Gas at Bidadi wanted 36 to 48 months after contract

Vol 8, PW 14 (06 Oct 04) Midstream & Downstream

Under the RFP for Bidadi gas suppliers must inform KPC if they sign gas contracts of five years or more with other customers.

If the supplier signs other long-term contracts from the same gas source we need to be sure our supplies wont be hit. KPC wants first gas anytime between 36 and 48 months of the date of contract.

This period is inclusive of the 12 months needed to satisfy the Conditions Precedent, we learn. The selected supplier also has the option of satisfying its share of Conditions Precedent within a shorter period.

Reliance the sole natural gas supplier is offering gas within 36 months while the Petronet-LNG consortium has asked for a 48-month period. IOC and Petronas are asking for a 54-month interval for first gas.

Petronas will have to compress its schedule, we learn. KPC is also demanding step-in rights should the supplier fail to provide gas.

If the supplier suspends gas deliveries we want the legal right to be able to step in and use the (LNG) regassification facilities or the (natural gas) pipeline to keep the power station running with gas from other sources, he adds. Once the supplier resumes supplies, well move out.

KPCs final RFP document also asks for a two-year make up period instead of the one-year suppliers are comfortable with. KPC originally asked for a three-year make up period.

Bidadi will require 1.6m t/y over 17 years, including the two-year make up period cited in the final RFP. This also states that if gas is not supplied for four consecutive months, KPC is within its rights to terminate the contract on two months notice.

If the Bidadi contract is scrapped, termination payment will equal the annual contract quantity (of gas) divided by two and multiplied by the gas price. KPC also makes it clear that it has no plans to increase Bidadi generating capacity by another 700-MW.

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