Monday, 10 September 2012

Nigeria: Power plant pricing dispute

Sources have revealed that the Ibom Power Plant, which is one of Nigeria's power generating companies that is part of the current privatisation process, has been purchasing gas from Seven Energy's subsidiary, Septa Energy, at a rate that is higher than the US$1.50 that the Federal Government prescribed for purchasing gas from oil majors. The Geregu Power Plant has also been buying from Seplat Petroleum Development Company at a negotiated price which is different from the prescribed price.
Incidentally, both Septa and Seplat have stakes in Oil Mining Leases (OMLs) 4, 38 and 41 which were divested by Shell and its joint venture partners Eni and Total. It will be recalled that Seplat - which is a merger of two indigenous companies; Shebah E&P and Platform Petroleum - secured a 45% stake in the OMLs with NNPC retaining its 55% stake which are assigned to its Nigerian Petroleum Development Company (NPDC) subsidiary.
In turn NPDC sub-assigned the production and development of the blocks to Septa Energy in 2010 in an arrangement that was termed a Strategic Alliance Agreement (SAA). The latter saw Septa take on the petroleum operation costs and the provision of technical expertise for the production and development of the blocks. Septa is currently constructing a Central Gas Processing Facility at Eket in Akwa Ibom State.
For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.

© 2012 Menas Associates

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