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Dabhol Power strikes long-term LNG deal with Oman co

Oman LNG has signed sale and purchase agreement to sell 1.6 million tonnes per annum of liquefied natural gas to Dabhol Power Company in Maharashtra for a period of 20 years.

The SPA signing ceremony took place at the ministry of oil and gas in Muscat, Oman, on Monday in the presence of Salem bin Mohammed bin Shaban, under secretary at the ministry and Oman LNG chairman and Sanjay Bhatnagar, managing director of both Dabhol Power Company and Enron India.

This gas supply deal represents a major milestone for Oman LNG because it means the entire output of the plant at Qalhut has now been sold. It is also unique because it will lead to the first import of LNG into India and it is also the first LNG contract in Asia signed with an independent power project.

The completion of the SPA follows the earlier signing in August agreement which defined all the principal commercial terms, including price for 1.2 mtpa. Negotiations since then have resulted in the increased supply of LNG from Oman to 1.6 mtpa.

Shaban said this is a historic occasion for both Oman and Oman LNG. For the deal will ensure supply of LNG to India over a period of 20 years. This will strengthen and improve bilateral relations still further.

The deal with DPC calls for the supply of LNG over a 20-year period with first cargo expected towards the end of 2001. DPC will build one LNG tanker specifically to ship the liquefied gas from Qalhat to their terminal in India.

DPC will import LNG supplied from Oman to generate electricity at a 2450 mega-watt power plant under construction on the Indian coast some 240 km south of Bombay. The first 826 mega-watt phase of the power project will shortly be commissioned and will run on naphtha until LNG deliveries commence.

DPC was formed to develop and operate a power station and a regasification facility and to sell power to the Maharashtra State Electricity Board.

Oman LNG is building its LNG plant at Qalhat near Sur, about 300 km east of Muscat at a cost of some $ 52 billion. It is the biggest single construction project ever undertaken in Oman. The overall project which includes design and procurement is 80 per cent complete, with actual construction work 55 per cent complete.

Oman LNG is a joint venture between the government of Oman (51 per cent), Royal Dutch Shell and Japanese companies Mitsubishi (2.77 per cent), Mitsui (2.77 per cent) and Itochu (0.92).

The plant will liquefy natural gas using two process trains, each with a capacity of 3.3 mtpa, and currently the largest LNG processing trains of their kind in the world. Although the LNG plant has a total capacity of 6.6 mtpa, actual volumes of gas produced for sale may be slightly reduced due to such factors as gas quality and normal losses as a result of the liquefaction process and seasonality requirements of the customers.

UNI

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