Government seeks cheaper alternative to WAPCo pipeline
The government is seeking a cheaper alternative source of transport to pipe natural gas from Takoradi in the Western Region to Tema in Accra.
The pipeline will augment the current one, which is owned and operated by the West Africa Gas Pipeline Company (WAPCo) – a partnership between Ghana and three other West African neighbours.
Should Ghana decide to use the WAPCo pipeline, the country will be expected to pay around US$5 per MMBTU as extra charge for transporting the gas directly from Takoradi to Tema, hence the decision to look at a cheaper alternative.
The move informed the recent decision by the Ghana National Gas Company (Ghana Gas) to renew a Project Implementation Agreement (PIA) with a Chinese conglomerate, Yantai Jereh Oilfield Services Group Co., in April.
The renewal allows Yantai Jereh to undertake engineering and survey studies on the proposed 278-kilometre onshore natural gas transmission pipeline from Aboadze in Takoradi to Tema.
A source at the Ministry of Energy and Petroleum explained that although no specific contract had been signed yet, the concept for the proposed onshore pipeline was to, among other things, have a cheaper alternative that will bring several advantages to the country. One such advantage, the source said, was a lower transmission tariff.
Ghana will also be allowed to own a pipeline facility, the source added.
“A contract has not been signed yet. What we have is another contract and not the actual construction of the pipeline,” the source explained.
Ghana’s gas production numbers will increase later this year with at least about 30 million metric standard cubic feet (mmscf) of gas per day expected from the Tweneboa-Enyera-Ntomme (TEN) fields.
The ENI Sankofa-Gye-Nyame field is also estimated to hold about 1.1 trillion standard cubic feet of natural gas and production is expected to start in 2018. This has brought about the need for a facility that will help in transporting the commodity across the country.
Currently, the country has two options (continue to use the WAPCo pipeline or construct its own pipeline) on how to pipe the gas from Takoradi to Tema for industrial use and power generations.
Although the initial thinking was to re-engineer the WAPCo pipeline to allow for a reverse flow, it was later ignored and the new option of constructing an onshore pipeline given premium.
That notwithstanding, it now appears the government has chosen to pursue both options at the same time, as the construction of the new pipeline will take a while. While constructing the new one, the government is hoping to rely on the existing WAPCo pipeline for gas transport.
Why not negotiate?
The Executive Director of energy sector think-tank, the Africa Centre for Energy Policy (ACEP), Mr Ben Boakye, said in a separate interview that if the reason for opting for a new pipeline was to get cheaper charges, then the government was better off negotiating the charges down.
“We have the West Africa Gas Pipeline (WAGP), which is virtually redundant, and our point is that why not use that pipeline? The argument they put forward is that WAPCo is insisting that if they use the pipelines from Western Region to Tema, they will charge the same tolling fee that they are charging for the Nigerian gas.
“I still think that if they want to negotiate with WAPCo, they will not want to still take US$5. The pipeline is there and we have a stake in it. So if the tariff is high, then go and negotiate,” he said.
The source at the ministry, however, explained that although an agreement had not been reached on the tariff, what WAPCo was proposing was on the high side.
And while there was the need for a new pipeline, the source insisted that Ghana had “no intention to phase WAPCo out because of our indebtedness to them”.