Delayed Ghana Gas project to start production end-2014

Ghana’s delayed project to supply gas from its offshore Jubilee oil field will start production by the end of the year, President John Mahama said on a visit to the site.

The $850 million project was supposed to have opened in December 2013 but stalled largely because of difficulties securing the disbursement of $600 million from the Chinese Development Bank, part of a $3 billion loan agreement signed in 2011.

As a result, Mahama’s government has struggled to tackle the country’s energy supply deficit and has spent more money than its budget projections on oil imports. This in turn has worsened a fiscal deficit.

Mahama said during an inspection of the terminal at Atuabo the project will be a “gamechanger” for the economy and save $1.5 billion per year in foreign exchange and other costs.

“Some gas will start flowing soon but commissioning will be when the full volume of 120 million standard cubic feet of gas is being transmitted to Aboadze and I suppose that will be sometime by the end of this year.”

The Western Corridor Gas Infrastructure Development Project includes a 111-km pipeline in Western Region that will take gas via Atuabo to thermal turbines at Aboadze run by the Volta River Authority that will generate 500 megawatts of power.

Delay in its completion is one reason why production at the Jubilee field has held steady at a lower level than the government initially expected.

Ghana’s economy has grown strongly in recent years on the back of exports of gold, cocoa and oil but it faces an array of fiscal problems including inflation and a falling currency and, as a result, the government needs to conserve foreign exchange.