Saturday, 13 July 2019

Ghana's LNG re-gas contract still held in secret from industry stakeholders



 Image result for Ghana's LNG re-gas


Adnan Adams Mohammed

A financial and energy expert has sounded caution to government on lack of transparency in all the agreements backing the contract it signed with Helios/China Harbor Engineering and Ghana National Petroleum Corporation as well as the Rosneft LNG regasification project.  

Alex Mould, former CEO of GNPC expresses concern about the seeming lack of proper world class advisors on technical, commercial and legal areas of all the LNG regasification project signed a year ago on behalf of government given the short negotiation  period which suggest a need for rushed off.

Helios and China Harbor Engineering and GNPC are constructing a terminal for the regasification project which is managed by Team LNG Terminal Company. It could also be remembered that, GNPC, last year June, signed a new gas sale and purchase agreement (GSA) deal with Rosneft for the same natural gas supply agreement it had signed with Gazprom in September, 2017. This raised a lot of questions by energy experts then as to what necessitated the abrogation of the Gazprom contract and the cost it came with for the forceful abrogation of the contract. 

“It is a year now, yet, stakeholders including Parliament and civil society are not getting much information about the LNG regasification project from government through the Ministry of Energy or from GNPC. There are more standing questions begging for answers”, Mr Mould told Economy Times in an interview at LNG Western Africa Conference 2019 held last week in Accra.     

He raised a number of questions bordering around the rush to sign off such a complex project, on transparency issues on the Ghana LNG Regasification project; on the structure of the project including risk allocation between GoG/GNPC versus the sponsors of the project, and the pricing of the LNG and utilization of the regasification facility.

Some of the questions raised by Mr Mould included: Who were GNPC’s advisors on this newly signed LNG regasification project on technical, commercial and legal issues in the agreement? 
- What is the LNG Regasification (LNGR) transaction structure? 
- What are the key stakeholders and counterparties in each agreement? 
- What is the termination clause (That is, how much and what does GoG/GNPC have to pay on termination)? 
- Is GoG/GNPC providing support for this project (- what is the form of support, - for political risk guarantee (PRG) or a government GSCA or a Put Call Option, - for SBLC for LNG supply (fuel supply), - for SBLC for FUA (regasification capacity charge))? 

Who is building and financing the breakwater and quay? Is this cost part of the LNGR project amortized in the LNGR project? What’s security structure supporting of project? What is GNPC liability in the project? And, what is size of Regas unit, storage unit?

It said that, the ministry off-take is around 250mmscfd through GNPC to all the power plants in Tema power enclave.

Although, it is believed that GNPC is not directly involved in terminal issues,  it is believed that GNPC has signed an agreement with the Terminal Company to guide eventual takeover of the Terminal (being a BOOT) arrangement; however, the details are blur and it is unclear who the EPC contractors are aside from the fact that the GSA is between Rosneft and GNPC.

Project completion is expected in second half of 2020 but however based on a study of projections of the gas demand and supply, it is estimated that, there is a surplus of gas progress until about 2028. 

GNPC is still the national gas aggregator as appointed by Government, but it is suggested that, the new Gas Bill which is going for Approval in Parliament is proposing Ghana Gas (GNGC) as the aggregator.

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