Ghana Gas seals deal with Chinese firm for major gas pipeline project

Business

The Ghana National Gas Company (Ghana Gas) has signed a deal with Chinese multinational, Yantai Jereh Group, for the construction of an onshore 278 km natural gas pipeline from the Aboadze enclave in the Western Region to the power enclaves at Tema in the Greater Accra Region.

The project agreement, dated April 11, 2017, will see the implementation of a previous agreement signed last year between the two companies.

The latest deal will enable immediate commencement of site works such as topographical/geotechnical site surveys and front-end engineering designs (FEED), which are already underway, as well as on-site civil construction activities which will commence within the next ten days.

The financial structure of the project includes a 15-year Build Operate and Transfer (BOT) model whereby the Yantai Jereh Group, along with their investment partners, will fully pre-finance all construction activities related to the project.

Ghana government will not bear any upfront cost, according to a press release from the two companies.

“The entire investment made by the Chinese conglomerate will be recouped by charging transportation fees based on volumes of gas being moved through the pipeline over a period of 15 years after which ownership of the entire infrastructure will be transferred to the Ghanaian government completely free of any recurring charges or financial encumbrances,” the press statement said.

Yantai Jereh Group’s Ghana based Senior Vice President for West Africa, Gao Yong, who will take responsibility for the implementation of the project, said the project represents a massive opportunity for growth for both Ghana and his company.

“We have been highly impressed with the new administration and their ability to get things done quickly and professionally,” he said.

The project is seen as a momentous milestone for the Nana Akufo-Addo-led administration which has pledged massive infrastructural development and industrialisation initiatives such as “one district, one factory” to spur economic growth.

The proposed gas transportation charge of approximately $1.56 per MMBtu (a standard unit of measurement used to denote the amount of heat energy in fuels and the ability of appliances) is a fraction of the $4.05 per MMBtu historically charged by the offshore West African Pipeline Company (WAPCO) for similar natural gas transportation services.

Other advantages of the onshore pipeline infrastructure include a secure transportation of natural gas energy resources generated from oil fields located in the Western Region to the east of the country while traversing multiple regions along the coastlines of Ghana.

Multiple regional natural gas distribution stations will be constructed between the two major load centers of Takoradi and Greater Accra with stations being located in Takoradi, Cape Coast, Winneba, Nsawam, and Tema earmarked for phase one of the project.

Also, a  potential station in the Volta Region has been proposed for phase two of the project.

These stations will enable manufacturers wishing to construct factories to connect directly to the infrastructure thus receiving cost effective natural gas to power their industrial operations.

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