Ghana has signed a major gas deal with energy giant Gazprom to boost the energy sector of the economy.
This came to light last Friday when a delegation from Gazprom – a Russian company – called on President Akufo-Addo at the Flagstaff House after the signing of the Gas Sales Agreement (GSA) with the Ghana National Petroleum Corporation (GNPC).
Present at the meeting were the Energy Minister, Boakye Agyarko; Board Chairman of GNPC, Freddie Blay and members of the management team, as well as the Transport Minister, Kwaku Ofori Asiamah.
The GSA is expected to add 1,000 megawatts to Ghana’s power supply and possibly save the country over $1 billion, according to sources at the ministry of energy.
A regasification terminal at Tema would be constructed under the agreement, which replaces two signed competing contracts for the same Tema liquefied natural gas (LNG) project by the previous Mahama administration, which were both over-priced and over-sized.
President Akufo-Addo said, “This new agreement is a positive one that is going to play a very important role in the economic life of Ghana.”
For him, the decision by Gazprom to establish a base in Ghana was testament to efforts made by the current government over the last eight months to try to put a better framework in place to encourage private sector participation in the growth of the economy.
After putting in place measures to improve the country’s fiscal and monetary policy, as well as improve the economic and business climate, he indicated, “We are now focusing on the very key area of power and energy.”
That, he said, was because “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 Akufo-Addo added, “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 his part, head, International Business at Gazprom, Pavel Oderov, said, “This is a very big day for us at Gazprom; we have signed today the second biggest LNG supply contract in our portfolio. With Gazprom producing 11% of the world’s gas, we are more than honoured to become a supplier of LNG to Ghana. We are absolutely sure that we will become a reliable partner for the energy industry in Ghana.”
Ghana Saved $1bn
The new LNG deal, which has saved Ghana over $1 billion, has been described in the international energy market as a “masterstroke.”
The previous Mahama administration entered into contracts with three different companies (namely, 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 (only 25% of which was the country’s needs as prescribed by the World Bank and the ministry of energy at the time or $25bn over the term of the contracts).
From a broader perspective, this was equivalent to more than half of Ghana’s 2016 GDP.
A fourth entity, called the Tema LNG (TLNG), also made submissions to the government but was not successful.
Needless to say, if all the three contracts had been made effective, the country would have suffered a devastating and longstanding impact on its balance sheet.
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