Gas to Power project feasibility in Middle East
Gas sales contract negotiation in Russia
Major French utility cogeneration supply

Gas to Power project feasibility in Middle East

Gas Strategies undertook a major project feasibility study looking at market entry, potential sourcing and transporting of gas supply to generate power needed to meet increasing demand in seven different countries in the Middle East

Our client, a services and industrial conglomerate based in the Middle East, was keen to enter the gas supply and transportation business providing gas supply mainly for power generation to several newly planned cities within the country as well as to neighbouring countries. Gas Strategies was consulted to assess the demand for gas-to-power, the costs of gas transportation and the overall project feasibility to supply the region.

Execution
We formed a multi-disciplinary team of expertise to take on the challenges of identifying and evaluating different routes, commercial and project realisation, satellite survey work to assess routing options, the supply-demand situation in each of the potential destinations as well as the reserves impact on potential suppliers. An economic model was build to identify the value of project including supply and delivery profiles and likely timelines for each phase of operation.

Client benefit
The initial study concluded that the project could have considerable value and a viable realisation strategy. Our client is in on-going discussions about sourcing gas supply in conjunction with this project and a number of related projects concerning energy supply and infrastructure in the Middle East.

Gas sales contract negotiation in Russia

Gas Strategies provided advisory services to a major oil and gas company in Russia in support of an ongoing gas to power contract negotiation. This included assistance in contract negotiations, analytical support and conceptual development of commercial terms.

Execution
Working closely with the client, we developed project objectives and a negotiation strategy whilst providing expert assessments on both commercial and technical aspects of the project.

A small team with contract negotiation experience in both the gas and power sectors worked to drive forward and progress negotiations. Principal elements of the project included contract and clause drafting, negotiations and strategic client advisory services.

Client benefit
Our client was able to develop and integrate the gas sales agreement into the wider project. We continue to support the client as a member of the Project Coordination Committee.

Major French utility cogeneration supply

Gas Strategies was consulted to support our client shape the best strategy for short and long term supply and transportation of gas to fuel a cogeneration plant in one of France’s largest industrial sites at a time of significant market liberalisation.

Support included negotiating the contractual terms and preparing tender documents for potential suppliers for gas supply needed for initial testing and eventually full operation of the plant.

Execution
The bidding process, structured by Gas Strategies, drew up a shortlist selection of best potential suppliers that met inflexible pre-arranged transport conditions with the monopoly transporter.

This required a two stage bid process – the first in order to secure short term highly variable supply need for plant testing, followed by a second bid process to arrange full supply with a lot more flexibility compared to typical long term contracts in order to meet relatively uncertain demand.

Additionally, we supported our client in negotiating price terms that looked to minimise risk in fluctuations in power prices. Other risks associated with liberalisation were also highlighted and minimised, such as changes in future conditions for access to the network, market liquidity and added price volatility.

Client benefit
The bidding processes were successfully negotiated between our client and several counterparties. Given difficulties with arranging transport conditions with the monopoly transporter, our client decided to source supply from the dominant supplier in the nearby region. The opportunity costs did mean our client was able to negotiate much better terms for the contract - high percentage of swing (low ToP) at a highly competitive price.