Oman Power and Water Procurement (OPWP) Company is in negotiations with Oman Oil for a 100-120MW power plant at Musandam. The gas-fired power plant is to be developed as an independent power project (IPP).

The project is not open to public tender, but rather negotiated on a one-to-one basis with Oman Oil. The oil and gas major will likely form a consortium so that it meets Oman’s minimum eligibility requirements.

OPWP will be the sole-offtaker of power from the project and will sell the full output to Oman’s Rural Areas Electricity Company (Raeco).

Oman Oil will buy power from the project for its new gas conditioning facility, which will be built nearby. At present, gas from Musandam is transported to the UAE emirate of Ras al-Khaimah. Oman Oil’s new facility will process the gas in the sultanate itself. This will require around 15 per cent of the power project’s output. The rest will be bought by other customers in Musandam Governorate.

The gas-fired power plant is part of a strategy to move Musandam away from diesel-fired power generation. The governorate currently relies on small diesel-fired units, which may be retained for back-up security once the gas-fired power plant is operational.

The US law firm Curtis, Mallet-Prevost, Colt & Mosle has been selected by OPWP to advise on the project. The IPP is expected to come online by the third quarter of 2014.