Two US federal agencies and the government of Afghanistan concluded an agreement Thursday for a power-generation project with related gas-field development in Afghanistan that has been "years in the making," according to the US' Overseas Private Investment Corporation.
The US parties involved in the $600-million, 200-MW project include OPIC, the US Agency for International Development and a US independent power producer, the OPIC statement said.
The project involves building and operating a gas-fired power plant adjacent to three gas fields in Sheberghan, the capital of Afghanistan's Jowzjan province; development of natural gas reserves needed to fuel the plant; and the construction of transmission facilities to connect the plant to the country's North East Power System, OPIC said.
OPIC will finance up to 75% or $225 million of the total $300 million in power plant costs and will provide political risk insurance to eligible investors investing in the project, it said.
USAID will finance the rehabilitation of two existing wells in the gas fields, as well as the drilling of one or two new wells to prove gas reserves for the proposed plant, it added.
OPIC said ContourGlobal, a US company that has partnered with OPIC on clean-energy projects in West Africa and Eastern Europe, is the US sponsor of the project. In addition, Industrial Promotion Services, the industrial development arm of the Aga Khan Fund for Economic Development, is also investing in the project, OPIC said.
Citing a 2010 USAID report, OPIC said 144 gas wells were drilled in the three Sheberghan gas fields between 1959 and the 1980s, "with 70 completed as production wells and nearly 64 billion cubic meters of gas produced. But the three fields have been estimated to hold an additional 34 billion cubic meters of gas in the produced reservoirs."
"The Sheberghan Gas Field project stands to become the cornerstone in the new foundation of northern Afghanistan's energy security," OPIC's president and CEO, Elizabeth Littlefield, said. "The power generated by this plant will meet Afghanistan's growing demand for electricity, at a reasonable cost, utilizing indigenous resources, and employing US private sector investment to do so."
OPIC is the US government's development finance institution. It provides private investors in its projects with financing, guarantees and political risk insurance, it said in its statement.
The USGS estimates Afghanistan's total undiscovered oil and gas potential at nearly 16 billion barrels of oil equivalent.
