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Delays won’t affect cost of gas project

  • SOURCE: | qwesa2big
  • Chief Executive Officer of Ghana Gas Company George Sipa-Adjah Yankey has said that delays in completing the Gas Infrastructure project are not likely to result in cost increases as many have feared.

    The estimated US$750million cost of the project can only increase when there is a change-order, he said, meaning that increased costs will only result when extra work is added to the original scope of work of the contract which then alters the original contract amount and/or completion date.

    Dr. Sipa Yankey told the B&FT that procurement of equipment for the gas plant has already been done and that, as a matter of fact, the plant has already been fabricated and is being shipped to Ghana while pipelines have been strung together and are being laid.

    The only “unanticipated” cost incurred so far, he said, has been the construction of an Irish Bridge to allow the haulage of heavy-duty equipment to the project site. The strongest bridge in the area, he explained, allows up to 70 tonnes of cargo while the equipment in question weighed 150 tonnes.
    As such, there was no way the equipment could have been transported to the site without the new bridge, which cost about GH₵700,000, he said.

    He confirmed that the differences between Ghana and SINOPEC, the Chinese firm executing the project, have been resolved and that work has, since Thursday, resumed in earnest.

    Last week, SINOPEC abandoned the project due to delayed payments and disagreements between the lawyers of the Ministry of Finance and those of SINOPEC on the interpretation of some of the provisions of the master facility agreement.

    The project was initially billed for completion in December last year but similar delays held it up, and it is now expected to be done by the end of the year.

    Asked whether the latest impasse is not likely to further delay the project, Dr. Sipa Yankey said work halted for only two days and that this will not affect the timeline.

    The US$3billion China Development Bank (CDB) loan, part of which is being used for the gas project, has been embroiled in a lot of controversy lately — with dissenters calling on Government to look for other sources of funding for the project.

    Aside from the urgent need of the gas for power generation, there are speculations that operators of the Jubilee oilfields may be forced to resume flaring the gas if the infrastructure is not made ready early enough.

    The associated raw gas production profile from the Jubilee Field development plan estimates a maximum 120 million standard cubic feet a day of gas for the initial phase, which is expected to be maintained over a three-year period.

    A status report issued by the Ghana National Petroleum Corporation (GNPC) in July 2008 indicates that “for every 1,000 barrels of oil that is produced, it will necessarily come out with one million standard cubic feet of gas.

    “During Phase I, production of 120,000 barrels of oil per day, the gas production will be 120 million cubic feet of gas. At the second phase, when oil production is increased to 250,000 barrels of oil per day, gas production will increase to 250 million cubic feet of gas.”

    From 55,000 barrels of oil per day when production started in December 2010, Jubilee is currently said to produce 111,000 barrels of oil per day. If production stays the same till the infrastructure for the gas is ready, it means 111 million metric tonnes of gas per day should be expected — that is, if the GNPC’s statement holds that “for every 1,000 barrels of oil that is produced, it will necessarily come out with one million standard cubic feet of gas”.

    Source: B&FT

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