LNG worries - Samsung's selection sparks concerns

The selection of a preferred bidder for Jamaica's liquefied natural gas (LNG) infrastructure is starting to attract more controversy. The Korean firm Samsung was recently announced as being selected as the preferred bidder but Sunday Gleaner sources say several questions are being raised in the energy sector about the process.

The parliamentary opposition has also voiced its concern about the selection process.

Last Tuesday, leader of opposition business in Parliament, Delroy Chuck, tabled 15 questions seeking answers from Energy Minister Phillip Paulwell.

Chuck argued that with Samsung not identified as the lowest cost bidder and price carried a 40 per cent weight in the published evaluation criteria, it is important for the Government to disclose the evaluation criteria used in the awarding of the LNG installation bid.

Chuck further noted that at the public opening of bids, it was announced that Samsung will use a fixed jetty regas operation instead of a FSRU (floating storage regassification unit), which can be moved to safety in the event of bad weather.

"The Opposition is also seriously concerned about issues related to the technology to be used in the LNG project, and calls (on) Energy Minister Phillip Paulwel to address the issues forthwith," said Chuck, who tabled the question on behalf of the Opposition Spokesman on Energy Gregory Mair, who was not in the House.

The selection of Samsung was made by the LNG steering committee that was headed by Chris Zacca, but his replacement, Dr Carlton Davis, was reportedly asked to review the process before the announcement was made.

Last week, Davis told The Sunday Gleaner that three entities tendered bids for the project but one was not considered because it was non-responsive on two counts.

According to Davis, of the two entities whose bids were considered, Exmar and Samsung, neither earned the full 40 marks on the basis of the price quoted.

However, data sourced by The Sunday Gleaner show that the Samsung bid was priced at US$111 million per year while the Exmar bid was priced at US$102 million, with Exmar presenting an alternative bid at US$84 million per year.

Technical criteria

Davis said the consultants, Worley Parsons, found that both companies' bids substantially met the technical criteria in the Government's request for proposals.

He said the technical team will have to look closer at the merits of the decision to construct the regas operation on a fixed jetty.

Davis also admitted that the companies submitted bids based on quantities well above the amount of LNG which Jamaica intends to purchase initially.

"Yes, the bids were made on the basis of 2.5 million tonnes per annum, three times more than our proposed starting amount of 850,000 tonnes per annum, and one of the challenges is to get the cost for the smaller amount well below where both (companies) seem headed," said Davis.

He noted the Government still has to address the big problem of the price at which it will purchase the LNG