Ghana Gas deflates media report on pipeline contract

Ghana National Gas Company Limited, has deflated media reports that it is constructing a 180-mile (290km) gas pipeline from Aboadze to Tema at a cost of $500 Million.

The company insists the project cost reported in the media is uninformed and a pick on a realistic estimation of the project from other media networks which ended in a jump into wrong assumptions.

The Company was responding specifically to a 14th October, 2016, by the Statesman newspaper headline: “TALE OF 2 COUNTRIES: GHANA GAS TO BUILD 180-MILE GAS PIPELINE AT $500M- AMERICA BUILDS 570-MILE PIPELINE AT $1.2BN.

According to the publication, Ghana Gas is paying $2.8 million for every mile of pipeline constructed whereas the US is building a similar gas pipeline at a cost of $ 211, 000 a mile.

However, in a release signed, Alfred Ogbamey, Corporate Communications Manager of Ghana Gas, indicated that the newspaper deliberately withheld details of critical information such as sizes/diameters of the US and Ghana pipelines it compared and the number of ancillary facilities such as compressors, block valve stations of the two pipelines.

He said those facts would have been essential for comparative analysis of the two projects, but were withheld because it would expose the flawed foundation and analysis of the report to discerning readers.

Ghana Gas also cited the US project in the report is the 570-mile-western pipeline constructed by Oneok Partners between 2011 and 2013 at $1.2 Billion.

“The Oneok project in question is a 16-inch diameter Natural Gas Liguids (NGLs) pipeline. Yet, as of 2013, the cost of the installed 16-inch diameter pipeline per mile was $2.1 million (not the $211, 000 reported). Again, the 180-mile Aboadze-Tema route is projected to use a 24-inch diameter pipeline, which is an increase of 50 per cent in the size of the 16-inch diameter Oneok pipeline”, the company asserted.

It continued that it is a fact that the cost of pipeline construction in Africa is generally more expensive than in the US, adding that the conclusion of the newspaper contradicts its own analysis in its report.

The statement noted that the project is based on a Build, Operate and Transfer (BOT) scheme, hence the cost of the project would not have adverse financial impact on the nation. Cost overrun on the pipeline will also inure to the disadvantage of the BOT Operator as it would not be able to charge more than $2 per Million British Thermal Unit (MMBTU), irrespective of the expenditure overrun”.

Ghana Gas through its statement stated that the report remains at best speculation and that full cost of the project will be announced on the execution of the projects execution contact upon conclusion of the Front End Engineering Design (FEED).

Ghana Gas further states that the reliance on the news report by leading political actors to indict the project is unfortunate.

Per the approval by the Government of Ghana to construct the onshore natural gas pipeline facility to link the western and eastern corridors, Ghana Gas on Wednesday, September 7th 2016 signed a PIA with Yantai Jere Oilfield Services Group Co. Ltd for the FEED.

The project is expected to provide bi-directional transport of gas between the critical load centres of Takoradi and Tema and supply security between the two key market pints.

It would also provide supply guarantees and linkages between LNG facilities in Tema and Takoradi, production of gas at the TEN Field, as well as upcoming Sankofa Field.