Incentives can boost commercial gas production

The General Manager, Geoscience, at the Ghana National Petroleum Company (GNPC), Mr Benjamin Kwame Asante, has advised the government to provide incentives to companies who intend to commercialise gas production in the country.

He said most of those companies came in looking to invest in oil exploration and not gas, hence the government should encourage them with favourable policies to entice them into gas production as well.

In an interview on the sidelines of the 2018 Ghana Gas Forum in Accra, Mr Asante said most investors were more inclined to the oil sector because it was a well-regulated pricing market compared to the gas sector, which often had lower prices and fewer markets, and, therefore, any attempt to prioritise natural gas usage should start with favourable government policies.

“If there is any prioritisation of natural gas that is going to help in industrialisation, then it has to start with government policies. It should start from the time we are negotiating and awarding the blocs because most of these oil companies come and invest looking for oil and not for gas,” he said.

He added that “we have to look at the fiscals when negotiating bloc awards. There should be lower royalties for those who want to produce the gas and it should be different for associated and non-associated gas”.

Also, with respect to appraisal time, he said oil exploration takes lesser time and it was, therefore, important for more appraisal time to be given to investors interested in the gas sector.

Review policy

Mr Asante also explained that it was important to review the country’s provision for the gas sector.

“We should even look at the concept for the development of the gas industry, in that it will not just extract it but how are we going to transport and utilise it?

“The plan of development and all that should be put together and backed by legislation or law, then we see that those who are going into gas, these are the things there for you and this is how we want to use the gas for industrialisation,” he added.

Recouping investment

Ghana is a party to the countries that made investments into the West African Gas Pipeline (WAGP) for transportation of gas from Nigeria. Other countries making use of the pipeline are Togo, Benin and Nigeria, which is the main supplier of gas to Ghana.

The country is currently looking at using the pipeline for a reverse flow from its gas processing plant at Atuabo in the Western Region to the industrial enclave in Tema, and this, Mr Asante said, when completed, would help rake in some revenue.

“What we are looking at now, if possible, is the reverse flow and the pipeline has the capability to do that. When that is done and we start flowing gas to the Eastern part for industries to use, they will pay tariffs and we can get money to even pay some of our debts to the West African Gas Pipeline Company,” he said.

Gas hub

The Deputy Minister of Energy, Dr Mohammed Amin Adam, said the country’s geographical position and democratic achievements, coupled with its enabling investment environment, positioned it well to become a gas trading hub in West Africa with a pricing benchmark linking gas producers and consumers in the sub-region.

In that regard, the government, he said, would continue to provide the needed infrastructure and incentives to help explore this opportunity in the face of increased gas production.

“The government will do what is necessary to sustain Ghana’s attractiveness to investments in the oil and gas sector in particular and the country as a whole,” he said.
He said recent developments in Africa’s gas exploits posed challenges but also opportunities, adding that among the major recent gas discoveries in the world, Africa had led 2012, with the region accounting for almost 30 per cent of global oil and gas discoveries made over the last five years.

“Mozambique, Tanzania, Angola, Nigeria, Egypt and recent discoveries in Senegal and Mauritania have all shown that in the future, we see Africa emerging as a major player in natural gas, anchored by LNG export,” he said.