General News of 2014-04-22

Controversy looms over gas processing

There is a looming controversy over which entity has the right to process gas from the country’s oil fields, as some of the oil companies which have discovered only gas deposits offshore insist they want to process before passing on to Ghana National Gas Company (Ghana Gas).

Ghana Gas, however, insists that it is the only entity mandated in the country to build, own, and operate infrastructure required for gathering, processing, transporting and marketing natural gas resources in the country.

Currently, some international oil companies which discovered gas only, without associated oil, are considering setting up a separate processing plant independent of the Ghana Gas plant.

Their discoveries have brought the country’s total gas deposits to an estimated volume of five trillion standard cubic feet, up from 1.2 trillion standard cubic feet which came from the jubilee field.

The controversy

The companies, which include the Italian Eni Petroleum, according to their plan of development, will like to first process the gas and sell the final product to the Ghana Gas for it to resell to end users such as independent power producers (IPPs).

However, Ghana Gas is resisting that move, stating it was its mandate to harness the country’s gas resources and that the gas discovered by any company should be connected to a riser platform, which serves as an offshore aggregator of gas, to be transmitted or shipped to its plant at Atuabo in the Western Region of Ghana for processing.

Phase I

Currently, Ghana Gas project is crawling to the end of the first phase of the processing facility with the installed capacity of 150 million standard cubic feet (MMSCF) a day.

Under the first phase, Ghana Gas will start receiving the part of the 1.2 trillion standard cubic feet of gas from the Jubilee Partners for processing.

Even though there have been delays, work on the physical infrastructure is almost complete with 111 kilometres of pipes extended to the Aboadze Power Enclave and the US$1.2 billion fertiliser plant, both in the Shama District in the Western Region.

Phase II

According to Ghana Gas, the second phase of the project, which is expected to increase its output to 300 million standard cubic feet, will start immediately after the first phase and, therefore, there was no need for a private company to duplicate its functions.

Protect interest of Ghana Gas

At a recent Star Ghana Oil and Gas Thematic Convention, discussants supported the stands of Ghana not allowing other companies to set up their own gas processing plants.

Lead discussant, Dr Steve Manteaw, who is also the Chairman of the Civil Society Platform on Oil and Gas, said the purpose of setting up the Ghana Gas was to ensure that the country benefited from other industries that could emerge from processing natural gas.

Dr Manteaw said the petroleum laws of the country was clear about what should happen when a company discovered oil with associated gas or exclusive gas, saying “when Ghana Gas is prevented from being the sole processor of natural gas, the country will then be denied the benefits that will be derived from processing raw gas.”

“When we get the raw gas, then we will have the added benefit of adding value to the raw gas, and that fertiliser plants and other petrochemical industries will then spring up and increase the manufacturing sector of the country,” he added.

Dr Manteaw explained that if any company was allowed to setup its own gas processing infrastructure, then every company that discovered gas would want to do same and that would lead to a chaotic situation as several pipes would be laid by the various companies to process gas and sell it to the country.

To prevent such chaos, the Ghana National Petroleum Corporation (GNPC) installed a riser platform, which serves as an aggregator offshore, so that other future discoveries could tie in and deliver the gas to shore for processing by Ghana Gas.

He said currently, Ghana Gas had the structures in place, pipelines had been extended to designated places and it was just right for companies such as ENI and others, which had discovered gas, to negotiate the raw gas with Ghana and sell to Ghana Gas.

“But if we cannot have these companies digging everywhere for transmission of gas to where a thermal plant is located, Ghana Gas or government for that matter must insist the gas is sent to Ghana Gas and not to allow another competitor,” he said.

Ghana Gas

Speaking to the Daily Graphic, the Chief Executive Officer of the Ghana National Gas Company, Mr George Adja Sipa Yankey, said it was not prudent to allow individual companies to set up their own processing facility since it would defeat the purpose of setting up Ghana Gas.

He said the focus currently was delivering the first gas to the plants and the second phase, which would be much easier, would follow.

The CEO maintained that Ghana Gas would be in a position to process the estimated gas deposits in the country, as onshore and offshore infrastructure was ready to receive and process gas.

The Graphic Business is making attempts to speak to some representatives of the oil companies. Those contacted so far have remained tight-lipped.

Natural gas is of critical importance to the country because of a number of reasons, some of which are stated below:

Key drivers for gas

High energy generation costs as a result of using light crude. This is already choking the economy.

Energy Deficit – The country has energy deficit which has even led to the shutting down of one of its important installations, the Volta Aluminum Company (VALCO) smelter.

Mining mineral deposits, such as manganese, bauxite and gold require heavy use of energy. Further energy is required to process them and stop their export in the raw form.

The West African Gas Pipeline (WAGP) is unable to deliver gas in required quantities to Ghana.

Ghana will be the majority shareholder in any natural gas infrastructure.

Source: graphic.com.gh
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