GAS DEAL BRINGS GHANA’S JUBILEE FIELD DEVELOPMENT CLOSER AS NEW GOVERNMENT BEDS IN
While the Jubilee field is being fast-tracked to first oil next year, approval of the development plan has been proceeding rather more slowly. Now there are signs of progress with agreement on gas supply terms, which could be good news for Ghanaian electricity consumers, as well as for those who have invested in Jubilee, writes Our Accra Correspondent.
The workings of government in Accra have been moving more slowly than enthusiastic bankers, looking to a potential West African boom market, and investors in companies such as Tullow Oil plc and Anadarko Petroleum Corporation would like, as they look forward to first oil from the much-anticipated Jubilee Field in 2010. But the National Democratic Congress (NDC) government and Jubilee field partners are now close to agreement on the field development plan submitted last October, after approval was delayed by the December presidential election, won by the NDC’s John Evans Atta Mills, and then by the change of government (AE 154/24).
Energy Minister Dr Joe Oteng-Adjei says he has been reviewing the Jubilee field plan. Sources said a sticking point was the international oil companies’ proposal to charge $4/’000ft3 for associated gas from the field. Officials report that the Jubilee partners – IOCsTullow,Kosmos Energy and Anadarko, with Sabre Oil and Gas Ltd, Edusei-Owusu (E.O.) Group and the state Ghana National Petroleum Corporation (GNPC) – have now agreed to supply 200bn ft3 of their share of the gas at no cost during phase one of the development. While some of the gas will be reinjected to maintain pressure in the reservoir, Ghana is keen to harness the gas for power supply. Jubilee is expected to deliver first oil in H2 2010. Some 120m- 160m ft3/d of associated gas could be produced from planned phase one oil production of 120,000 b/d. The Jubilee partners have an agreement in principle with the government for a gas development plan which will include the capability for gas reinjection and a gas export pipeline to a processing plant on the coast. Charging for the gas would help the companies recover the cost of piping it to shore. With costs rising, there has been speculation thatTullow and Kosmos might have to sell equity to complete the development, but the companies have denied this, and Tullow has continued to raise funds in a difficult market (AE 158/1). Aberdeen-registered vehicle Sabre wants to sell its minority stakes in the two blocks that contain the Jubilee field, Deepwater Tano and West Cape Three Points.Three Indian companies – Hindustan Petroleum Corporation, Indian OilCorporation and Oil India Ltd – are reported to be in the running for this.
Campaigners have expressed concern that development is going ahead on a fast-track basis before the field development plan has been approved, and that its contents have not been made
public (AE 157/24). “Potential conflicts of interest exist in that the government, through GNPC, is in the position of both participating in the development of and evaluating the field development plan,�? said a report by Oxfam America in February. The government has invited offers for the commercialisation of gas prospects in the TanoBasin and elsewhere. The cost of commercialisation from Jubilee alone is estimated at $1bn,with a link to the Osagyefo power barge at Efasu – now operated by Balkan Energy Company but not working (AE 158/1) – as Stage
1, and a link to the West Africa Gas Pipeline and 550MWAboadze thermal power plant as part of Stage 2 (2010-12).“The government intends to accelerate the process of acquisition of blocks in the Ghana sedimentary basins in order to fully and speedily delineate the country’s oil and gas
potential,�?Oteng-Adjei told a news conference in Accra on 22 April. It is not just looking to IOCs for help. Vice President John Dramani Mahama held talks with Libyan Leader Muammar Qadhafi about potential investment to develop the hydrocarbon sector during a state visit toTripoli on 30 April-1 May. While Ghana and Libya are old allies, it is not clear whether much will come of this.