Ghana Gas under fire

Troubles for the infant Ghana National Gas Company (Ghana Gas) keeps on growing by the day with the latest being the call by the Civil Society Platform on Oil and Gas for its Chief Executive Officer, Dr. George Sipa-Yankey, to step aside for investigations to be conducted into his stewardship. Not long ago, the Environmental Protection Agency and other civil society groups expressed grave concerns about the inability of Ghana Gas to obtain final permit before commencing work on the gas infrastructural project at Atuabo. With regards to the call for the CEO’s head to roll, the civil society group alleged that Sinopec International Petroleum Services Corporation (SIPSC), a subsidiary of the Sinopec Group, which is constructing the gas processing plant at Atuabo in the Western region, has overpriced the project while Ghana Gas remains indifferent. According to them, “The SIPSC is delivering a processing plant that is costing $40 million more than another plant which is considered superior by virtue of having five additional features including specifications that are favourable to the Volta River Authority (VRA).” Speaking at a press conference late October, the Chairman of the Civil Society group, Dr Steve Manteaw, claimed that “SIPSC has overpriced the materials for both the power plant and pipes by building hidden costs purportedly occasioned by an arrangement with SIPSC’s special purpose subsidiary offshore firm called SAF Petroleum Investments (FZE), registered in Dubai. He said under the arrangement, “SAF will make the initial procurement and resell the items to SIPSC. Meanwhile, the same person – Ms Yang Hua serves as Project Director for both SIPSC and SAF”. On the permit issue on the other hand, though Ghana Gas has issued notice to serve for public information for the gas infrastructural projects as required under the procedure for the conduct of Environmental Impact Assessment (EIA) in accordance with regulation 15(I) of LI 1652 of the EPA, they did not wait to go through the full process before commencing the project. This action is in an attempt by the Ghana Gas to achieve the December 2012 mechanization completion target for the first phase of the gas plant project at Atuabo. However, this approached has led to the EPA to express its misgivings about the disregard for it rules by the Ghana Gas describing it as unfortunate. Nevertheless, according to Kojo Agbenor-Efunam, Deputy Director in charge of Oil and Gas at the Environmental Protection Agency, even though they are not happy with the current situation, there is nothing much they can do because of the urgent nature of the project. Emphasizing the urgent nature of the gas project, Mr Victor Sunu-Attah, Project Development Director for the Western Corridor Gas Infrastructure Project, indicated the Jubilee Field cannot continue to sustain long periods of gas injection without damaging the reservoirs and curtailing production; hence the need for Ghana to quickly evacuate the gas from the Jubilee Field. In addition, the deadline set by the Jubilee Partners to start gas flaring if government failed to put in place a gas infrastructure expires early next year; putting government’s zero tolerance on gas flaring policy in jeopardy. According to Mr Sunu-Attah, the other alternative to gas flaring is to dig another well some place to inject the gas in, which would cost the Jubilee Partners another $100million. To him, the country cannot wait any longer and needs to work quickly to evacuate the gas from the Jubilee Field to enable it perform optimally. “So what we have done with the gas project is to do all we can to work quickly by cutting off all the fat of the project. For example instead of producing propane and butane gas using two different columns, we would use one column to produce propane and butane together,” he said. He further explained that this approach means that instead of working gradually towards achieving 99percent efficiency, they would settle for 90 percent efficiency now and then within 2013 fix the other component to optimize production. But he maintained that safety and quality are two things that cannot be sacrifice. However, the EPA insist that they would have preferred if the Ghana Gas has gone through the full process and obtained a permit before the commencement of the project. Also concerned about the fast paced approach adopted by the Ghana Gas is civil society groups in the country. According to George Mireku Duker, Program Manager for the Platform on Oil and Gas, “We need gas but that doesn’t mean we should compromise that with quality.” To him it is important to take time for the project to be executed properly. He emphasized that the pipeline if not laid or constructed properly can lead to leakages and pollutions. The Ghana National Gas Company Ltd was established in July 2011 with the responsibility to build, own and operate natural gas infrastructure required for gathering, processing, transportation, and marketing. Other pressing issues for the fast track approach of the project also include the need to replace light crude oil and diesel used for power generation with a less expensive and more environmentally friendly natural gas, the significant supply-demand imbalance for gas and the need to facilitate the economic development of Ghana with the availability of reliable gas supplies. Again another major issue that the Ghana Gas has side stepped for now is putting in place a national gas policy and a master gas plan. But according to Mr Sunu-Attah, despite the fact that the country does not have a formal master gas plan, “we know what to do with our gas and how to get there”. He argued whether it would be more prudent to inject the gas back into the reservoir with its associated risks or go ahead to put the gas infrastructure in place to harness the gas for commercial purposes whiles the process of putting a policy and master gas plan is formulated. According to Mr Sunu-Attah the benefits of the gas project are enormous to Ghana. The natural gas project, especially, will generate employment, create new infrastructure to support a vibrant petroleum and petrochemical industry, provide a new economic growth pole for Ghana starting with the Western Region and provide the opportunity for a more competitive pricing of indigenous gas. It will also generate much lower cost power, secure competitiveness of Ghanaian industry, accelerate economic development, support strategic objective of becoming a petroleum processing hub and resume Ghana’s strategic role as preferred exporter of power in the sub-region. The short term strategic and operating objectives of the Ghana Gas is focus on developing a gas infrastructure project to process and pipe Jubilee phase one (1) gas to Takoradi Thermal Plants in Aboadze. These seek to build the early phase Gas Infrastructure Project by the end of 2012. The Project will comprise a fully integrated and profitable gas business to serve the Ghanaian and export markets; acquire sites at Domunli (Bonyere, Egbazo, Kabenlasuazo, Ndumsuazo, Bokakole) Atuabo, Esiama, Inchaban, and Prestea to prepare and build requisite infrastructure for; gas operations and controls centers, incorporating Helicopter Surveillance Fleet for protection of the gas facilities; petro-chemical plants; prepare commercial and technical agreements for purchase, gathering, processing, transport and delivery of natural gas; commence commercial operations on completion of the early phase of the project.