Africa Oil & Gas: Ghana should use excess gas to develop petrochemical industry

ghana-sankofa
The Sankofa Gas Project

The government has been urged to leverage opportunities presented by its growing gas production to develop its petrochemical industry. With gas production scheduled to begin from the Sankofa Gye Nyame field in 2018, the country is presented with an opportunity to use the excess gas to undertake petrochemical manufacturing.

A member of the Public Interest and Accountability Committee (PIAC) – the committee with oversight responsibility for the prudent use of oil revenues in Ghana – Dr. Steve Manteaw said developing the industry would help make use of chemicals from natural gas to manufacture, for instance, fertilizer for crops in the agricultural sector.

“More importantly is the opportunity that gas affords us to undertake petrochemical manufacturing. We can get these various chemicals depending on the compounds of these condensates, that is where you have a lot more urea and ammonia compounds and then it gives you the opportunity to be able to manufacture fertilizer.”

“This will help interface the oil and gas sector with agriculture and get into a situation where the gas industry could support the agriculture industry,” he told members of the Institute of Financial and Economic Journalists (IFEJ) at a post analysis workshop on the 2016 PIAC report in Koforidua. It was sponsored by GIZ.

Gas from the Tweneboa Enyera Ntomme (TEN) is expected in the second half of 2017 and it will produce about 30 million standard cubic feet of gas per day over the next five years.

Cheaper power

Dr Manteaw, who is also a policy analyst for the Integrated Social Development Centre (ISODEC), said the increase in gas production would also aid the country in its power generation efforts.

Currently, power generation from thermal sources is suffering as a result of the inability of the country to secure gas to power all its plants.
More gas production is, however, expected to cushion against the challenge, something he said would enable the country to sell the produced electricity at a much cheaper price.

“We will get LPG and Lean gas to the extent that the lean gas will be used to generate electricity. Domestic users of electricity will be sure that they will get reliable and possibly even cheaper sources of power,” he said.

Negotiating capacity

Dr Manteaw also reiterated the need for the country  to build its capacity in contract negotiations to be able to get the best of the deal from the oil and gas sector.

He said the country had weak negotiation capacity and should therefore tie the rules of negotiation into the laws of the country governing the sector.

He further explained that if the procedures on negotiations were present in the laws of the country, it would make the rules mandatory which would prevent public officers from giving too much away and manipulating the terms of negotiation.

“We are not known to be great negotiators so if you have a law that actually stipulates how an investor should acquire a concession in the oil sector, let that law work for you,” he said.

Concerns have been raised about the price negotiated for the commencement of oil and gas production at the Sankofa Gye-Nyame field (SGN) operated by ENI and several other related contracts.

Dr Manteaw said the prices negotiated for the gas operated by the ENI fields were not very competitive and would be dangerous for the country’s economy.

Sharing his views on the US$7 billion signed contract for the SGN oil and gas project, he said the price negotiated for the gas was higher than that of Ghana’s gas and added that there was a worrying clause in the contract that committed the country to buy the ENI gas at the negotiated price even when cheaper options became available.

“So once we have already signed these and therefore cannot alter them, we should relook at the terms of negotiation and not repeat the same mistakes by tying the terms of the contract mostly to our laws and allow the laws to operate,” he said.(source: Graphic Online)

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