Global Gas seeks FG intervention over prolonged dispute with SPDC

…Says dispute sending wrong signal to foreign, local investors
Global Gas Refining Limited (Global) has called on the Federal Government to encourage amicable settlement of the dispute between Global Gas and Shell Petroleum Development Company Limited (SPDC).

Global Gas, in a court document exclusively obtained by The Daily Times accused SPDC of deliberately refusing to supply the required “Rich Gas” thereby frustrating its efforts to maximise the gas potentials of the region in line with the Federal Government policy on gas development.

The company, however, lamented that the prolonged dispute if not immediately looked into will send a wrong signal not only to foreign and local investors but would also affect the nation’s economy.

Global Gas said, “The much needed Foreign Direct Investment and local investment in the gas sector could be achieved if the Federal Government encourages the amicable settlement of the dispute between Global Gas and Shell Petroleum Development Company Limited (SPDC) and compensate the firm for its wasted expenditure and huge investment.

“We are of the strong conviction that the continuance of such a dispute as in the instant case portends significant consequences and may militate against the commendable efforts by the Federal Government to attract and encourage the much needed Foreign Direct Investment

as well as the promotion of local content development in a key sector of the economy such as Gas Production and Processing. The negative multiplier effect of such an avoidable situation need not be over emphasised”.

Global Gas had on March 20, 1998 by virtue of a Gas Sale and Purchase Agreement (GSPA) entered into an agreement for the sale/purchase and processing of Natural Gas (Rich Gas) with the SPDC.

By the GSPA, SPDC agreed with Global to supply the natural gas available from the Cawthorne Channel Region to Global for processing.

In the GSPA, SPDC represented to the Global that the gas studies (as per the reserve certificate) available for the Cawthorne Channel Gas Gathering Plant (CCGGF) confirm that SPDC has the reserve capacity to supply up to 160mmscf/d of rich gas to Global for processing.

Under the GSPA, Global Gas was required to establish a gas processing plant whilst SPDC was obligated to establish its own gas gathering facility.

But the SPDC purportedly conceived that Global was in default of the agreed time to complete the construction of the Global facilities, and sought to terminate the GSPA.

Global Gas however countered SPDC’s position by commencing an arbitration.