Ghana’s oil sector too small for many independent national players – ACEP

The African Center for Energy Policy (ACEP) says Ghana’s oil and gas sector is too small to have many independent national players.

“In fact, the existence of Ghana National Gas Company as an independent company, as shown in ACEP’s earlier analysis, is a product of politics and not an optimal option for Ghana’s nascent oil industry.

This is what the contextual realities and the Gas Master Plan sought to correct by making GNGC a subsidiary of GNPC”, it said in a rejoinder to Ghana National Gas Company (GNGC) on the Centre’s “Analysis of the Proposal to make GNGC The National Gas Aggregator” published on 21st May 2020.

Though it argues that the response has neither been received officially nor published on the website of GNGC to give it any certified authenticity, however, based on the credibility of the media houses that carried the publication and the fact that it was widely circulated, it is appropriate it responds to the issues raised by GNGC.

“It is important to state that ACEP’s analysis did not target the operational efficiency, which the Centre has a lot to say about, or the capacity of GNGC to deliver on its functions as is or hopes to be.

The analysis was meant to highlight the challenges with the policy directive from the Presidency which GNGC happen to be the proponent of and the beneficiary of the policy change.

“In essence, the analysis was meant for the policymakers, and not an advocate of the policy. Therefore, if GNGC has a response, it should be directed at the policymakers”, it pointed out. It, however, expressed readiness for a response from policymakers on the analysis of the issue and not from GNGC, adding “Nonetheless, for academic purposes, ACEP would like to make comments on the response from GNGC.”

Commercial implications of the policy

ACEP said so far, GNGC has shown considerable oblivion of the commercial issues in the gas value chain.

In that regard, their analysis only accounts for role change and potential benefits to them and not the liabilities associated with being the gas aggregator, it emphasised.

As a result, GNPC is seen as benefitting from a role that GNGC assumes is theirs.

Integration of the oil and gas value chain

ACEP said its analysis did not suggest that there is no need for integration in the oil and gas value chain.

Rather, it preferred a complete integration as proposed by the Gas Master Plan.

This, it said, is also confirmed by the earlier examples (which they have now discarded) cited by GNGC in their proposal, such as Gazprom, Nigerian National Petroleum Corporation (NNPC), and Petroleum Authority of Thailand (PTT).

The fundamental disagreement between ACEP and GNGC is that, while GNGC wants an integration of just the midstream gas segment, ACEP and the Gas Master Plan (GMP) prefer an integration of the entire oil and gas sector.

GNGC has known no financial risks

It argued that GNGC’s craving is informed by the fact that they have known no financial risks.

As a gas processing and transmission company, ACEP said GNGC does not own the commodity; they are paid for services delivered- processing and transmission.

It, however, added that since GNGC process the gas, it has over the years encumbered the liquids (LPG and condensate) and lean gas consumed by non-power users without accountability.