Press Release

Oman Oil Company majority owned subsidiary Musandam Power Company SAOC signs a power purchase agreement, natural gas sales agreement and project financing agreements

  • Aug 11, 2015
  • SAOC

Oman Oil Company SAOC (OOC) majority owned subsidiary Musandam Power Company SAOC (MPC) announced the execution of a long term Power Purchase Agreement with Oman Power and Water Procurement Company SAOC and a Natural Gas Sales Agreement with the Oman Ministry of Oil and Gas providing for the supply and sale of natural gas to MPC. MPC has also signed project financing agreements and achieved financial close with Bank Muscat.

MPC is developing a new dual fuel Independent Power Plant (the Musandam IPP) in Tibat - Wilayat Bukha at the Governorate of Musandam with a capacity of 120 MW. MPC has selected dual fuel Reciprocating Engines (RE) configuration for the Musandam IPP following a competitive pre-qualification and tendering process to deliver flexible, lowest life cycle costs and sustainable energy to the Musandam Governorate.

Isam Al Zadjali, Chief Executive Officer of OOC, said: “the second phase of the project i.e. the issuance of notice to proceed to the EPC Contractor and construction work of the Musandam IPP started in advance of the signing of Power Purchase Agreement and project financing agreements in order to accelerate the pace of work and the establishment of the plant according to the completion schedule. This cooperation came in light of the commitment of all concerned parties to boosting national economic growth, contribute to ICV and facilitating investments through such sustainable projects.” 

The Musandam IPP will use clean natural gas as the main fuel to maintain the stability of the local electricity supply and support sustainable development in the Musandam Governorate while significantly contributing to the Sultanate’s energy-production capabilities and long-term economic diversification plans. Storage diesel fuel will be used during emergencies as the alternate fuel on discontinuation of natural gas fuel to guarantee the electricity supply for the Musandam Governorate.     The electricity generated from this project will be transmitted to the existing medium voltage grid through the new 132KV transmission lines being built by Rural Area Electricity Company SAOC. The generated electrically will serve the power demand of the Musandam Governorate.

MPC signed the Engineering, Procurement and Construction contract and Long Term Service Agreement for the Musandam IPP with Wärtsilä Muscat LLC – an affiliate of Wärtsilä Corporation of Finland, a global leader in complete lifecycle power solutions. Wärtsilä Muscat LLC will design, procure, engineer, construct, and commission the power plant as well as provide on-going maintenance and performance monitoring throughout the project’s lifecycle. The plant is expected to be commissioned by end of 2016.

As Oman’s first independent power project in the Musandam Governorate, MPC will use natural gas to be processed by OOC’s wholly owned subsidiary, Oman Oil Company Exploration and Production from the adjacent Musandam Gas Processing Plant to integrate the value chain and maximise value from Oman’s resources.

MPC was established in 2014 as Oman’s first independent power plant producer in the Musandam Governorate, a joint venture between Oman Oil Company SAOC, holding a 70% stake, and LG International Corp, holding a 30% stake.