Integrated Gas Company (IGC), the sole aggregator and supplier of natural gas in the Sultanate of Oman, has invited existing end-users to bid for short-term gas supplies in the first such auction of its kind by the wholly state-owned energy firm.
On the market are around 9,000 million British Thermal Units (BTU) per day (approx 9 million standard cubic feet/day – mmsfd) of gas that will be available to one or more successful bidders for a period ranging from one to two years, according to IGC CEO Eng Abdulrahman bin Humaid al Yahyaee.
“As with our highly successful maiden spot natural gas sales contract that was signed with a leading Omani industrial customer barely a week ago, this time around IGC has unveiled yet another gas supply initiative that aims to maximise revenue generation for our principal stakeholder – the Omani government,” he said.
“Furthermore, these innovative actions seek to provide our industrial users, among other customers, with greater flexibility and efficiency in their purchase of natural gas.”
Speaking to the Observer, Eng Al Yahyaee said interested bidders are required to submit their price bids in sealed envelopes at IGC’s head office latest by August 30, 2024.
“IGC has already set a minimum price for the gas volume to be auctioned, so any price offers should improve on this reserve price,” the CEO said. “To allow for this transaction to benefit multiple players, IGC is open to having one, two or even three customers sharing the volumes among themselves in a certain proportion. Besides, the supply timeframe is for one year, which can be extended by negotiation for a second year.”
Just a week ago, IGC signed a landmark spot natural gas sales contract with Octal, the Salalah-based world leading polyethylene manufacturer. Under the deal, IGC has committed to supplying 15,000 m3 per day of natural gas for four months. The transaction marked IGC’s groundbreaking foray into gas marketing activities in line with its enlarged mandate as the sole shipper of Omani natural gas.
Set up as a state-owned enterprise under the auspices of the Ministry of Finance, IGC represents the government’s interests in the management of all allocations, assets, rights and obligations of natural gas purchase, sales, transport, imports and exports, as well as all relevant products. IGC is also tasked with contributing to Oman’s fiscal performance by shouldering all expenses related to gas purchase and transport from the State Budget. Part of its remit is to transfer net gas revenue to the treasury as well.
This week’s short-term gas supply auction has several underlying aims, said Eng Al Yahyee. “One objective is to help existing end-users strengthen their positioning in their respective field of operation by meeting their requirements of additional gas. This is particularly the case where a customer may have just completed a debottlenecking exercise, which necessitates access to additional energy supplies. Thus, instead of turning to diesel, which is not only more expensive but also significantly polluting, auctions of this kind will give them the opportunity to access relatively cheaper and environmentally friendlier natural gas.”
On the other hand, plant shutdowns – scheduled or sudden – can leave producers grappling with supply disruptions and unutilized gas volumes on their hands. By allocating these volumes to other potential customers through spot sales or short-term auctions, IGC can not only minimize impacts from disruptions, but crucially, also ensure uninterrupted revenues accruing to the Omani government, he stated.
Source:https://omanpetroleumandenergyshow.com/News/igc-launches-omans-first-shortterm-natural-gas-supply-auction