Officials of the West African Gas Pipeline Company (WAPCo) are in talks with Dangote Refinery to buy gas to bridge an estimated 300million Standard Cubic Feet of Gas Per Day (mmscfd) deficit by the year 2020 which has dire consequences for power generation in Ghana.
Officials of Dangote Refinery disclosed this to selected Ghanaian journalists who visited the plant to see, at first hand, the progress of work.
The move by WAPCo is seen as positive to resolve erratic supply of natural gas from Nigeria’s N-Gas.
Ghana has, over the years, experienced shortfall in natural gas supply from N-Gas to WAPCo to fire electricity generating thermal plants, particularly those in the Tema enclave, which rely solely on natural gas.
Thermal plants in Tema shut down
Currently, thermal power plants, such as Sunon Sogli, which rely solely on natural gas to run, have been shut down because N-Gas and WAPCo have shut down supply due to some $180million indebtedness
120 mmscfd challenges
The Volta River Authority (VRA) has signed an agreement with N-Gas of Nigeria to consistently supply 120million Standard Cubic Feet per gas a day to VRA to run thermal power plants to generate electricity.
However, N-Gas has not been able to deliver the 120million mmscfd consistently and management blames it on problems in the Niger Delta area where insurgents are said to have consistently vandalized gas pipelines.
800mmscfd required by 2020
According to the Energy Commission, gas production from all oil fields would make available an average total of 300-500 mmscfd by 2020 if developments of the fields are carried out as planned.
However, total gas supply is not likely to exceed 500 mmscfd though demand for power generation could go past 800 mmscfd by 2020.
Clearly, the fact that the indigenous gas would still not be adequate to meet the gas requirements for the medium-to-long term requirements of the country, Ghana is therefore looking at supplementing the gas supply with LNG imports.
300 mmscfd deficit by 2020
The Energy Commission said an estimated deficit of about 300 mmscfd by 2020 is within the breakeven point for a typical 200-250 mmscfd LNG re-gasification facility.
LNG supply option expensive
It noted that LNG supply option, however, would be relatively expensive compared to local or the WAGPCo gas.
Dangote gas to the rescue
Providing further details, Mr Rama Rao Putta, Head of Quality Assurance and Quality Control of the 650,000 barrels of crude oil a day capacity refinery, told journalists that the refinery is deploying the largest sub-sea pipeline infrastructure in any country in the world with submarine pipelines to handle three billion Standard Cubic Feet of Gas per day.
Secured gas from Dangote
Because the pipelines that would deliver the gas are under the sea, management is upbeat that it would be free from potential attacks from insurgents to avoid disruptions.
According to him, the $16billion world class refinery/ Petrochemical complex comprising a refinery, petrochemical and fertilizer plants is expected to be completed in 2019 and serve both the domestic and external market, with West Africa as the major beneficiary.
Mr Putta said the project, which is sited at the Dangote free zone, Lekki, Lagos, occupies 2,630 hectares of land and with capacity to produce 650,000 barrel of crude per day remains the single largest industrial undertaking in the world.
He explained that the first phase of petrochemicals manufacturing would be integrated with the refinery and would produce 750,000 metric tonnes of polypropylene per annum, while the fertilizer plant would produce 2.8 million metric tonnes per annum of urea and ammonia.
Even before the refinery is completed, Dangote Group has acquired oil blocs to produce crude oil.
Dangote acquires gas processing company
As part of the process, Africa’s richest man, Aliko Dangote, through his company Dangote Industries Limited (DIL), has completed the acquisition of Twister BV, a gas processing company based in Netherlands.
The company delivers reliable, high-yield and robust solutions in natural gas processing and separation to the upstream and midstream oil and gas sectors.
Twister’s acquisition complements DIL’s portfolio of investments in the upstream, midstream and downstream segments of the oil and gas sector.
The company will help design and build the gas plants which would be critical in processing gas from oil fields for transportation via Dangote’s planned sub-sea pipeline (EWOGGS) for ultimate consumption by various industries and power plants.
“Twister’s cutting edge gas processing technology is fundamental to delivering our strategy to unlock about 3 billion cubic feet per day (bcfd) of gas in order to meet Nigeria’s gas needs.” Dangote said.
“We are delighted with the confidence DIL and First E&P have shown in Twister to be their core provider of gas separation solutions. After a very thorough due diligence, our technology has been recognised as a key enabler to reduce gas project costs which is crucial in this current environment. We are excited to be part of the Dangote family of companies,” Twister’s CEO, John Young.
Dangote said the project when fully in operation in 2019, would help the country save $5 billion spent on the importation of oil into the country.
WAPCo to review tariff in 2018
WAPCo says it has agreed to a possible tariff review in the future with the government of Ghana to enable her have access to reliable gas supply.
The Managing Director of WAPCo, Walter Perez, hinted of a possible tariff review in the landing component of gas after 2018 when the current contract ends.
According to him, the agreement with the government of Ghana to supply gas to the Volta River Authority (VRA) will expire at the close of 2018 to pave way for the renegotiation of the tariff.
Current price of gas
For 2016, the Energy Commission projects a further drop in WAGP delivery price to VRA from $8.31/mmBtu ($8.45/mscf) to between $8.25-8.30/mmBtu ($8.40-8.45/mscf) during the first half of the year but increase to $8.50-8.55/mmBtu ($8.66-8.71/mscf) during the second half.
Annual average price would drop slightly from 8.75/mmBtu to 8.7/mmBtu61.
The delivery price of the Jubilee gas is on the other hand expected to remain at $8.84/MMBtu (($9.01/mscf) throughout the year.
However, since we project the bulk of the gas to come largely from the Jubilee, we estimate a total average delivery price of $8.87/mmBtu ($9/mscf)