[attachimg=1] NNPC/Shell intrigues may have stalled a strategic move for improved power supply in the country, as the gas-to-power initiative, scripted as part of the industry roadmap, appears threatened by red tapism.
Firstly, Shell Petroleum Development Company (SPDC) is yet to make good its commitment to signing the requisite tripartite agreement with Nigerian National Petroleum Corporation (NNPC) and another firm, Southfield Petroleum Limited.
Also, a seeming reticence on the part of NNPC to enforce the Federal Government's directive on the project is allegedly adding to the delay.
Equally intriguing has been the award of a $250 million (N37.5 billion) contract to a Korean firm – Deawoo Engineering and Construction Company Limited, through SPDC and NNPC to execute a similar project, for which the country had already secured a Build, Own and Operate (BOO) pact with another company.
Southfield Petroleum is said to have secured the mandate of the Federal Government to build a supplementary gas treatment processing plant, at the Utorogu and Oben gas plants in Delta State.
The scheme, designed under the master-plan, is to ensure de-watering of the wet gas being currently supplied to the power plants through Southfield's facility, to be built under the BOO basis, for a period of 25 years. The project was estimated at about $400 million (N60 billion).
But two years after Southfield won the contract to ensure that bone-dry gas is supplied to power plants at Geregu, Papalanto, Omotosho and Egbin power stations, the relevant firms were, as at yesterday yet to sign their own part of the agreement, guaranteeing wet gas supply for the project, from its Utorogu plant.
The failure of all parties to sign the tripartite /heads of agreement in line with the Minister of Petroleum's directive, a source said, has led to the project not moving forward.
The tripartite/heads agreement guarantees the supply of gas by the operator/owners to the processing plant and ensures that no new processing plant/ technology is applied upstream of Southfield Petroleum plants.
The Utorogu gas plant was initiated in 1989 with the aim of processing 27 mmscfd of dry gas for supply to domestic markets around Lagos industrial areas via the Escravos-Lagos Pipeline System. It also serves as a back-up gas supply to some industries around Warri, including the PHCN's Delta I-IV Power Stations.
According to the Federal Government, the quality of gas emanating from the Utorogu and Oben gas plants into the Escravos-Lagos Gas Pipeline System had been a source of concern due to its unacceptably high wet gas content, which causes blockages along the pipelines and adversely affects the optimum performance of the power plants.
Buoyed by the need to further treat the gas from the Utorogu and Oben gas plants owned by the NNPC and SPDC Joint Venture before delivery to the domestic transmission line, the Federal Ministry of Power, had in 2008 invited proposals for the management of rich/wet gas at Utorogu and Oben gas processing facilities.
In order to remedy the situation, the government set up a committee to investigate and advise on how to supply bone-dry gas to the power stations.
The committee recommended a rich/wet gas management project, which would further treat the gas by removing the excess water and heavier hydrocarbons from the Utorogu and Oben gas plants before delivery to the domestic transmission line.
It also recommended that the project be executed on BOO basis, as this would compel the vendor to be more careful in the design, installation and operation of an enduring facility.
At the end of the bidding process, a firm named Southfield Petroleum Nigeria Limited, having scored the highest mark, was granted approval to install the supplementary gas treatment/processing plants in between SPDC's Utorogu and Oben gas supply lines to the Escravos, Lagos Pipeline System.
The contract for the project was awarded to Southfield Petroleum Limited for the installation of the supplementary gas treatment plants at Utorogu and Oben vide the Ministry of Petroleum Resources letter of award marked MPS/2115/T.36/T of July 9, 2009, having been approved by the Federal Executive Council.
Two years after Southfield won the contract, NNPC and SPDC as at yesterday, were yet to sign the agreement guaranteeing supply for the project.
A source, who spoke to The Guardian, affirmed that SPDC might have come out with an option, which the company has been trying to present to the government as an alternative to the existing project.
But industry sources faulted the new move.
"The need for our power stations to get supply of dry gas cannot be delayed due to the strategic importance of the commodity for improved power supply in the country, at this point in time.
"In fact, the effectiveness and lifespan of the power plants could be compromised if the scheme that would ensure supply of dry gas is not effected early enough. So, a direct intervention of the government is most imperative now, to ensure the actualisation of the power sector's roadmap", the industry technocrat said.
The Group Managing Director of NNPC, Austin Oniwon, had said recently that as part of efforts to ensure the success of the Federal Government's aspiration on steady electric power supply across the country, the corporation would ensure adequate gas supply to the power plants in all parts of the country.
Oniwon said power is the benchmark of most developed industrial economies in the world and as part of the corporation's commitment to support the Federal Government's aspiration on Power, the NNPC is doing everything humanly possible to ensure uninterrupted supply of gas to the power plants.
"The NNPC, more than ever before, is determined and committed to the Federal Government's gas to power initiative and as the Corporation saddled with the responsibility of managing the country's hydrocarbon resources, we have resolved to ensure that the abundant gas resources in the country are channelled into the power plants," Oniwon said.
Source: NNPC/Shell intrigues stall gas to power project (http://www.ngrguardiannews.com/index.php?option=com_content&view=article&id=41764:former-minister-of-foreign-affairs-tom-ikimi-left-action-congress-of-nigeria-acn-presidential-running-mate-fola-adeola-presidential-candidate-nuhu-ribadu-and-the-partys-national-chairman-bisi-akande-during-the-acn-rally-in-port-harcourt-yeste&catid=1:national&Itemid=559)