Ghana gas forces taps open in Nigeria?

It is good news for Ghana currently so far as gas supply from Nigeria is concerned; perhaps for the first time since April 2009, when the West African Gas Pipeline started delivering gas, VRA is unable to consume all the gas that comes in.

And, perhaps, now more than ever, the stretch of the pipeline between Tema and Takoradi is being utilized; gas from Nigeria has been quietly going to Takoradi due to increased volumes and due to challenges with Ghana’s own gas on the FPSO Kwame Nkrumah.

“Currently, we are getting in excess of 140million standard cubic feet per day of gas from Nigeria. That has been quite encouraging,” Kofi Ellis, Business Development Manager of the VRA told the B&FT on the sidelines of the Ghana Gas Forum held in Accra recently.

So what has accounted for the increasing gas supplies from Nigeria even when the VRA owes the suppliers in excess of US150million? Is N-Gas acting like a slow moving driver who increases his speed immediately he realizes someone is trying to overtake him?

For a whole year, from August 2012 to August 2013, Ghana, Togo and Benin received no gas from Nigeria because the pipeline was damaged by a vessel in Togolese waters.

Even before then supply was hardly up to fifty percent of what was expected, and when supply resumed after the pipeline was fixed, the story remained the same for a long time.

Until recently, volumes supplied to Ghana dropped to an all- time low of between 30million and 50million standard cubic feet per day, making it difficult for the solely gas-reliant Sunon Asogli power plant (200 megawatts) to stay on.

The Ghana Gas Company likes to think that the coming on stream of its own gas must have had something to do with the recent increase in supplies from Nigeria.

While extolling the virtues of his company at the Ghana Gas Forum, Dr Sipa Yankey of Ghana Gas joked that: “for some reason supply from Nigeria has suddenly increased,” and what he was suggesting was not lost on attendees of the forum.

Amid fits of laughter, CEO of the West African Gas Pipeline Company, Walter Perez, parried off Sipa Yankey’s suggestion when the B&FT sought his comments: “Well, I have heard Sipa Yankey mention this several times. He knows it’s not true but he continues to offer this as a possibility.”

WAPCo’s side of the story is that the Nigerian gas sector has simply found some peace, with no pipeline vandalism in the last few months, a reason supply to Ghana has increased significantly.

“The other component, I believe, is that some of the policies of the former government in Nigeria had been to invest in pipeline infrastructure and also in gas production, and we are seeing that those plans are coming through; they are actually being completed…” Walter Perez insisted.

While there is evidence to show that a lot of positives are happening on the gas front in Nigeria, resulting in increasing supplies, WAPco and N-Gas are not unmindful of the competition Ghana gas brings.

There was a sense of this in the statement of the Nigerian Minister for Petroleum Resources as far back as November 2014, at an emergency meeting in Accra of the committee of ministers of the four countries in the deal. Ghana Gas, at the time, had just begun pumping about 30million standard cubic feet of gas per day (MMSCFD) to Aboadze.

The minister’s representative at that meeting reminded Ghana, Togo and Benin that gas from Nigeria would remain the most competitive in the sub-region.

“Nigeria is unconditionally committed to the objectives of the West Africa Gas Pipeline Project,” the minister assured.

At the recent Ghana Gas Forum, Walter Perez re-echoed and reassured gas recipient nations that gas from Nigeria remained “the most competitive” in the West African sub-region.

Explaining to the B&FT what he meant by those comments, Mr Perez said: “Well, gas produced in Ghana is taxed at a very high level and the delivered price of gas to Ghana Gas at Aboadze is essentially equal to the price of WAGPI gas in Tema. So by the time the gas finds its way from Takoradi to Tema it is going to be even more costly. I really do not understand why it is that way. You would have expected that the cost of gas produced in Ghana would have been substantially less. The only thing I can imagine is that the cost of constructing the pipeline network and the gas plant came at a high cost and we are now seeing that reflected in the cost of gas.”

While plans are afoot to connect the Ghana Gas and the West African Gas Pipelines, the government of Ghana intends to build another dedicated pipeline to support the evacuation of more gas to the Tema power enclave.

The thinking at the Petroleum Ministry also gives a sense of the competition, which should be good for the consumer, which is heating up on the gas front.

Dr. Ben Asante, a Gas Consultant to the Petroleum Ministry said at the Ghana Gas forum that the decision to utilise the existing West African Gas Pipeline or the new dedicated pipeline in the long-term will be driven not just by tariff comparison and capacity reservation charges, but also by factors like ease of expandability for the future, vulnerability to third party damage, and assets control and operability considerations.

Today, though, gas from Nigeria remains as important to the power sector in Ghana as Ghana Gas is; each will be bearing part of the weight of the other for a long time to come, especially as Ghana seeks to become a power hub for the sub-region. May it all result in a happy consumer.