Oil majors invest in Saudi power and gas projects

Royal Dutch Shell, Exxon – Mobil and BP have announced major shareholdings in three integrated energy projects in Saudi Arabia that will attract investments of $25bn. The projects represent the first foreign investment in Saudi’s gas sector for 25 years.

The projects involve the development of natural gas fields and associated power plants, infrastructure and petrochemical facilities. Desalination facilities will also be built.

“We are delighted to be involved in one of the largest integrated gas development projects in the world,” commented BP’s CEO Sir John Browne. “Assuming a 25 per cent interest, BP’s expenditure alone on these projects could amount to $4bn.”

BP, together with Exxon, Shell and Phillips Petroleum, will develop the South Ghawar project, involving the development of gas reserves in the east of the Kingdom. Exxon will lead the consortium, which will construct two petrochemical plants, two 2000 MW power projects and desalination facilities.

Exxon is also the leading partner in the $5bn Red Sea project. Its partners will be Occidental Petroleum and Marathon Oil. The third project, Shaybah, will involve TotalFinaElf, Shell and Conoco.

Temelin causes strife for CEZ privatization

German power group E.ON has said that it will pull out of the process to privatize the Czech power sector unless the government unbundles the assets included in the sale and sells of the Temelin nuclear power plant separately. The move will make Electricité de France (EDF) the frontrunner in the planned sale.

E.ON is concerned that it would face a backlash from the German public and environmentalists if it owned the nuclear plant. The company recently cancelled a contract with CEZ for the import of around 3 TWh of power, citing the mounting opposition to Temelin as the reason.

These recent steps will cause other potential buyers to reassess their plans, according to analysts. The privatization of the power sector, involving the sale of a 67.5 per cent stake in CEZ bundled together with six distribution companies and several other assets, is complex and already long-delayed.

At the recent Power-Gen Europe conference, CEZ CEO Jaroslav Mil expressed his confidence in privatization, but stated that the government needs to resolve uncertainties surrounding the sale and speed up the process.

Nigeria suffers power setback

The Nigerian state-owned power company, Nepa, suffered a major setback in its attempts to improve the performance of its power industry when vandals attacked a vital transmission line. The attack left 13 states and several main cities in darkness, including Port Harcourt, the centre of the country’s oil industry.

Nepa warned that the blackouts would last for up to two weeks while repairs were made. The blackouts are a setback for the company’s efforts to reform the power sector and attract much-needed investment.

Many foreign firms are interested in investing in the Nigerian power sector but capital investment has been slow due to the lack of regulatory guidelines.

President Olusegun Obasanjo, who personally took control of Nepa in 2000 following a series of major blackouts, has pledged to reform and liberalize the sector. He faces political opposition as well as the hurdles of power theft and scrap metal thieves, who steal from aging power installations and sell the metal.

Kosovo B to be overhauled

The European Agency for Reconstruction in Kosovo has awarded a $16.9m contract for the overhaul of the Kosovo B power station to a consortium comprising Alstom and Innogy. The overhaul, which will start this month, will improve the reliability and performance of Kosovo’s power sector.

Alstom will supply spare parts for the turbine room and repair work for the condenser, LP heaters, feedwater pumps and HP/LP bypass.

The order follows a similar contract awarded to the same consortium in 2000. The Kosovo B power plant, a 678 MW lignite fired power plant in Obilic near Pristina, supplies a major part of the country’s total electrical consumption.

CCGT in Qatar

AES corporation has won the contract to develop the $720m Ras Laffan natural gas-fired combined cycle and desalination power plant in the State of Qatar. The company will own a 55 per cent equity interest in the project and will assume operating responsibility.

Ras Laffan will generate 750 MW of power and 182m l/day of water. The entire output of the plant will be bought by the state-owned electric and water distribution company, Kahramma, under a long-term purchase agreement.