|“ENERGY FOR GROWTH: VISION AND AGENDA” By Dr Joe Oteng-Adjei, Minister For Energy|
|Thursday, 06 October 2011 12:34|
Honourable Minister for Information & Chairman for Today’s Occasion,
Colleague Ministers of State,
Ladies and Gentlemen of the Press,
Chief Executives and Staff of the Energy Sector Agencies,
Distinguished Invited Guests:
It is with a feeling of gratification and the deepest pleasure that I once again have the opportunity and honour to take my turn at this Year’s Meet-the-Press Event.First of all Mr Chairman, let me thank the Ministry of Information for providing this platform for mutual interaction. I also wish to thank Ladies and Gentlemen of the Press for gracing this occasion. This Press encounter provides me the opportunity to tell Ghanaians of progress made in the implementation of programs and projects in the energy sector which are informed by the Ghana Shared Growth and Development Agenda (GSGDA), a medium-term policy framework which seeks to concretise the Better Ghana Agenda of the NDC Government.
I am therefore here this morning to update you on what we have all been able to do as a country to ensure that the national milestones of the energy sector are met to help realise the overall Government development agenda for accelerated economic growth and the attainment and improvement of our middle-income status.
2. ENERGY SECTOR VISION AND POLICY DIRECTIONS
Ladies and Gentlemen, the Government’s vision for the energy sector is to develop a dynamic energy economy that secures a reliable supply of high quality energy services for all sectors of the Ghanaian economy and also become a major exporter of oil and power by 2012 and 2015 respectively.
Mr. Chairman, let me assure you that the Ministry of Energy remains focused on this vision and in order to provide a better understanding of Ghana’s Energy Policy framework as captured in the “Better Ghana Agenda”, the Ministry in March last year, published the National Energy Policy document as well as the Energy Sector Strategy and Development Plan. These provide concise outline of the Government’s policy direction that seeks to ensure universal access to electricity and choice of alternative modern forms of energy to all Ghanaians without exception by 2020. These documents were presented at the Policy Fairs of 2010 and 2011. Copies are also available on the Ministry’s web site. (www.minenergy.gov.gh)
3. DEVELOPMENTS IN THE POWER SUB-SECTOR
Ladies and Gentlemen, before I explore what we have done so far with respect to our commitment to provide secure and reliable power to the country, I wish to recount the specific tasks we set for ourselves for the power subsector. We promised to:
i. Sustain power generation capacity expansion, as well as rehabilitate and reinforce the transmission and distribution infrastructure to meet the projected growth in power demand of 10% per year in the medium-term;
ii. Complete on-going power projects;
iii. Open up the electricity subsector to Independent Power Producers (IPPs)
iv. Develop a non-congested transmission system.
v. Secure long term reliable gas supplies for the operation of thermal power plants
vi. Increase access to modern forms of energy to the poor and vulnerable especially in the rural areas through the extension of the national electricity grid
vii. Support sustained energy efficiency and conservation programs including reducing power system losses and waste in electricity supply and consumption
Mr. Chairman, Ladies and Gentlemen of the Press, we took over the administration of this country amidst severe challenges in the power sub-sector characterised by highly erratic power supply caused by generation, transmission and distribution deficiencies. Today, we have improved generation and transmission and reduced distribution challenges significantly.
Generation capacity has been increased from 1,810 MW in 2009 to 2185.5 MW by the addition of 375.5MW of thermal generation. The additional capacity was provided by completion of the following projects
1. Tema Thermal 1 Power Plant – 126MW
2. Tema Thermal 2 Power Plant – 49.5MW
3. Sunon Asogli Power Plant – 200MW
Ladies and Gentlemen, as part of our continuing efforts to expand generation capacity to 5,000 MW in the medium-term, additional capacity of 265 MW will be ready by the end of 2012 through the completion and commissioning of one unit of 133 MW out of the 400 MW Bui Hydroelectric Project by December 2012 and 132 MW capacity from the Takoradi 3 Thermal Project by June 2012.
It should be gratifying to inform you that impoundment has started at the Bui Dam and 80% of construction of resettlement housing units in the Dam catchment area is completed and communities supplied with potable water.
Mr. Chairman, also with the purpose of meeting the 5,000 MW target by the year 2015 to meet the growth in the national electricity demand and also to export to the neighbouring countries, the following on-going power generation projects are in progress in order to achieve the goal:
Takoradi International Company (TICO) Expansion
The TICO plant is a joint venture between VRA and CMS Energy of Michigan and resulted in the construction of a 2 x 110 MW combustion turbine plant in Takoradi in 2000. It is now being expanded to a 330 MW combined cycle plant to provide additional 110 MW steam unit. The Government in April 2010, entered into a Memorandum of Understanding with TAQA Energy, majority owners of the plant, to implement the expansion which is expected to be on stream in the first quarter of 2014.
220 MW Kpone Thermal Power Plant
This project is being implemented by VRA and is expected to add 220 MW to existing capacity. Gridco will ensure that the plant is connected to the National Interconnected Transmission System to facilitate power evacuation.
Other Hydropower Projects
Mr. Chairman, the Ministry intends to develop small and mini hydro power projects. Notable amongst such plants are the Juale (90 MW), Pwalugu (48 MW) and the Hemang (93 MW) hydro power plants. Studies are currently on-going for the development of the Pwalugu, Juale and Hemang mini hydro projects.
Fuel Supply for Power Plant
Ladies and Gentlemen of the Press, we are aware that running thermal power plants on diesel and light crude oil has significant impact on Tariffs. To ameliorate this phenomenon, it is planned that natural gas from Nigeria and domestic natural gas from the Hydrocarbon Find in Ghana would be utilized in the running of thermal power plants. An agreement has been signed with the United States Trade and Development Agency (USTDA) to assist the Energy Commission conduct feasibility studies for the installation of a Floating Storage and Regasification Unit in Ghana to supply Liquefied Natural Gas (LNG) to supplement natural gas from Nigeria and local sources. When operational, the LNG plant will in addition to supplying more gas, guarantee gas supply reliability for industrial and power production operations in Ghana and other countries connected to the West Africa Gas Pipeline.
Mr. Chairman, the transmission company, the Ghana Grid Company Limited (GRIDCo) has been entrusted with the responsibility of ensuring a transparent environment for the management of the wholesale supply market for electricity generation and sale in the country. GRIDCo is to ensure adequate electricity transmission capacity from the generating plants to the distribution utilities.
Currently the National Interconnected Transmission System (NITS) is saddled with over-aged and obsolete equipment, overloads, high losses, low voltages and evacuation constraints among others. The Ministry is addressing these challenges through progressive replacement of these over-aged and obsolete equipment and reinforcement of others.
In line with that, Government has initiated projects since 2009 to achieve this target. Some of these projects are on-going while others have been completed. The completed projects are:
1. Construction of 60 km 161 kV line between Kumasi and Obuasi to reinforce transmission at a cost of US$10.0 million. This will increase the power transmission capacity to Kumasi and the North.
2. Construction of a 330 kV Aboadze – Volta Transmission Line. This is Ghana’s first 330 kV transmission line and substation facility. It comprises 220 km of 330 kV transmission line from Takoradi to Tema. The associated cost is US$80.0 million.
3. The upgrade of existing 200 MVA transmission line between Volta and New Tema substations in Tema at a cost of US$1.0 million.
4. The provision of a fourth 161 kV transmission line between Tema and Accra to increase the power transfer capacity into Accra at a cost of US$2.0 million.
5. Upgrading of transformer capacity at Ho, Asiekpe, Techiman, Kumasi, Tema, Winneba and Takoradi at a cost of US$10.0 million.
6. Installation of capacitor banks at Achimota, Kumasi, Takoradi, Sunyani, Kpando and Smelter substations to improve upon system voltages and reduce the demand for reactive power from power plants at a cost of US$4.5 million.
7. Construction of a 161/34.5 kV 25 MVA substation at Buipe to supply power to the Savanna-Diamond Cement factory and Buipe Township and its environs. The station was energized in April 2011. The cost of the project was US$8.5 million.
8. Expansion of the existing Mallam substation by the incorporation of two additional transformers and two 161 kV transmission lines to meet the increasing Accra load at US$10.0 million.
Improvements in Distribution Infrastructure and Services
Ladies and Gentlemen, the Electricity Company of Ghana (ECG) is faced with numerous challenges with regard to the operation of its distribution network. Some of the challenges of the distribution system can be attributed to the following:
i. Overloading of equipment and lines due to capacity constraints
ii. Weak feeders and obsolete equipment
iii. Lack of adequate system redundancies or alternative sources of supply
iv. Inordinately long feeders
ECG is currently implementing a number of projects to address these technical challenges. Some of the projects are:
i) Ghana Energy Development & Access Project (GEDAP)
ii) ECG Network Expansion Project (Jacobsen Phase II)
iii) GoG Supported Projects
iv) ECG Financed Projects
v) Suppliers’ Credit Projects
Specific projects being undertaken by ECG to improve distribution system reliability include:
a) Five switching stations and associated lines at Airport and Osu in Greater Accra, Amanfrom Abuakwa and Kumasi Technical Institute (KTI) in the Ashanti Region and Koforidua in the Eastern Region;
b) 2x20 MVA Primary Substations and associated 33 kV and 11 kV circuits;
c) 3,020 distribution substations across all ECG operational areas;
d) Installation of SCADA equipment on all 33 kV networks in Accra and Tema and also installed secondary network automation in Accra to improve response time to addressing faults and network outages;
e) Procurement of one power and six distribution mobile substations to support network operations to provide support for network operations and maintenance works;
f) Procurement of Meter Test Benches in all ECG operational areas to support meter testing and calibration processes;
g) Construction of district offices in Korle-Bu, Kwabenya, Roman Ridge and Achimota to provide a medium to reach, address and satisfy customers.
Revenue Improvement Interventions
Mr. Chairman, to address ECG’s revenue problems, the Government of Ghana (GoG) is assisting ECG to finance the replacement of credit meters with prepaid meters in its areas of operation.
The company has also engaged consultants to inspect metering of 10,000 largest customers to check accuracy and integrity. Furthermore, Loss Control Units (LCUs) have been set up and reward schemes put in place for informants of electricity theft.
Mr. Chairman, subsequent to the 2010 tariff increase which became effective on June 1, 2010, the Government provided GH¢20 million support (over 7 months) to electricity consumers. The utilities also offered a rebate of GH¢67.1 million from June to December 2010 to further reduce electricity prices. It is believed that these measures provided relief to consumers. We will urge customers to exercise patience for on-going projects to be completed, as these will make the required improvements in the quality of power supply visible.
It may also be recalled that the cost of generating electricity reduced marginally during the last tariff adjustment exercise by PURC. This was attributed to an increase in natural gas component as fuel for power generation. The hope is that as we endeavour to reduce the use of light crude oil and diesel as fuels for power generation in favour of natural gas and hydro, the cost of power generation would significantly go down and should obviously translate into cost savings to consumers.
4. NATIONAL ELECTRIFICATION SCHEME (NES)
Ladies and Gentlemen of the Press, the National Electrification Scheme (NES) was instituted in 1989 as Government of Ghana’s principal instrument to achieve its policy of extending the reach of electricity to all parts of the country over a thirty-year period from 1990-2020. At the inception of the NES, only about 15% of the total population of Ghana had access to electricity supply. A decade later, according to the 2000 population and housing survey, the number of households that were connected to the national electricity grid rose to 43%. The rate stood at 54% in 2008.
Ladies and Gentlemen, from January 2009 to date, the rate has been increased from 54% to above 72% and indications are that with current projects slated for completion in 2012, this rate should increase considerably.
Mr. Chairman, despite this impressive national average of 72%, the access rate for the three northern regions are clearly below the national average. The Northern, Upper East and Upper West regions have coverage rates of 43.52%, 30.39% and 31.95% respectively. The direction of Government therefore, is to ensure that the accessibility rate in the three northern regions is considerably improved. Government has therefore secured over US$300 million for electrification projects in these regions. This amount is to be used to connect 1400 communities in the three regions to the national electricity grid (i.e. Northern: 500, Upper East: 500, Upper West: 400).
Mr. Chairman, for the years 2010 and 2011, the following achievements were made in rural electrification:
· 581 communities connected to the national electricity grid as at August 2011 under Self-Help Electrification Program (SHEP-4) Phase-2 electrification works by China International Water & Electric Corporation. It is expected that about 600 more communities would be connected to the national grid by 2012 under this project.
· One hundred and sixty seven (167) additional communities were also connected under the Ministry’s own rural electrification program, also under SHEP-4.
· Works for the extension of electricity to 39 out of the 82 communities in the Ashanti and Eastern Regions under BNP Paribas facility have been completed while the completion level for the rest is at 80%.
· Construction works have also begun in 200 communities in the Western Region and survey works are on-going in the Central and Brong Ahafo Regions under the project for the extension of electricity to 1,400 communities countrywide by Messrs Weldy Lamont & Associates. This project is being jointly funded by a facility from the US Exim Bank and the Government of Ghana at a cost of US$ 350 million.
5. GHANA ENERGY DEVELOPMENT & ACCESS PROJECT
Mr. Chairman, the Ghana Energy Development and Access Project (GEDAP) is a multi-donor funded Project led by the World Bank International Development Agency (IDA) at the cost of US$312 Million. The project is to be implemented over a 6-year period, from November 2007 to November 2013.
The Development objective is to improve the operational efficiency of the power distribution system, increase the population’s access to electricity and help transition Ghana to a low-carbon economy through the reduction of greenhouse gas emissions.
A brief status of the project as at the end of the second quarter of 2011 is as follows:
a) Construction of five (5) 33/11 kV ECG primary substations in Accra and Tema – Three (3) substations at Kwabenya, Cantonments and Nmai Dzorn have been completed and commissioned. The other two substations at Sowutuom and Dawhenya are about 95% complete.
b) Extension of grid electricity to unelectrified communities:
o Central: All 81 communities completed,
o Volta, Eastern, and Greater Accra: All 125 communities completed; second round of service connection in progress
o Western: 31 communities out of 139 completed
o Ashanti: construction is in progress in 109 communities
c) Grid intensification in electrified communities:
o Brong-Ahafo: 75% of construction completed for intensification in 109 communities
o Northern, Upper East & West: 75% of construction completed for intensification in 20 communities
o Ashanti: intensification in all 132 communities completed
o Central: intensification in all 83 communities completed
o Western: intensification in all 56 communities completed
o Volta, Eastern, and Greater Accra: intensification is in progress in 159 communities
6. STREET LIGHTING PROGRAM
Mr. Chairman, the Ministry of Energy is committed to improving the existing street-lighting situation throughout the country in a sustainable manner with the view to providing security and safety, improve upon the aesthetics at night and also enhance socio-economic development of the country.
Mr. Chairman, the Ministry of Energy has made considerable strides in the area of provision of street lights through implementation of the Regional Capitals Street Lighting Program. Installation works were completed in Koforidua, Sekondi, Cape Coast, Tamale and Tema under the 1st phase of the project. Installation works in the remaining regional capitals have also been completed under the 2nd phase of the project. Mr Chairman, the Ministry is now extending this program to cover all Municipal and District Capital in the country.
Mr. Chairman, previous Street-lighting facilities installed in some areas of the country had faced challenges, including poor maintenance and vandalism of street light lamps. With the exception of a few facilities for which maintenance contracts have been signed, most of the facilities are facing maintenance challenges.
Street lighting Policy
Ladies and Gentlemen, in order to address these challenges, the Ministry of Energy has begun the process of finalizing a policy on street-lighting deployment in Ghana. The policy seeks to provide street-lighting facilities in the Regional, Metropolitan, Municipal and District Capitals that would be owned, operated and maintained in a sustainable manner. It also seeks to harmonize standards for best practices through partnerships among Government, Utility Companies and Regulatory Agencies within the power sub-sector of Ghana, and also come up with time-bound implementation programs. The Metropolitan, Municipal and District Assemblies shall assume full responsibility for the maintenance and repair of street lights and for the expansion of street lighting projects in the areas under their jurisdiction. Street lighting levy which currently stands at GH¢ 0.0001/kWh may have to be adjusted to ensure sustainable power supply for street lighting. This implies that one has to consume 100kWh before he or she contributes ONE PESEWA towards street lighting. Renewable Energy options for street lighting will also be pursued. Stakeholder consultations on the Street Lighting Policy Framework have been held in Tamale, Kumasi and Accra for the northern regions, the middle and the coastal belts respectively.
7. RENEWABLE ENERGY SUB-SECTOR
Colleague Ministers, as an indication of the Government’s commitment to renewable energy, the Ministry of Energy has upgraded the Renewable Energy Unit at the Ministry to a full Directorate similar to the Petroleum and Power Directorates. This new Directorate will formulate, plan and monitor policies and strategies for the promotion of all forms of renewable energy resources in the country and achieve at least 10% contribution of modern renewable energy services in the electricity generation mix by 2020.
Renewable Energy Bill
Mr. Chairman, to create the enabling environment to ensure the achievement of this target, a Renewable Energy Bill that will provide the regulatory framework and fiscal incentive to attract private sector investment in the renewable energy sector was approved by Cabinet and is currently under Parliamentary consideration. I am optimistic that the Bill will be passed into law before the end of the year.
Ongoing Renewable Energy Projects
In the meantime, Mr. Chairman, the Energy Commission has initiated a programme to support the installation of grid connected solar systems in some public institutions in the country. The Ministry of Energy is also supporting the Energy Commission to undertake a more detailed wind resource assessment of the potential sites along the coast for the development of wind parks for power generation. As stated earlier on, the Ministry of Energy is working with the VRA, the Bui Power Authority (BPA) and other private developers to undertake further studies towards the development of small and medium hydro power systems.
Ladies and Gentlemen, the Volta River Authority is setting the pace to install the first 2 MW solar park for integration into the national electricity grid by 2015.
My Ministry is also collaborating with JICA to build Human Resource Capacity for Solar PV dissemination in Ghana. The KNUST, Koforidua and Tamale Polytechnics have been provided with solar PV training materials and testing equipment for academic research.
Invited Guests, Government in 2009 secured a 5 million Euro grant facility from the Spanish Government for the supply and installation of solar systems in schools, hospitals and security outposts mainly in remote communities without electricity. Districts that have benefited to date include island and lake side communities in the Dangbe East, Krachi East and West, Nkwanta North and South, Afram Plains, Sene and Bongo Districts where a total of 845 solar systems including solar streetlights and vaccine refrigerators have been installed to date. Teachers’ quarters in the beneficiary communities have also been equipped with solar systems to provide the basic electricity requirement to encourage the teachers to stay in such deprived communities.
The Ministry is also collaborating with the World Bank under the Ghana Energy Development and Access Project (GEDAP) to provide loans with grant facility through the rural banks to supply rural homes in remote off-grid communities with solar systems. About 2,700 households in 11 Districts have so far been supplied with solar systems over the past two years.
Mr. Chairman, the Ministry of Energy, since 2009, has supported the Ghana Health Service and provided 379 solar systems for 132 remote health facilities (Chip Compounds) to support vaccine storage and lighting in 21 Districts mainly in the Brong-Ahafo, Northern, Upper East and Upper West regions.
8. ENERGY EFFICIENCY AND CONSERVATION INITIATIVES
Mr. Chairman, ensuring energy efficiency and conservation is a major policy goal of Government. The Energy Commission in 2010 set two main targets in Energy Efficiency & Conservation. These relate to the introduction and implementation of a comprehensive refrigerating appliance efficiency project that will be implemented over three years and the reduction of Government expenditure on electricity through the installation of capacitor banks to improve power factor
The successful implementation of the Efficient Lighting Retrofit Initiative has resulted in electricity demand savings of over 124 MW and energy cost savings of over US$33 million per annum. The use of incandescent lamps has reduced from 58% in 2007 to less than 3% in 2011.
Ladies and gentlemen of the Press, it is gratifying to note that this initiative made the Minister for Energy a recipient of an international award for Energy Efficiency in Washington DC in May 2010.
Invited Guests, the Appliance Energy Efficiency project being implemented by the Energy Commission, involves the introduction of appliance performance standards and labels that will guide consumers to make a choice with regard to energy efficiency of appliances before they purchase them; and the transformation of the refrigerating appliance market through a phase-out of used refrigerators because of the impact of ozone-depleting CFC gases used in such appliances.
The project which was approved in June 2011 will be formally launched in October 2011. It is being funded by Global Environment Facility (GEF), the UNDP, the Multilateral Fund of Canada and the Government of Ghana. The Energy Efficiency (Refrigerating Appliances) Regulations, 2009, LI 1958 backing the full implementation of this project is already in place. It is expected that the project will reduce energy consumption of refrigerators from a national average of 1,200 kWh per annum, to 600 kWh per annum. Appliance dealers have been sensitized on the project and it is gratifying to note that the major appliance dealers have already started complying with the law by stocking only power efficient appliances. Agreements have been reached with importers of used refrigerating appliances for a gradual phase-out of such imports.
The Ministry will continue to support the Energy Commission in the implementation of these and other energy efficiency and conservation programs.
Power Factor Correction
Mr. Chairman, to reduce Government expenditure on electricity, the Ministry of Energy has supported the Energy Commission to undertake a pilot project to install Automatic Capacitor banks at some selected public facilities whose bills are paid by Government. These public facilities include; the Ministry of Defence, Korle-Bu Teaching Hospital, the Office of the President, Food and Drugs Board, Accra Sports Stadium and Parliament House. This has resulted in the reduction of power consumed from 11,743kVA to 9,889kVA. Translated in monetary terms, a total savings of about GH¢39,145 a month or GH¢469,740 per annum.
The Ministry of Energy will continue to support the Energy Commission to extend this program to other public buildings while encouraging the private sector to undertake similar energy saving measures. Ladies and Gentlemen of the Press, I will be relying on you as the life-cable for the public education and awareness creation to ensure the successful implementation of these programs.
9. ELECTRICITY USAGE SAFETY: NATIONAL WIRING REGULATIONS
Mr. Chairman, on many occasions fire outbreaks in buildings and facilities have been blamed on electrical faults. To ensure that the outbreaks of fire due to electrical installations are reduced to a minimum, the Energy Commission has developed the National Electrical Wiring Regulations for approval by Parliament. The regulations have specific requirements for qualification of who does electrical wiring in Ghana, how wiring is to be done and with which materials. The regulations also provide for the inspection of old electrical installations by qualified persons to identify and correct any potential fire hazards. It is expected that the Wiring Regulations will ensure that fires and accidents attributed to electrical installations would be significantly reduced.
10. PETROLEUM SUB-SECTOR DEVELOPMENTS
Oil and Gas Prospects
Mr Chairman, Ladies and Gentlemen of the Press, it has become evident that Ghana’s oil and gas prospects are real and noteworthy. Our oil and gas potential stretches across the country’s shoreline from the west (Tano Basin) to the east (Keta) and also covers the Voltaian Basin, which constitutes 40% of Ghana’s landmass.
The Voltaian Basin unfortunately is the least explored. Mr. Chairman, it is in this light that under the mining support program sponsored by the European Union, airborne geophysical survey has been conducted on the basin. GNPC has been given access to this data. To complement this and the other available data, GNPC has now planned a geoscientific study of the entire basin to enhance the understanding of the area. The program involves the acquisition of about 1700 km of 2D reconnaissance seismic data.
Mr. Chairman, I have to intimate that Ghana’s known oil and gas resources are growing. Apart from the initial discoveries that have come to be known as the Jubilee Field, nine (9) other discoveries have been made to date and are being appraised, whilst additional leads have been identified and are being pursued.
Appraisal of the Tweneboa/Enyenra/Ntomme (TEN) complex made significant progress during the year under review. Four (4) appraisal wells were drilled on this complex in 2011. The results of these appraisal wells have so far been very encouraging with the recently completed Enyenra 3A well showing excellent results. It is expected that a Plan of Development (POD) will be submitted to the Minister by the middle of 2012.
Vanco and Lukoil have commenced appraisal activities on the Dzata discovery with the drilling of the first appraisal well, Dzata 2A. A second appraisal well, Dzata 3A is also planned for the last quarter of 2011. Depending on the outcome of these firm wells, additional appraisal wells are planned to be drilled before the submission of a Plan of Development.
Exploration Drilling Activities
Eight (8) exploration wells were drilled during the year. Six (6) of these resulted in oil, gas and condensate discoveries. The discovery wells are Teak-1, Teak-2, Banda-1, Gye Nyame-1, Paradise-1 and Akasa-1. The Teak-1 and Teak-2 wells both wells encountered multiple oil, gas and condensate pools.
Data Acquisition, Processing and Interpretation
Tap Oil, Operator of the Offshore Accra Block acquired 1,200 sq km of 3D seismic data on this block in February 2011. The processing of this data set is currently on going.
Award of Blocks
Two applications evaluated by GNPC for open blocks have been recommended to the Ministry of Energy for consideration.
1. Hess Ghana/Rockfield application for E&P rights in the West Keta block (west of Afren/ENI block)
2. Sahara Energy Fields Limited application for E&P rights in the East Cape Three Points Block (north of Vanco/Lukoil and east of Vitol/ENI Blocks)
Reservoir Description and Reservoir Characterization for DWT and WCTP
The Ghana National Petroleum Corporation (GNPC) intends to apply part of its budgetary allocations to conduct studies on Reservoir Description and Characterization for the West Cape Three Points (WCTP) and Deepwater Tano (DWT) acreage Blocks. GNPC's purpose is to establish the total resource base of these two blocks for future national planning.
Development in the Jubilee Field
Ladies and Gentlemen of the Press, in 2009 we indicated that the Jubilee Field will be developed in phases. Our specific targets were to:
· Develop and produce oil and gas in commercial quantities.
· Achieve at least an output of 60,000 barrels of crude oil per day by year end 2010.
I am happy to report that:
· Jubilee has been successfully developed including drilling and completion of 17 wells and subsea installations.
· Financing and construction of the FPSO was completed, its lease arrangement successfully concluded and the vessel successfully moored.
· The target of producing First Oil from the Jubilee Field was met in December 2010.
· Ghana achieved an industry record of 3.5 years (40 months) from discovery of oil to first oil production.
· Oil production increased steadily from the initial average of 45,000 barrels of oil per day in January 2011 to about 77,000 barrels of oil per day on the average in August 2011.
· The total crude oil production from January 2011 to September 2011 was about 16.7 million barrels.
· There was a total of twenty four (24) crude liftings from the Field by all the partners.
· The Ghana Group earned a total of US $337,337,945 from the sale of the first three liftings totalling 2,980,720 barrels of crude oil
Mr. Chairman, interest in Ghana’s oil and gas is growing and becoming more competitive and therefore places the country in a better position to negotiate for better fiscal terms and greater participation and thus enter into better Petroleum Agreements that preserve the national interest. Currently there are thirteen (13) different petroleum operations being undertaken along the country’s shoreline at different stages of exploration and development. Transparent procedures have been developed by the Ministry as a demonstration of Government commitment to streamlining and accelerating the process of acquisition of blocks in the sedimentary basins in order to fully and speedily increase the country’s known oil and gas resources.
b) Midstream Initiatives
Commercialisation of domestic Gas Prospects
In 2009, I did indicate that Government’s intention was to maximise the exploitation of the gas from the Jubilee Field and other future gas discoveries. Indeed Government has moved to actualise this intention by initiating the processes of ensuring the development and utilisation of natural gas that would be produced.
The targets we set were:
Ladies and Gentlemen, I am glad to state that a limited liability company, Ghana National Gas Company (GNGC), incorporated under the companies’ code has been established. The GNGC is a wholly state-owned entity under the Ministry of Energy mandated, among other things, to:
i. Own, manage and develop a national network of upstream and midstream gas pipelines and gas treatment and storage facilities.
ii. Acquire, by purchase or otherwise, construct, establish, manage, and maintain and otherwise deal with upstream and midstream gas transmission and processing facilities, works, buildings, conveniences and other systems necessary to gather, transport, treat or store gas.
iii. Acquire, own, process, market and sell natural gas and related gas products.
iv. Carry out any general commercial activities related to the safe and reliable operation of the upstream and midstream gas infrastructure.
Mr Chairman, some advances have already been made in our efforts to fast track the development of our gas infrastructure. The following activities are part of these efforts:
1. The installation of 12 inches x 14 km, deep water gas export pipelines.
2. Completion of Environmental and Social Impact Assessment.
3. Completion of survey of Gas Pipeline Shallow Water Route.
4. Completion of the Front End Engineering Design (FEED) of the deepwater pipeline.
5. The Land Demarcation survey for the Gas processing plant and other related projects which are ongoing.
c) Downstream Developments
Mr. Chairman, in my submission to the public last year, I stated that Government needed heavy capital to revamp the capacity of our national refinery. The search for the funding is still ongoing and I am happy to inform this august meeting that the Ministry of Finance and Economic Planning is giving us the needed support. Government has relieved TOR of its heavy debt burden and a program has been put in place to ensure technical and financial restructuring of the Refinery to enhance its economic viability.
Increasing Strategic Reserves of Petroleum Products
Ladies and Gentlemen, Government is committed to increasing the capacity of the Bulk Oil Storage and Transportation Company in both storage and the transportation of bulk products nationwide. In this regard tank expansion projects are underway in most of their depots. In addition the company is fabricating barges for the purpose of transporting bulk products by the Volta Lake to the northern sector of the country.
Liquefied Petroleum Gas (LPG)
Mr Chairman, a lot has been said about this subject in the past few weeks. Nevertheless allow me to outline the major initiatives that the Ministry is spearheading to address shortages of LPG in the market. Despite Government’s efforts to meet LPG demand at an affordable price, supply of the product across the country has been inconsistent and below demand. This situation has been attributed mainly to the increasing usage of LPG for operating commercial vehicles due to higher price differential between LPG and Gasoline. This price differential is mainly as a result of the subsidy component on LPG in the price build-up, which was designed for domestic users with the primary objective of meeting their demand at an affordable price.
Ladies and Gentlemen, the current infrastructure for LPG is inadequate and has the following constraints:
· The jetty at Tema is a multi-user jetty used for exports of Naphtha and Fuel Oil and imports of smaller cargoes of ATK, Petrol, Diesel and LPG as well as being used by Tema Lube Oil to import Base Oils in the blending operations.
· The LPG pipeline from the jetty to TOR also appears to be severely inadequate. The pipeline has 6 inch diameter and a length of 5km, which can accommodate pumping at a rate of 60 – 70MT/hour.
· The available LPG Storage Capacity at TOR of 6,500 MT is currently insufficient.
· TOR production of 200-250 MT/day is insufficient for the growing demand in the country.
· The delivery capacity of TOR also does not meet the required standard needed to efficiently meet soaring demand in the country. TOR has two gantries dedicated to LPG activities and can load approximately 35 to 40 trucks daily, with a median capacity of 16 MT per truck i.e. approximately 700-900 MT a day deliveries.
· Currently, the import program is to bring in 5000 MT of LPG a week to augment TOR’s production of 1500-1750 MT/week
Addressing the Supply Constraint
Ladies and Gentlemen, taking cognisance of the above challenges, the Ministry of Energy is working closely with its relevant agencies and the private sector to address the supply constraints. TOR is constructing additional storage capacity of 1,500 MT which should be completed by December this year. Fueltrade is also constructing a tank farm with 4,500 MT storage capacity which should be available by March 2012. These two projects will provide additional 6,000 MT of storage to bring the total to 12, 500 MT, thereby giving us about 2 weeks strategic stock. In addition, the construction of an 8-inch pipeline will be completed by the end of October 2011.
To enhance the pumping rate, two horizontal pumps are being installed at TOR and will be ready in the first week of October 2011. The Ministry has also made some proposals for Cabinet’s consideration with respect to the policy on subsidies on the product. In all the options presented to Cabinet, the Ministry is mindful of the fact that LPG is considered clean cooking fuel and the Ministry does not intend sacrificing that.
d) POLICY & LEGISLATION FOR PETROLEUM SUB-SECTOR
A number of policy and legislative frameworks and institutional engineering and re-engineering initiatives have been developed by Government to assure good governance in the oil and gas sector. These policy and legislative frameworks have been developed through very transparent and truly participatory citizen’s consultation processes, to the best of our ability. Some of the legislative frameworks developed include:
1. The Petroleum Revenue Management Act, to guide transparent and accountable management of revenues from the upstream petroleum sector.
2. The Petroleum Commission Act, to establish an independent upstream petroleum regulatory authority
3. Draft Petroleum Exploration And Production Bill, which seeks to replace an existing petroleum exploration law which was in place before the commercial oil find
4. Local Content and Local participation in Petroleum activities policy, to ensure enhanced locally retained value.
5. Draft legislation and regulations to provide legal backing to the local content policy.
In addition, Ghana has extended the Extractive Industry Transparency Initiative (EITI) to the oil and gas sector; expanded membership of the Multi-stakeholder steering Group (MSG) to include stakeholders in the oil and gas sector, and particularly provided more space for industry and civil society participation. You may recall that in September 2010, Ghana was declared EITI compliant with respect to the mining sector, the second country in Africa at the time to achieve this feat. Let me also take this opportunity to affirm that the Ministry of Energy has began to publish all existing Petroleum Agreements and future ones as part of our commitments to good governance in the oil and gas sector.
e) LOCAL CONTENT
Mr Chairman, our ability to leverage our oil and gas resources for the development of the economy and for enhanced welfare of the citizenry can only be achieved by mainstreaming the involvement of the citizenry in activities of the sector. It is to that end that the Ministry has developed a Local Content and Local Participation in Petroleum Activities Policy. This policy outlines strategies on how to develop the oil and gas industry with optimal local content and participation; enhance national development; create jobs; and also effectively manage the potential revenue from oil and gas production and processing; as well as ensuring security for the oil and gas installations and the industry as a whole. An Implementation strategy and the necessary Legislative Instrument to implement this policy have been drafted and will be presented to the public for scrutiny.
Capacity Building for SME’s
The Ministry of Energy and the Ministry of Trade and Industry have recognized that organizations and individuals in Ghana have very high expectations of employment in the emerging oil and gas sector since oil was discovered in commercial quantities. However, they may not be able to fully participate since they do not have all the necessary skills and capabilities to enable them take advantage of business opportunities that may arise in the oil and gas sector. The Capacity of SMEs have to be enhanced to enable them meet the stringent requirements, including management and financial controls, health and safety standards and quality control needed to do business with the international oil and gas companies.
An SME Office will be established in the Western Region as the focal point for co-ordination between the oil and gas companies and SMEs and also provide support to SMEs so that they can position themselves to take advantage of business opportunities that are available in the oil and gas sector. The SME Office will also undertake capacity building of SME’s and will assist market their capabilities, liaise with international Oil and Gas Companies and Service Providers by being a focal point for procurement opportunities, as well as establish a single pre-qualification process acceptable to all IOCs and Service Providers, among other things.
Mr. Chairman, Ladies and Gentlemen of the Press, Distinguished Invited Guests, let me conclude by stating with emphasis, that none of the achievements mentioned in the fore-going could have been chalked without the contribution of all stakeholders and the general public. The Ministry of Energy is appreciative of the support we have enjoyed from all Ghanaians during the period under review. We will continue to count on your support to achieve the targets we have set together and God willing, next year by this time, we will have even happier stories in the energy sector to tell together. Once again thank you for coming and May God richly Bless us all.