Shell, Bayelsa seal deal on gas supply for power generation

29 February 2016, Lagos – As oil prices in the global market continue to decline, the Bayelsa State Governor, Henry Seriake Dickson has taken proactive steps to insulate and ring-fence the gas-rich economy through partnerships in gas-based infrastructure.

Governor Seriake Dickson of Bayelsa state.

Governor Seriake-Dickson of Bayelsa state.

To this end, Bayelsa State Government has closed a business deal in the hydrocarbon value chain with the Shell Petroleum Development Company of Nigeria (SPDC) by entering into a gas sale agreement through Bayelsa Development and Investment Corporation (BDIC) for the purpose of power supply to the Kolo Creek Gas Turbine.

The Gas Turbine asset is one of key businesses vested in the BDIC, a state-owned entity set up by the governor in 2012 to diversify the economy and create multiple income streams.

According to a statement from BDIC, quoted the acting Group Managing Director of the Corporation, Tamunoye Alazigha, described the development as historic. He commended Dickson for the high-impact catalytic initiative, and emphasised that the Corporation was improving on the required infrastructure to receive and generate power to augment the income of the state as well as create employment.

He said: “By this agreement, the SPDC would sell gas to the BDIC with the option of upward review of the volume to accommodate additional power investments. The contracted gas volume is sufficient to keep the Kolo Creek Gas Turbine up and running and leaves some that can in the short term be used to power the 31MW Power plant for which the state only recently entered into a concession agreement with Robo-Michael to complete and operate within the agreed framework.”

According to him, the strategy of the Corporation is to create robust alliances and enter into viable technical and commercial partnerships such as this one to leverage the abundant natural gas to generate cheap, sustainable and environmentally- friendly electricity for use locally and into the national grid.

“The Bayelsa Electricity Company Limited, one of our subsidiaries, is actively engaged in power generation, distribution and marketing, utilizing the finest system of automation techniques,” he said.

Also speaking on the deal, the Managing Director, Bayelsa Electricity Company Limited, Mr. Olice Kemenanabo, who also doubles as the Special Adviser to the Bayelsa State Governor on Power recounted that, “the signing of the agreement represented an enduring mutually beneficial commitment between the Bayelsa State Government through the BDIC and the SPDC on the sale and supply of gas. It will open up the state to wider investment opportunities.”

In his remarks, the Commercial Operations Manager (Gas), SPDC, Mr. John Kadiri recalled that the company commenced gas sales to Bayelsa State in 1996, saying the agreement was a logical extension of the milestone.

He commended the state government for its efforts towards the agreement, and expressed confidence that the relationship between SPDC and the State Government through the BDIC would yield productive results.

Bayelsa State already has the Gas delivery infrastructure that delivers gas to the Power plants at Imiringi and as such will only be expanded as the case may be. The state has gas reserves in excess of 18 trillion cubic feet. The interim gas purchase agreement is expected to remain operational until the parties negotiate and execute a Gas Sale and Aggregation Agreement (GSAA) under the Nigeria Gas Master Plan that will include the Gas Aggregation Company of Nigeria (GACN).

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