NNPC/Pan Ocean JV Signs Gas Purchase Agreement With PHCN
ABUJA, June 15, (THEWILL) - The brand new gas pricing regimeã€€made public a fortnightã€€ago by the Federal Government hasã€€crystallized into the signing of a Gas Supply and Purchase Agreement (GSPA) between the NNPC/Pan Ocean Joint Venture and the Power Holding Company of Nigeria, PHCN, today.
Petroleum Minister, Dieziani Allison-Maduekeã€€who described the signing of the GSPA as a key milestone in the drive to reposition the Nigeria domestic gas market for sustainable growth said with the new gas pricing regime, the gas market is set for unprecedented growth propelled by demand from the power sector and other gas based industries.
Speaking on the significance of the GSPA between the NNPC/Pan Ocean JV and PHCN, Alison-Madueke said: "The importance of today’s event is anchored not only in the size of the gas supply, but in the integrity and robustness of the process for gas access and contracting that this agreement has come to symbolize in the evolving Nigerian domestic gas market."
The agreement which was signed by Chief Festus Fadeyi, Chairman of Pan Ocean Corporation on behalf of the NNPC/Pan Ocean JV, the Managing Director of PHCN, Engr. Hussein Labo, and Dr. David Ige on behalf of the Gas Aggregation Company would guarantee the supply of 65mmcf/d of gas from Pan Ocean’s Ogharefe Gas Processing Plant to Egbin Power Plant.
The Minister revealed that apart from the gas supply from the Pan Ocean JV, the Egbin Power Plant is billed to get more gas supplies from the NNPC/Shell Petroleum Development Company JV and the NNPC/ Chevron JV as the GSPA’s for those deals would be signed before the end of the month.
According to her, for the Nigerian gas sector to realize its full potential, the processes that govern it must be bankable and robust enough to attract external financing and the contractual process must be such that enforces performance on all players in the value chain from producer to off-taker, adding that the new GSPA template that has been developed by the federal government is designed to meet those standards.
"The template stipulates all the terms and conditions for effective and bankable supply for gas to power in Nigeria. Having developed this template through a rigorous process of consultation with all stakeholders, the template is being customized for each gas supply transaction. I have directed that the template be loaded on the website of the Gas Aggregation Company of Nigeria.
This will allow potential investors in IPPs etc to have immediate visibility of the terms and conditions of gas supply in Nigeria, hence expediting their investment decision," she explained.
Also speaking at the occasion, the Minister of State for Power, Architect Nuhu Wya noted that the signing of the GSPA was like a birthday to Nigerians as it marks the end of epileptic power supply in the country.
"Right from today, there is no hiding place for anyone in the power sector. There is no more excuse for not generating enough power. Last year the excuse was that there was no gas, with this agreement that has been signed here today, PHCN is sure of receiving gas to generate power; and I can assure you Nigerians of regular power supply," Way said.
He commended the Minister of Petroleum Resources for her effective leadership in ensuring speedy completion of gas to power projects and particularly for driving the process of GSPA signing between the NNPC/Pan Ocean JV and PHCN to speedy fruition.
On his part, Chairman of Pan Ocean Corporation, Chief Festus Fadeyi, commended Allison-Madueke for her role in making the GSPA signing a success, adding that it was his happiest day.
Highlight of the agreement include: A clear specification of obligations and liabilities such that when gas is supplied it must be taken, failing which the defaulting party is liable to specific penalties; a clear line of sight between buyer and supplier without the NGC standing as a middleman; clear provision of a platform for roll-out of the new price regime of gas to power; clear definition of gas specification and what deviation is tolerable and at what price; and clear provision of world class bankable agreement structure that would encourage new players to want to supply into the Nigerian domestic gas market, among others.
Allison-Madueke expressed optimism that the new GSPA template and the example shown by the Pan Ocean JV and PHCN in signing the agreement would spur other JVs on to a prompt closure of their respective agreement.