Page 7 - GLNG Week 32

GLNG CommEntARy GLNG
be completed by the end of the rst quarter. Such an expansion faces challenges, though, given the complexity of the plan, its scale and the
number of states it would have to transit.
Some demonstration of the complexities involved come from the tangled history of the WAGP. e link was repeatedly delayed during construction, owing to leaks and occasional outbursts of violence. When it was up and running the pipe was snagged by an anchor dragging from a ship captured by pirates in 2012. It took around a year to be
repaired.
Competition
Gas pipeline schemes, particularly long-dis- tance ones, face competition from LNG import plans. the appeal of LNG as an alternative is being demonstrated in Ghana, among other locales.
e West African state pays $9.8 per mmBtu ($271 per 1,000 cubic metres) under a sales agreement with Eni Ghana, for supplies from the o shore Sankofa eld. e World Bank, in documents exploring its support for the o shore project, calculated the net cost to Ghana at $6.6 per mmBtu ($182.6 per 1,000 cubic metres).
In January, Accra said it had negotiated the price paid down to $7.89 per mmBtu ($218.2 per 1,000 cubic metres). Local Ghanaian reports have put processing costs at $2.8 per mmBtu ($77.5 per 1,000 cubic metres).
When the World Bank set out its reasoning, LNG prices were fairly high. Since then, LNG has fallen signi cantly. At the beginning of this month, Reuters reported a spot cargo had been sold in Asia for $3.69 per mmBtu ($102 per 1,000 cubic metres). Prices have risen somewhat, but remain below $4.5 per mmBtu ($124.5 per 1,000 cubic metres).
Ghana’s energy sector is struggling under high debt loads. In February this year, Ghana Gas was reported to be owed $735mn by the Volta River Authority (VRA). Following restruc- turing, this debt has been somewhat reduced – but it remains high.
ese payment issues are not new. Previously they disrupted supplies of Nigerian gas via the WAGP, ultimately needing high-level talks in order to resolve the problems.
Ghana therefore pays a high price for its gas from Eni, while also struggling to ensure pay- ments reach the required party. e country has talked of LNG imports and a oating storage and regasi cation unit (FSRU), the Golar tun- dra, was parked o shore for around a year. Ulti- mately, the local infrastructure failed to be built in time and the vessel was removed.
take or pay
Ghana’s deal with Eni is based on a take-or-pay agreement, under which the country pays for the gas for 20 years. e deal secured Eni su ciently good terms that it agreed to the nal investment decision (FID) on the Offshore Cape three Points (OCtP) project, which contains the Sankofa gas eld, in 2014 despite the commod- ity price crash.
the take-or-pay deal has taken its toll on Ghana, as the country has been unable to o ake the agreed quantities. Despite this inability, it must still pay for the gas.
GNPC’s CEO, KK Sarpong, noting the completion of the ttIP work, said the conduit should reduce the cost of power in tema, as gas would replace higher-priced oil products.
Sarpong went on to say that increased domes- tic use of gas would reduce the take-or-pay pen- alty. A failure to take any of the gas would see Accra paying $40mn per month to Eni. As of the beginning of the year, the country was taking around 60mn cubic feet (1.7 mcm) per day in takoradi, leaving 80 mmcf (2.27 mcm) per day unused – at a cost of $28mn per month.
Completion of the WAGP reversal work was expected to reduce the amount of unused gas to 20 mmcf (566,000 cubic metres) per day.
Scaling up ttIP will help Ghana take advan- tage of its domestic resources. the rationale for LNG imports remains, although the most pressing detail will be resolving local payment issues.™
Eni’s onshore receiving plant in Ghana
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