact Eric Watkins at hippalus@yahoo.com.

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