Its report is “a mixture of ill-informed conjectures and skewed assertions stewed in misguided suspicions”

The Ghana National Gas Company (Ghana Gas) says a report issued by the African Center for Energy Policy (ACEP) on its activities is nothing but “a mixture of ill-informed conjectures and skewed assertions stewed in misguided suspicions.” The Corporate Communications Manager of Ghana Gas, Mr. Alfred Ogbamey, who made this assertion, noted that the ACEP report released on May 20, 2014 is worse than a shoddy piece of intellectual exercise, saying he was alarmed by the poverty of facts in the report.

Mr. Ogbamey spoke on Citi 97.3 FM on a formal response issued by Ghana Gas in reaction to a damning report issued by ACEP on the national gas producing company.

He said ACEP’s report was so porous that Ghana Gas decided not to address all the misinformed conjectures in it, citing two issues Ghana Gas did not address in its report to buttress his point on air.

He said ACEP, for example, claimed that the activities of Ghana Gas could and would lead to Ghana’s inability to access the Millennium Challenge Account (MCA) Compact II. “Yet on the very day they issued the report, the Ministry of Energy and the US Embassy signed the MCA Compact II agreement, a report of which appeared on the front page of the following day’s Daily Graphic.” He said ACEP again blamed Ghana Gas for alleged indecision of Government over the Sankofa oil fields, when Ghana Gas is not connected with commercial gas production from Sankofa in any way. “We will utilize gas from the Jubilee field” he said, stressing that and any industry analyst would know that there is another company seeking to utilize gas from the Sankofa oil field.

In the response to ACEP, Ghana Gas insisted that “ACEP in a rush to judgement has failed to recognize the patent absurdity in claiming that a two and a half year old project is four years behind schedule.”

Below is the full statement issued by Ghana Gas on the ACEP report. “Our attention has been drawn to a “Public Interest Report” entitled, “Ghana Gas, Questionable Deals And The National Interest: How Ghana’s Quest For Energy Security Faces Imminent Danger” authored by Messrs. Mohammed Amin Adam and Benjamin Boakye, issued by the African Centre for Energy Policy (ACEP) and circulated by ACEP “as a Damming Report on Ghana Gas” to the media and published on various websites. As a corporate entity, the Ghana National Gas Company (Ghana Gas) recognizes that it is a private company with shares wholly-owned by the State of Ghana. This gives every Ghanaian the right to demand appropriate information and action through the requisite laid down procedures and authorities.

This, however, does not confer on anyone, group or think-tank the license whatsoever to proceed on the basis of ill-informed opinions and misguided suspicions to malign hardworking individuals, people or corporate entities. While Ghana Gas seeks not to impede any institution’s democratic right to an opinion, there are large portions of the ACEP Report which contain glaring inconsistencies, misinformation, and half-truths.

In their rush to judgement, ACEP failed to contact Ghana Gas for its views or input and did not as much as send a copy of the Report to Ghana Gas for our comments or simply for our information before it was widely circulated to the media on May 20, 2014. 1.On page 4 of its report, ACEP restates the well-known fact that “the Ghana National Gas Company was established in July 2011” following its incorporation to “build, own and operate infrastructure required for the gathering, processing, transporting and marketing of natural resources in the country”. However, on the next page (5), ACEP asserts that “… the project has been delayed for four years as a result of explained and unexplained reasons.”

Clearly, ACEP’s assertion is false. The fact is that Ghana Gas is barely 3 years old. How then could the project have been delayed for four years as claimed by ACEP? The Engineering, Procurement, Construction and Commissioning (EPCC) contract to build the gas infrastructure project became effective in November 2011. The execution of the project itself started in August 2012. The project, which has taken 2½ years and under an aggressive schedule, is virtually complete. Again, in its rush to judgment, ACEP failed to recognize the patent absurdity in claiming that a two and a half year old project is four years behind schedule!

On the basis of this same false four-year claim, ACEP embarked on a phantom calculation asserting that their estimates show that “the delay has cost the country an average of US$550 million per annum and this translates to US$2.2 billion in four years”. The inherent fallacy is that Ghana Gas is supposed to complete a project even before its inception. No project is begun and completed on the same day. A competent and fair-minded calculation would have taken into account the original contract period and the project completion schedule. This is, certainly not worthy of a ‘think-tank’ that wants to be credited with some repository of knowledge in the petroleum, energy, oil and gas fields.

2. On page 7 of its Report, ACEP concludes that - “As at today (May 20, 2014), our information is that the vessel which will tie in the Ghana Gas pipeline offshore pipeline to the Jubilee Floating Production and Off-loading (FPSO) vessel for the evacuation of gas is yet to arrive in Ghana and as yet there is no indication when it will arrive”.

A one-minute telephone call to Ghana Gas would have revealed to ACEP that the vessel in question, MV Reef Larissa, which has two remote operating vessels (ROVs) on it, arrived in the country on May 11 2014, and berthed at the Sekondi Naval Base in the morning of May12, 2014.It sailed to the Jubilee Fields in the late afternoon of May 12, 2014, and has been working on site since then. It would further have revealed to ACEP that the utilization of the MV Reef Larissa was occasioned by the loss of an ROV at seabed on a vessel contracted by the Italian firm (Micoperi) that undertook the offshore pipeline construction and pre-commissioning. The loss occurred during pre-commissioning activities of flooding and cleaning of the offshore pipeline, which started several weeks ago. 3. ACEP further claims (page 6) that the construction of a by-pass by the Jubilee Partners is indicative of the lack of confidence in the completion and operability of the Ghana Gas project. On the contrary, the concept of the by-pass was part of the original construction plan of the GPP to be executed after construction of the first phase and at the time of the installation of the Turbo Expander component (part of the second phase) when the Gas Plant has to shut down, to enable basic gas flow to meet the VRA and other customer needs. For the education of ACEP, a by-pass system in any gas plant is not an indication of a lack of faith or confidence in either installation or operation of the facility. It is a necessary operational relief mechanism in case of upset conditions. Indeed, it is a sine qua non in the industry.

Ghana Gas became aware of the plans of the Jubilee Partners to accelerate a by-pass mechanism to enable them supply gas directly to the VRA. To be able to do this, a connecting pipeline would need to be attached to link the offshore pipeline to the onshore pipeline constructed by Ghana Gas as part of the project. Although the Jubilee Partners’ decision to undertake the bypass was largely unilateral on their part, we have decided to collaborate with them to ensure that the safety and engineering compatibility with our facilities are not compromised in any way. Consequently, Ghana Gas is currently engaged in the processes of modeling and construction of the by-pass in discussion with our Jubilee partners. Significantly, it is the same SINOPEC that the Jubilee partners are seeking to engage to construct the by-pass.

4. Ghana Gas’ original concept for evacuation of NGLs (LPGs and Condensates) was by the employment of a jetty fed by NGLs pipelines. However, the long-lead time required for the installation of the jetty and financial constraints necessitated the consideration of an early secondary evacuation solution which employs a loading gantry with truck transportation. This concept remains part of the overall gas infrastructure scheme. Funding delays have prevented Ghana Gas from completing its export jetty and tanks before first gas is produced and the company has therefore had no choice but to look at viable alternatives. Consequently, Ghana Gas has created a Header Point which will allow any Bulk Distributing Company (BDC) that wants to build a storage and loading facility to interconnect with the Gas Processing Plant. It is worth noting that Ghana Gas is continuing with the primary plan of the installation of a jetty and LPG pipeline as a long-term solution for NGLs evacuation, as we expect the additional gas infrastructure development in the near future.

5. Contrary to ACEP’s assertion (page 8), Ghana Gas has not sole sourced the award of a contract to Quantum Terminals Ltd (QTL), neither has Ghana Gas given any exclusivity to QTL whether in the building of a loading gantry or in the supply of LPG.

QTL’s project was initiated solely by QTL on its own and financed and built with money raised by QTL at its own risk. There was therefore no procurement by Ghana Gas involved and therefore no procurement law could possibly have been broken. Ghana Gas entered into a Memorandum of Understanding (MoU) with QTL. Nowhere in the MoU was Quantum given the exclusive right to offtake LPG from Ghana Gas. The MoU was to explore and carry out feasibility study for activities including LPG Tank Farm, Condensate Processing Facility, Loading and Export Buoy. The MoU categorically stated that it was not binding on both parties, neither was it intended to create a legally binding relationship between them.

Ghana Gas has negotiated to make the QTL facility an Open Access Facility. This means any BDC can use it. At this time, QTL’s construction schedule is ahead of Ghana Gas’ schedule and so Ghana Gas will use that facility for the evacuation and supply of LPGs to interested bidders.

6. The environmental issues alluded to by ACEP (page 8) are grossly exaggerated. Almost all petroleum products including LPGs move from Tema and Takoradi to other parts of the country exclusively by road. Depending on the LPG recovery rate and the incoming raw gas feed, the expected bulk road tankage traffic will be between 20-24 trucks per day. Ghana Gas has already taken steps, in consultation with its community partners, to rehabilitate the required roads and bridges (specifically the Eloyin bridge) to serve the anticipated truck traffic. Government and the Jubilee partners are also constructing an upgraded road that by-passes all the communities in the area to join the main Elubo-Takoradi road. This road will help handle the increase in business activities that the area will start experiencing once the gas processing plant becomes operational. To our knowledge, the National Petroleum Authority (NPA) and the Environmental Protection Agency (EPA) have visited and evaluated the QTL site and have provided the relevant permits for the construction of the facility, contrary to the assertion made by the ACEP.

Additional steps are being taken to manage any potential health and safety issue that may arise, including community sensitization programs for all communities from Atuabo to Takoradi using locally appointed trainers; upgraded driver training programmes to certify drivers evacuating the LPG; the completion of an emergency management system including fire tenders, tow trucks, ambulances; traffic wardens at entry and exit points of each community on the route; and rest stops along the route to Takoradi and beyond.

In the meantime, the isopentane from the Ghana Gas processing plant will not be flared irresponsibly by Ghana Gas without recourse to the environmental concerns as alleged by ACEP (page 9). It is important to stress that Isopentane is a special by-product with very high volatility compared to condensates. It is typically a waste product that is normally flared by gas processing plants, and that its primary use is not for power generation.

In the case of the Ghana Gas project, we have decided to find multiple uses for the isopentane. Firstly, we will deploy isopentane, instead of using dry gas, in the hot medium heater for heating purpose to support plant operations. Secondly, we intend to allow the offsite evacuation of isopentane to be employed as feed fuel for a fuel-to-power power station, which is expected to be completed in 2015 with an expected 30 MW output, which could be injected into the national power grid. It is only the remainder which will be safely disposed of through the flare stack as part of the Gas Processing Plant`s operation. It should be noted that Ghana Gas has not entered into any Agreement with any entity called GTG Limited as alleged by ACEP (page 9). Ghana Gas entered into an MoU with CENIT for CENIT to use the isopentane for power generation. CENIT is a private power production company that owns an operational 126MW power station in Tema. They made an offer to offload the waste isopentane, to obviate flaring on site. Ghana Gas accepted their proposals in principle. To date, no contract has been executed with CENIT.

7. In discussing the Joint Venture Agreement (JVA) between Ghana Gas and AfGEN, ACEP did not consult Ghana Gas, neither did ACEP review a copy of the JVA to confirm the actual business of the JV Company. ACEP rather referred to an April 22, 2014, issue of Upstream Magazine and made a series of baseless and uninformed assertions on the matter (page 9).

The JVA referred to provides that the business of the JV Company shall be the development of LNG regasification solutions for Ghana, and the marketing and sale of regasified LNG from the Benin Project to fulfil gas demands in Ghana. The JV does not cover the building of an “LNG re-gasification facility” as claimed by ACEP. The two are not the same.

For the avoidance of doubt, Ghana Gas is not building or investing in any plant in Benin. The JVA with AfGEN only seeks to enhance and diversify the sources of gas for processing as fuel for power generation.

Ghana Gas, under the direction of its Board of Directors and Entity Tender Committee, adheres to due process and is compliant with the requisite laws and regulations in the procurement of all its goods and services whether by competitive tender, restricted tender or sole-sourcing.

8. The major factor that has hindered early completion of the Ghana Gas Project has been financial. In September 2012, the EPCC Contractor, Sinopec, demobilized for three months because of late payments. As a result of delayed payment, Sinopec was unable to pay some of its sub-contractors, including Thermo Design Engineering (TDE) of Canada, the Company that fabricated the gas processing plant modules. The effect was that TDE could not pay for a purchase order that it had placed for some component equipment, lost its manufacturing slot and had to wait for another slot. Also, as a result of delayed disbursement, Micoperri, the sub-contractor installing the offshore pipeline system, demobilized from site in May 2013 and remobilized to site in December 2013, only after it had received payment. This amounted to an additional loss of seven (7) months of project time. Similarly, TDE refused to ship the last components of equipment for the gas processing plant earlier enough for them to arrive in June 2013 because of delayed payment. These equipment were later shipped after the arrears had been paid and arrived in Ghana in August 2013 (loss of three months).

In effect, the project which was commenced in the first quarter of 2012, and is now about 2 years 3 months old, has suffered a total loss of about ten (10) months of project time because of financial challenges over which Ghana Gas had no control. It is therefore unacceptable for Ghana Gas to be blamed for the delay the Project has suffered. Notwithstanding these challenges, we believe that we have still been able to keep with the aggressive schedule for a project of this magnitude.

It is important to note that the Early Phase Gas Infrastructure Project has three key components comprising:

1. Construction of a 44km 12-inch diameter shallow water Offshore Pipeline to transfer natural gas from the FPSO Nkrumah Jubilee Field.

2. Construction of a new Gas Processing Plant (GPP) and main site offices at two nearby locations at Atuabo from the scratch in what used to be a virgin forest zone. The GPP will be the recipient of the natural gas from the Jubilee Field. The GPP comprises reception facilities, Inlet Separation, Gas chilling and de-ethanization, NGL Fractionation, Ethylene Glycol Injection & Regeneration, methanol injection, LPG & Condensate Storage Tanks and export unit, Instrument Air and Nitrogen system, Heat Medium System, Flare & Closed Drain System, Waste Water Treatment System, Fire Fighting & Closed Drain System, Power Generation and Cooling System for LPG.

3. Construction of a 20inch diameter 111km Onshore pipeline from the GPP in Atuabo to Aboadze in Takoradi to send processed gas to VRA.

While we at Ghana Gas concede that there has been some slight delay of the project as a result of these mainly financial challenges, it is important to put on record that the Western Corridor Gas Infrastructure Project will still be completed in record time this year. The truth is that typically, projects such as the one we have embarked on take, at least three to four years to complete and made ready for commissioning tests. Indeed, a 3-year installation period for a composite project of offshore pipelines installation, onshore pipeline installation and a processing infrastructure would be considered a major achievement by industry standards worldwide.

As a company, Ghana Gas is excited to be the catalyst for the development of a gas and petrochemical industry in Ghana. We are proud of the highly competent Ghanaian human resource we have managed to attract and by the new skill-set we are developing in an industry in which we are first in the country. We are further emboldened by the decision to create a wholly-owned Ghanaian company instead of outsourcing our national interest to foreign companies as has happened in the past.

Finally, Ghana Gas has, in spite of its numerous challenges, been successful in the execution of the gas infrastructure project. This is largely due to the quality of the management of the company. The high caliber of its Board, composed of Dr. Kwesi Botchwey (Chairman), Dr. Valerie Sawyerr, Mr. Eric Yankah, Mr. Thomas Manu and Dr. George Sipa-Adjah Yankey (CEO), hardworking management and staff and, especially, its young but efficient engineers have together worked to build the gas infrastructure in record time.

We at Ghana Gas are proud of our achievements to date and hope that the good people of this country who stand to benefit from the project will appreciate the efforts being made by us”