President Nana Addo Dankwa Akufo-Addo has described the Liquefied Natural Gas sales agreement reached between the Ghana National Petroleum Corporation and GAZPROM as a positive one “that is going to play a very important role in the economic life of Ghana.”
The Gas Sales Agreement will see the construction of a regasification terminal at Tema.
According to the president, the decision by the world’s largest natural gas company to establish a base in Ghana is a testament to the efforts his government has put in place over the last 8 months to “try to put a better framework in place to encourage private sector participation in the growth of the economy.”
He said, having put in place measures to improve the country’s fiscal and monetary policy, as well as improve the economic and business climate, the government was “now focusing on the very key area of power and energy.
“If we are going to succeed in pushing the industrial development of our country rapidly, the supply of gas to our country is now a matter of very great importance for us,” President Nana Akufo-Addo noted Friday when a delegation from GAZPROM called on him after the signing of the Gas Sales Agreement between the entity and GNPC.
The combined superior negotiation skills of Ghana’s Energy Minister, Boakye Agyarko, and the CEO of the Ghana National Petroleum Corporation, K K Sarpong, have saved the country over $1 billion in the LNG transaction that will allow for the addition of up to 1,000MW to Ghana’s power supply.
The new GNPC LNG deal is being hailed within the international energy market as a “masterstroke.” It replaces two signed competing contracts for the same Tema LNG project, signed by the previous John Mahama government, which were both considered over-priced and over-sized for Ghana.
The World Bank and Ministry of Energy had estimated that a total of about 250 – 300 mmscf/d of imported liquefied natural gas would be needed by 2018 to undergird the supply of gas from the indigenous fields.
In a bid to meet this requirement, the erstwhile Mahama government entered into contracts with three different companies – Quantum Power Ghana, West African Gas Limited and Kaheel – for the supply of LNG and the construction of its associated import terminal. The aggregate contractual commitment made to these companies amounted to 1000 mmscf/d. But, only 25% of this was the country’s needs, as prescribed by the World Bank and the Ministry of Energy at the time.
A fourth entity, the Tema LNG (TLNG), also made submissions to the government but was unsuccessful.
On the assumption of office, the Akufo-Addo administration felt the need to evaluate the four proposals to compare the commercial benefits of each against the other, with the objective of deciding on the best for the country.
Subsequently, the Energy Minister constituted a Committee to establish a common frame of reference and receive revised proposals from all four entities that would allow for a more transparent, fair and scientific comparative analysis.
The Committee came to the determination that the TLNG proposal offered the best value for the nation.
TLNG is a consortium made up of Gazprom Marketing and Trading Ltd, Helios Investment Partners, the largest investment firm in Africa with over $3 billion in capital commitments, Gasfin Development, a global leader in cryogenic tank design and currently involved in 6 regasification projects, and Blystad Energy Management, a Norwegian firm focused on developing and managing marine power projects that require LNG as a fuel source.
Subsequently, through a well-exhaustive and rigorous process, GNPC was able to negotiate a Gas Supply Agreement with Gazprom which industry players see as reflecting balanced equity and efficient risk allocation whilst delivering a huge value for the Corporation.
President Akufo-Addo, Friday, assured the team from GAZPROM that “all of us are going to do whatever we need to do to make sure that this relationship that we have now begun to build becomes a strong positive and successful one.”
On behalf of GAZPROM, Pavel Oderov, Head International business at GAZPROM, described the signing of the agreement as “a very big day for us at GAZPROM. Indeed, we have signed today the second biggest LNG supply contract in our portfolio.”