Ghana to lose $340 million after Gas project delay

The inability of the Ghana Gas Company to begin commercial delivery of gas from the Atuabo Gas facility in January, 2014, is likely to cost the country $340 million.

Ghana Gas cannot meet the January, 2014, scheduled delivery date because of the loss of a container carrying a consignment, including 34 fabricated plates for the liquefied petroleum gas (LPG) storage tank, off the coast of South Africa.

The consignment, which also included some important accessories for the storage and condensing tank, was said to have sunk when the Chinese vessel in which it was being carried, the Senghuang Song, was involved in an accident on August 8, this year.

According to the Chief Executive Officer (CEO) of Ghana Gas Company, Dr George Adjah Sipah-Yankey, with the loss of the items, the company would not be able to generate the first gas after the contemplated December 31, 2013 completion date.

He said the commercial production of lean gas, LPG and condensates was likely to commence after March, 2014, culminating in a 90-day lost opportunity for fuel substitution for power generation by the Volta River Authority (VRA).

Dr Sipah-Yankey said the VRA currently spent about $3 million per day on the procurement of light crude oil (LCO) to generate power.

According to him, when Ghana Gas Company commenced processing gas and transported lean gas to VRA for the generation of the same unit of power a day, the VRA would save about 50 per cent of the cost of generating power with LCO.

“In effect, the VRA will save about $1.5 million per day. When you multiply that by 90 days, then for the three months that Ghana Gas will not process gas, the VRA will lose $135 million.

“Ghana Gas, on the other hand, will incur revenue loss of $135 million for the sale of lean gas to the VRA and an additional revenue loss of $70 million from the production and sale of LPG,” Dr Sipah-Yankey added.

It would be recalled that the container carrying the consignment, including some essential tools for the hooking up and installation of vessels to transport gas from the facility, all costing $2.6 million, sunk when the vessel carrying it got involved in an accident as a result of bad weather.

The vessel was transporting the consignment on behalf of the contractors, Sinopec, to the Atuabo site when the incident occurred.

Luckily for Ghana Gas, however, Sinopec insured the consignment and has since notified its insurers who are replacing the lost and damaged equipment.

“We are optimistic that by September 21, 2013 the raw plates would have arrived at Sinopec’s site in China for fabrication and subsequent shipment to Ghana,” Dr Yankey told the Daily Graphic.