AMMAN: Jordan’s state-owned National Electric Power Co (NEPCO) has issued a request for proposal (RfP) to be supplied with 59,130,000/MMBtu annually over a period of four years, starting 2016, according to a document it released on 23 July.
This equates to around 20 cargoes every year, depending on the calorific value of gas and the size of vessel used for delivery to the 160,000 cubic metre (cbm) Golar Eskimo, Jordan’s floating storage and regasification unit (FSRU) positioned in Aqaba.
Qualified participants must submit their bids by 2 September, with an award date expected by no later than 30 September. While NEPCO prefers to receive the bids on the basis of the Brent crude oil price, it will consider other indices, including the Henry Hub and NBP benchmarks. It is up to the buyer’s discretion, however, to consider bids that are based on pricing mechanisms other than Brent.
The power producer’s existing five-year contract with Anglo-Dutch major Shell for 1mtpa of LNG is Brent-linked, ICIS understands. Deliveries from Shell started in July this year. NEPCO relies extensively on crude-linked pricing formulae for its domestic markets, namely diesel and fuel oil. In terms of hedging its risk exposure, there is sufficient derivatives’ liquidity in the Henry Hub and NBP markets to support gas-indexed contracts.
However, an offtake agreement, which could underline a structured supply position to service a mid-term contract, is more likely to be linked to crude pricing than gas indices. This is likely to be the case for volumes offered from Middle East and Australian production as well as diversions from the Asian markets, such as China. Gas indices, however, could come into play for bids made based on North American projects, reloads from Europe or by sellers with exposure to hub-linked markets and have opportunities to divert or optimise their existing long-term positions.
