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Ghana’s Gas Commercialisation Programme: What options?

  • SOURCE: | qwesa2big
  • This topic is an ongoing deliberation from the Penplusbytes Online Discussion on Oil and Gas which is part of the “Empowering the Media to Play an Active Watchdog Role over Ghana’s Oil and Gas Revenues and Resources” project sponsored by STAR-Ghana. This Discussion will continue till Wednesday, April 23, 2014.

    The bigger question relates to how to make the domestic gas market value chain beneficial in terms of guaranteeing jobs, diversifying the economy through ancillary activities, and human resource skills development. There are also lingering questions over the ownership of the gas resource; is it GNPC or Ghana Gas that owns it and whether it could impact on the time of first delivery of gas, or compromise good corporate governance?

    But also of immediate interest to many Ghanaians is the “The Development of Gas Infrastructure” and its impact for electricity generation. The completion of the a gas plant being built at Atuabo has become crucial in recent times as the West African Gas Pipeline Company struggles to deliver the 123 mscfd of gas that Ghana is entitled to shore electricity generation. It is estimated Ghana Gas can supply 100mscfd to VRA for electricity generation.

    Perhaps, Ghana can take lessons from Cameroon, where some major decisions have been taken. Starting in 2003, Cameroon made developing its gas industry a priority, resulting in definition of the Gas Master Plan, issued in 2006. Also, the Gas Monetization Strategy led to an allocation of 3tcf for export through a single integrated gas (LNG) project (Max Nussbaum, April 2013).

    As many may already be aware, in February 2011 the Government of Ghana commissioned a “National Gas Development Task Force” to review and make appropriate recommendations for the speedy realisation of a national gas commercialisation infrastructure system. Subsequently in April 2011, the Task Force submitted its report to the President and eventually culminated in the establishment of the Ghana National Gas Company (Ghana Gas) as a limited liability company in July 2011. Ghana Gas was given the responsibility to build, own and operate infrastructure required for the gathering, processing, transporting and marketing of natural gas resources in the country.

    The operations of the company have not been without controversy following reported allegations of usage of sub-standard materials, internal squabbling among top officials and defective financing mechanism.

    Nonetheless, the company has soldiered on and is now expected to complete the construction of a gas processing plant by end of April 2014 after missing out on the previous end-of-December 2013 deadline.

    The delay in the disbursement of the $3 billion China Development Bank (CDB) loan as well as the loss of a container with vital components for liquefied petroleum gas storage tank off the coast of South Africa is said to have severely contributed to missing the December 2013 deadline.

    From the perspective of government, there cannot be a compromise on the April 2014 deadline particularly as much of the growth that government expects for the Industry Sector in the medium term stems from the anticipated debut production of gas in 2014. Lean gas from the processing would be transmitted through pipelines to the Aboadze metering station for power generation and this is estimated to half the $3million dollars a day the VRA spends in purchasing crude oil for power generation.

    The gas processing plant is expected to receive 140 million Standard Cubic Feet of raw gas per day from the Jubilee Oilfield. The plant would then separate raw gas into various components as well as other mineral residues like propane, bitumen and others.

    Meanwhile, Ghanaians are battling the effects of power rationing following shortfalls from gas supply for electricity generation.

    It is against this background that this discussion is proposed to look at any contributions/suggestions stakeholders, guided by a gas expert, can offer to ensure the nation meets its targets as far as the gas processing commercialisation programme is concerned.

    The outcome of the discussions would be shared with policy making and implementing institutions such as the Ministry of Energy, the Petroleum Commission, the GNPC and Ghana Gas.

    Here is a recap of the key issues on which we invite all of you stakeholders to contribute in the form of critiques, questions/answers and suggestions/recommendations for effective policy, legislative and institutional reforms:

    • Local content in relation to domestic gas market value chain
    • The ownership of the gas resource; is it GNPC or Ghana Gas that owns it?
    • The adequacy of Ghana’s gas reserves for power generation, agro-industry development, etc. What option to choose?
    • Will the gas processing plant result in better electricity supply and or low cost of electricity to consumers or none of these? (considering the volume of gas available)
    • How to deal with the West African Pipeline Company’s supply shortfalls
    • Gas supply reversal: Is it possible to utilise the West Africa Gas Pipeline to supply Tema with jubilee gas?

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