Gas, New Projects

Oman’s Barka 3, Sohar 2 gas fired IPPs to start construction on 15 September

9 August 2010 – Projects agreements linked to the development of two independent power projects (IPPs) in Oman are due to the signed in the coming weeks, paving the way for construction work on the gas fired power plants to begin in earnest on 15 September.
 
According to Oman Daily News, a consortium led by Kahrabel GDF Suez, part of the international energy giant GDF Suez Group, was awarded the mandate to develop and operate the two IPPs last June in a keenly contested international tender. Barka-3 and Sohar-2, as the IPPs are referred to, will be developed with an estimated investment of $1.7bn.
 
According to an official spokesperson of Kahrabel GDF Suez, the consortium has set up separate companies to develop and operate the two IPPs. While Barka-3 will be established by Al Suwadi Barka Power Company SAOC, Sohar-2 will be developed by Al Batinah Sohar Power Company SAOC.
 
The companies are owned by a partnership of Kahrabel GDF Suez (46 per cent), Bahwan Engineering Company Oman (22 per cent), Shikoku Electric Power Corporation – Japan (11 per cent), Sojitz Corporation – Japan (11 per cent), and the Public Authority for Social Insurance – Oman (10 per cent).
 
A formal signing ceremony will be held in the coming weeks, at which a number of agreements covering the development of the green-field projects will be inked.
 
Among the project agreements to be signed are a 15-year Power Purchase Agreement with Oman Power and Water Procurement Company (OPWP); Natural Gas Sales Agreement with the Ministry of Oil and Gas; Project Founders’ Agreement with the Electricity Holding Company and all the founders; the Usufruct Agreement for the site and the Usufruct Agreement for the temporary areas (for Barka-3) with the Ministry of Housing; the Sub-Usufruct Agreement for the site and Licence Agreement for the temporary areas (for Sohar-2) with Sohar Industrial Port Company (SIPC); and the Seawater Extraction Agreement (Sohar-2) with Majis Industrial Services Company (MISC).
 
The projects will be financed through a blend of equity, early generation revenues and a senior loan facility, with the involvement of export credit agencies.
 
A consortium of GS Engineering of South Korea and Siemens of Germany has been named as the Engineering Procurement Construction (EPC) contractor for the two IPPs. A formal go-ahead for the commencement of construction work on the two projects is due to be issued on 15 September, according to the spokesperson.
 
Barka 3 and Sohar 2, each boasting a generation capacity of 744 MW, will be based on fuel efficient combined-cycle gas turbine (CCGT) technology. Barka 3 will be built close to where two existing independent water and power projects (Barka 1 and Barka 2) are already co-located at Barka. Sohar 2 will be constructed adjacent to the now operational Sohar-1 power and water scheme located within the Port of Sohar.
 
Both new IPPs are scheduled to be fully commissioned by 2013, although around 800 MW of early power will be available by 2012. Neither venture has a water desalination component.
 
When fully operational in 2013, Barka III and Sohar II will boost the total electricity generation capacity of the Main Interconnected System (MIS), covering the northern half of the Sultanate, by a hefty 40 per cent. The total contracted generation capacity within the MIS is projected to jump from the present 3726 MW to 5200 MW.