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Business News of Monday, 1 December 2014

Source: The Finder

Power supply to improve as Ghana Gas increases supply to VRA

The Volta River Authority (VRA) will start receiving increased volumes of dry gas from the Atuabo Gas Processing Plant by tomorrow to double the 107 megawatts of electricity it currently generates with gas from the Ghana National Gas Company (Ghana Gas), The Finder has gathered.

Sources say a request for increased volumes of gas from the current average 28 million standard cubic feet of gas a day (mmscf) to 60 mmscf has been made by the VRA to Ghana Gas and approved by the regulatory agencies.

The Jubilee field Partners, led by Tullow Ghana, kick-started the process yesterday by increasing the volumes to Ghana Gas, which would lead to a corresponding increase in supply to the VRA by tomorrow.

Sources say the request by the VRA and approval by regulatory agencies was based on the realisation that the gas quality and bar pressure of the Atuabo Gas were far better than that of the West African Gas Pipeline.

Communications Manager for Ghana Gas, Alfred Ogbamey would not elaborate on the issue when reached on phone by The Finder over the weekend. “We are happy with the commissioning process. It’s been good so far. We will in due course let you all know where we are,” he said without answering the specific questions raised on the increased volumes to the VRA.

In the meantime, The Finder’s credible sources within the energy industry have told this newspaper that Ghana Gas may have elected to keep activities on the plant off the radar till final commissioning following initial desperate attempts to derail the physical Tie-in.

Sources in the energy sector hinted The Finder that the Tie-in of Ghana Gas’ 58-kilometre Offshore Pipeline to that of the 2-kilometre flexible riser of the Jubilee partners, completed a month ago, was initially delayed because of a sudden request for upward review of the insurance covering the vessels contracted to do the job.

According to the sources, the insurance of $15 million for the vessels was agreed and signed in February this year.

However, when the Tie-in started some two weeks ago, there was a fresh demand for the insurance to be increased to $30 million.

Consequently, the vessels had to suspend work for fresh negotiations concerning the new insurance demands for the vessels to be completed, the sources said.

The sources explained that the negotiations were back and forth until the two parties finally settled on a lesser figure as the new insurance cover for the vessels.

The Jubilee Partners, in a news release on November 7, 2014, announced the commencement of the physical tie-in of their flexible riser of the FPSO Kwame Nkrumah to the onshore gas processing facility of Ghana Gas.

According to the release, the commencement of the physical Tie-in follows the issuance of the relevant permits by the Energy Commission and the Petroleum Commission to affirm that the two parties can safely tie in their facilities.

The news release explained that the permit, which was issued on October 27, 2014, allows the limited flow of 16 mmscf of gas per day to the Ghana Gas Atuabo Plant for the commissioning phase of the project and shall be valid for six weeks.

It said the physical tie in was expected to take a week to complete and would pave the way for the pre-commissioning and commissioning of the Ghana Gas processing plant at Atuabo.

The news release noted that on completion of the commissioning, which will take a minimum of 42 days, gas would be made available to the GNGC in commercial quantities for supply to the Volta River Authority’s (VRA) thermal power plant at Aboadze.

According to the release, in a crucial meeting with the Minister of Energy & Petroleum, Charles Darku, General Manager of Tullow Ghana, the Operator of the Jubilee field, affirmed Tullow's commitment to the realisation of gas flow.

He said, “This is a significant milestone in the process towards supplying gas in commercial quantities from the Jubilee field to GNGC on a regular basis and we are excited at its achievement. Given the step-changing role such regular supply of gas will play in the socio-economic development of Ghana, we are committed to ensuring timely supply to the GNGC. We look forward to the timely completion, certification and permitting of the remaining processes by the relevant regulatory agencies to enable the commercial supply of gas to begin.”

But before Ghana Gas could receive First Gas from the Jubilee field on the scheduled date of November 10, 2014, the Energy Commission wrote a letter on Saturday, November 8, 2014 to prevent Ghana Gas from receiving the gas.

The ensuing controversy eventually culminated in a meeting at the Atuabo Processing Plant to establish the veracity of the claims contained in the letter by the Energy Commission.

Sources say on finding out the inaccuracies in the information it had, the Energy Commission revoked its earlier decision and, together with other regulators, gave Ghana Gas the go-ahead to commission the Atuabo Gas Processing Plant.

The plant has since last week Monday been providing an average 26 million mmscf to Aboadze to generate over 105MW of electricity daily to aid in the current ‘dumsor dumsor.’