Ghana has this month reverted to electricity rationing, thanks to unreliable Nigerian gas supplies. But petty bickering over the location of Ghana’s unduly delayed gas infrastructure to harness local gas will cost the country in many more ways than meets the eye.

The delay is already estimated to cost the country and the Jubilee partners several hundred million dollars in unrealised potential revenue from oil production.

And now the decision to relocate the US$1.2billion facility from Bonyere to Atuabo is undermining social stability in two coastal Nzema communities in the Western Region.

Indigenes of Bonyere in the Jomoro District are fingering Deputy Energy Minister, Mr. Emmanuel Armah Kofi Buah and Ghana National Gas Company (GNGC) Head Dr. Sipa-Adjah Yankey, claiming that they have been scheming to have the facility sited at Atuabo in their rather flood-prone Ellembele District.

This new twist to the winding narrative means the nation is confronted with a perfect storm of factors that could undermine the peaceful and efficient exploitation of a resource now largely seen as the game-changer for its economic development.

The new development has at least three identifiable outcomes, each of which comes at costs of different magnitude and severity to the country.

For the purpose of analysis, let us start from the known to the unknown.

Firstly, the haggle over location risks further delays to the development of the gas infrastructure -- and that is set to further ruffle feathers of Jubilee oil field partners, who have said they cannot continue to produce oil and gas indefinitely without a pipeline to carry away the gas.

In conformity with government policy of zero gas-flaring from oil production, Jubilee partners have been re-injecting most of the associated gas back into the reservoir -- a practice which, the partners say, at higher rates of oil production would lead to compromising the integrity of the reservoir with adverse consequences.

Tullow Oil, the lead operator on the Jubilee Field, has intimated that full gas re-injection into the reservoir will no longer be an option by December 2012; and without a gas pipeline, they may shut-in some oil production.

Jubilee is currently pumping out an average 85,000bopd (barrels of oil per day) and Mr. Aidan Heavey, Tullow’s CEO, has lately not been mincing words about Jubilee’s future; “the earliest date for hitting 120,000bopd is first quarter, 2013. We will do everything not to destroy the world-class field.

“We are looking after the oil. The government is looking after the gas; and so what we’re looking at is how to manage the field.

“Jubilee is a credible, valuable asset for Ghana and has to be managed properly …to make sure nothing is done to damage the field in the long-term, because the important thing is the asset,” Heavey told B&FT.

Originally, plateau production of 120,000bopd was targeted to be attained by July 2011, which -- with the development of new wells -- would be sustained to about 2015, after which time production figures are expected to decline.

The inability of Tullow and other partners to produce at peak, translates into loss of potential revenue on approximately 35,000bopd at a conservative price of US$85 per barrel for the almost-two years of delay.

Secondly, the delay in getting the gas infrastructure in place undermines the country’s aspirations for high efficiency in electric power generation and supplies -- to both meet growing domestic demand and consolidate Ghana’s electricity leadership and dreams of becoming the de facto energy-hub in the West African sub-region.

The Ghana National Petroleum Corporation (GNPC), the country’s primary repository of knowledge and expertise in the hydrocarbons industry, notes that for the country to derive full value from oil production, associated gas will have to be utilised in the generation of electricity to help meet the rapidly-growing demand estimated at about 10 percent annually.

Ghana’s increasing domestic demand for electric energy has outstripped the total output of both its existing and potential hydroelectric generation sources.

So, in order to meet the growing domestic demand and also with an eye to consolidating its position as electric energy leader in the West African sub region, Ghana is increasing investments in thermal generation which currently contributes about 40 percent of total electricity generation to meet total peak demand of approximately 2,000MW.

The thermal plants are largely fired by crude oil, but are configured to be able to use less expensive natural-gas as feedstock.

A major development in the gas sector has come via the West African Gas Pipeline (WAGP), a multi-million dollar international project that is to deliver gas from Nigeria’s Niger Delta to Benin, Togo and Ghana, with Ghana receiving over 90 percent of the total delivery to fire thermal plants in Takoradi and Tema.

The WAGP is expected to be delivering 134,000m British thermal units (btu) daily, with maximum capacity of 474,000m btu/day; but currently the highest deliveries have not exceeded 90,000m btu/day to Ghana, thereby greatly hampering electricity generation in the country.

Increasingly, erratic gas deliveries through the WAGP is lending credence to a conspiracy theory here that Nigeria, for geopolitical reasons, is deliberately manipulating gas-flow through the WAGP.

A couple of weeks ago, GRIDCo, Ghana’s electricity transmission monopoly, announced it was resorting to power-rationing due to non-delivery of gas from Nigeria -- which has stalled generation from thermal sources.

Obviously, gas from the WAGP is the Achilles heel of Ghana’s electric energy sector; and much as it is easy to compute its costs on the investments of the 200MW Sunon-Asogli thermal plant -- which currently entirely utilises the gas from Nigeria -- its adverse impact on whatever geopolitical advantage Ghana could obtain by consolidating and stretching its status as regional power hub is incalculable.

It is now imperative that Ghana speeds up the development of its domestic gas resources to address the challenge posed by the Nigerian situation, even if it cannot entirely divorce itself from that inconvenient arrangement.

But thirdly, what could, and indeed should, be the most worrying outcome of the squabbling over the location of the gas, is the growing mistrust of people in the oil host-communities of their elected politicians -- as they are perceived to be biased in the allocation of benefits from the industry.

This has the potential to undermine social cohesion and social stability in the oil host-communities of the Western Region.

And for examples, one need not look far.

The Niger Delta of Nigeria is replete with ghost-communities: testimonies to inter-communal violence. Under a Revenue Watch International-sponsored programme that took a group of Ghanaian journalists to the Niger Delta for a first time experience in 2011, a handful of returnees to one such ghost-town in the Ogbia Kingdom explained that their two neighbouring communities ravaged each other because one side was perceived to be benefitting from too many of projects, while requests by the other went unheeded simply because they did not have political representation at even the local level.

These were thriving neighbouring communities of over 10,000 inhabitants that had lived peacefully together for decades, perhaps centuries.

The conflict raged on from 2004 for five years; and when the burning and looting intensified, inhabitants of both communities fled leaving behind charred buildings, not counting the dead, that are presently overgrown with weeds two long years after the last gunshot.

Over here, the raucous noises about seceding to Ivory Coast by indigenes of Bonyere over the re-location of the gas plant from their community should immediately strike a chord in the mind. Needless to be reminded that Ghana’s Western Region is not really too far from the Niger Delta and the people here cannot be any different from those in the Niger Delta.

Even more ominous is the proximity of Bonyere to Ivory Coast, a country that for all intents and purposes is still in a state of conflict…and worse, is laying spurious claims to Ghana’s offshore oil and gas wealth.

In a region where conflict is sparked by the flimsiest of excuses, Ghana cannot afford to be arbitrary in its decisions over its oil and gas resources.