Ghana Gas Signs Big Deal

The gas pipelines being laid as part of the project

The Ghana National Gas Company (Ghana Gas) has signed a project implementation contract with a Chinese conglomerate, the Yantai Jereh group.

The deal entails the construction of a 278 kilometer onshore natural gas pipeline infrastructure from the Takoradi Aboadze enclave to the power enclaves of Tema and Greater Accra.

The recent execution of the agreement, which represents a revival of a project that was initially conceived last year, enabled the immediate commencement of site work such as topographical/geotechnical site surveys and front end engineering designs (FEED) which are already underway, as well as on-site civil construction activities which will commence within the next 10 days.

The financial structure of the project includes an innovative 15-year Build Operate and Transfer (BOT) model under which arrangement the Yantai Jereh group, along with its investment partners, will fully pre-finance all construction activities related to the project with absolutely no upfront cost being born by the Ghana government.

The entire investment made by the Chinese conglomerate will be recouped by charging transportation fees based on volumes of gas being moved through the pipeline over a period of 15 years, after which ownership of the entire infrastructure will be transferred to the Ghanaian government completely free of any recurring charges or financial encumbrances.

The proposed gas transportation charge of approximately US$1.56 per MMBtu (a standard unit of measurement used to denote the amount of heat energy in fuels and the ability of appliances) is a fraction of the US$4.05 per MMBtu historically charged by the offshore West African Pipeline Company (WAPCO) for similar natural gas transportation services.

One advantage of the onshore pipeline include the fact that it will ensure the secure transportation of natural gas energy resources generated from oil fields located in the Western Region to the east of the country, whilst traversing multiple regions along the coastline of Ghana.

Multiple regional natural gas distribution stations will be constructed between the two major load centres of Takoradi and Greater Accra, with stations being located in Takoradi, Cape Coast, Winneba, Nsawam and Tema, earmarked for phase one, as well as a  potential station in the Volta Region in phase two of the project.

These stations will enable manufacturers who wish to construct factories to connect directly to the infrastructure, thus receiving cost-effective natural gas to power their industrial operations.

The project marks a momentous milestone for the new NPP government, which has pledged massive infrastructure development and industrialization initiatives such as “one district, one factory” to spur economic growth.

Yantai Jereh’s Ghana-based Senior Vice President for West Africa, Gao Yong, who will take responsibility for the implementation of the project, said, “This project represents a massive opportunity of growth for both Ghana and the Yantai Jereh group. We have been highly impressed with the new administration and their ability to get things done quickly and professionally.”

 

 

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