Business News of 2014-04-07

Present petroleum exploration, production bill to Parliament

The government has been urged to lay the petroleum exploration and production bill before Parliament. It must also consider developing a master gas plan for Ghana.

That, according to analysts, was very urgent because it would provide the framework for the development of Ghana’s gas potential, where incentives that would attract investors to come in, explore and develop gas fields would clearly be stated.

According to the Africa Centre for Energy Policy (ACEP), an energy policy think tank in Ghana, even though the first gas delivery from the Jubilee Field for the Ghana Gas Company was expected in the middle of the year, there were still a number of outstanding operational steps to be undertaken with regard to who actually owned the gas.

Speaking at a round-table meeting with some journalists in Accra on the theme: “Gas Commercialisation as a Solution to Ghana’s Energy Crisis – Myth or Reality,” the Executive Director of ACEP, Dr Mohammed Amin Adam, maintained that the problem of ownership of the Jubilee gas was yet to be resolved.

The meeting was organised by the International Institute of ICT Journalism - Penplusbytes, in partnership with the Revenue Watch Institute, Natural Resource Charter for 32 journalists and editors who had successfully completed a “Strengthening Media Oversight over Extractive Industries” training programme.

Who owns Jubilee gas

He said in the contracts signed with the Jubilee partners, the Ghana National Petroleum Corporation (GNPC) owned the gas but the mandate establishing Ghana National Gas Company gave the company the power to own gas, transport and sell it.

“So would GNPC continue to own gas on behalf of Ghana or will it be transferred to Ghana Gas?

“Apart from this we are yet to sign an agreement with the Jubilee partners with the evacuation of gas which would govern the relationship,” he said.

He said the Volta River Authority (VRA) was supposed to be the primary user of Jubilee gas, yet a gas purchase agreement between VRA and Ghana Gas or GNPC, or whoever the owner would be was yet to be signed.

“And these are not simple issues, if we want to wait until gas is delivered before we run around to sign those appropriate agreements,” he lamented.

Gas master plan

Dr Adam, an expert in energy policy who was contributing to the discussions at the meeting, said there had been talks for sometime now on the master gas plan but it (the plan) was yet to be developed.

“We need it as a matter of urgency because that gives us the alternative uses of gas and how we can ensure that over a certain period gas is delivering to us what we need from gas.”

According to him, a gas poison policy for instance, which was recently developed was a bold attempt, but the government needed to go beyond that to develop gas rules – rules for determining gas prices because it would provide some regulatory certainty to any investor who wants to come into the sector.

Challenges in power sector

He maintained that most of the challenges in the power sector had been attributed to the country’s inability to procure sufficient light crude oil or diesel to bring all oil-fired plants on-stream.

Dr Adam said issues of gas had become topical in Ghana in recent times because for the first time, the power crisis had not been attributed to water shortage or low levels at the Akosombo Dam but to shortage of gas.

He said putting up more gas plants meant the country would be vulnerable when gas was not available.

He suggested that Ghana used its indigenous gas to improve the energy sector while it imported gas to develop the petrol-chemical industry.

He said the gas reserves were inadequate for the provision of the required electricity needs of Ghana and therefore, Ghana would still have to depend on Nigeria but stressed Ghana was not likely to get more gas from Nigeria because Nigeria was getting better prices from new markets.

Nigeria and Algeria are laying a gas pipeline to Europe. This is something Ghana needs to consider, developing its indigenous gas facilities by providing private power generators guaranteed fuel for investors who come to invest in the energy sector.

Concerns about Jubilee contracts

Dr Adam expressed worry about how contracts were being awarded to companies with no experience in oil at the Jubilee Oil Field in Ghana.

According to him, Ghana was currently processing a new contract for a company owned by the son of a renowned Ghanaian international diplomat.

“They have no experience at all about oil. And these are the types of contracts we are signing today. And for me I am losing hope in our country as far as giving out oil blocks are concerned,” the energy expert said.

Dr Adam said the only justification given by the Ministry of Energy and Petroleum was that these were better contracts than the previous ones because they offered high local content.