Implementation of the West Africa gas project
Regional, Economics, 9/25/2004

"The Ghanaian Minister of Energy announced the start of the implementation of the West Africa gas project in November," JANA reported yesterday.

The report said "Pana news agency quoted the Ghanaian official as saying that a meeting would be held in al Tomor( October ) to authorize a number of various studies in order to launch the project."

The report added " the director of the Ghanaian ministry of foreign affairs stressed the importance of completing the measures necessary for launching the West African gas project."

In 1982, The Economic Community of West African States (ECOWAS) as one of its key regional economic policies, proposed the development of a natural gas pipeline throughout West Africa. ECOWAS's regional energy distribution plan (1991) and a feasibility study on the supplying of Nigerian gas to Ghanaian markets (1992) further ehanced the practicality and need of developing a regional pipeline. A feasibility report, prepared for the World Bank in the early 1990's, deemed that a pipeline to transport Nigerian natural gas to Benin, Togo and Ghana was commercially viable. The report's conclusion was based on the U.S.-firm Chevron's associated gas reserves in Nigeria's Escravos region. In September 1995, the governments of the four nations signed a Heads of Agreement (HOA) pertaining to the pipeline project. The HOA broadly outlined the principles of the pipeline development, according to the US department of Energy.

In June 2002, A gas supply agreement for Ghana's Takoradi power plant was signed. The gas is expected to significantly reduce boiler-fuel costs at Takoradi by substituting gas for oil. In February 2003, The four nations signed an agreement on the implementation of the WAGP. The treaty, which is for a 20-year period, provides for a comprehensive legal, fiscal and regulatory framework, as well as a single authority for the implementation of the project. The WAGP partners are ChevronTexaco with 36.7%, NNPC with 25%, Shell with 18%, Ghana's Volta River Authority (VRA) with 16.3% and SoBeGaz and SoToGaz each with a 2% interest.

The WAGP will traverse 620 miles (1,033 kilometers) both on and offshore from Nigeria's Niger Delta region to its final planned terminus in Ghana. The first portion of the pipeline, which will deliver gas to the greater Lagos area (Alagbado), is already in existence. The Escravos-Lagos pipeline (ELP) was commissioned in 1989, supplying natural gas to Nigeria's Egbin power plant and other industrial consumers in Lagos and Ogun States. ELP has a capacity to handle nearly 900 million cubic feet per day (Mmcf/d) of natural gas, but currently the majority of this capacity is not utilized. A 34-mile (57- kilometer) onshore portion of the WAGP will run from Alagbado to Seme beach in Lagos State. The WAGP will continue offshore, with proposed landfall spurs at Cotonou (Benin), Lome (Togo), Tema (Ghana), Takoradi (Ghana) and Effasu (Ghana). The initial capacity of the WAGP will be 200 Mmcf/d, with the capability to expand to 600 Mmcf/d as demand grows.

The $500-million WAGP will initially transport 120 Mmcf/d of gas to Ghana, Benin and Togo begining in June 2005. Gas deliveries are expected to increase to 150 Mmcf/d in 2007, to 210 MMcf/d in 7 years and be at 400 Mmcf/d when the pipeline is functioning at its capacity (approximately 15 years after construction). It is estimated that $600 million will be spent on the development of new and renovated power facilities in the four states to utilize the gas. It is also possible that the WAGP will be extended to markets in Cote d'Ivoire. Speculation has the WAGP eventually terminating in Senegal, but the current regional stability problems of several countries (Cote d'Ivoire, Liberia, Sierra Leone) that lie on the way to Senegal, will hinder any further extension of the WAGP.

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