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The delay in delivery of the West African Gas project is a source of headache for both Accra and Abuja....

At an interactive session on Africa’s Trade Corridors at the World Economic Forum in Cape Town last June, I expressed my personal frustration about the slow progress of the continent’s cross border energy projects. I cited the Congo’s Inga Dam project and the West African Gas Pipeline.
The mention of the West African Gas Pipeline was a way of putting a project from West Africa in the issue bin.
I’d reckoned that the choice of panelists for that session was too narrowed to a particular sub-region. With the exception of Thorleif Enger, Chairman of Norway’s Yara Foundation, who is European, everyone on the panel was a Southern African: Rob Davies - South Africa’s Minister of Trade and Industry, Antonio Fernado -the Mozambican minister of Industry and Commerce, Felix Mutati - the Zambian minister of Commerce, Trade and Industry and Tomaz Augusto Salomao - Executive Secretary, Southern African Development Community, based in Botswana. Even the moderator, Alex Hogg, is editor in chief of Moneywebb, South Africa.
But the sharpest response to my comment was from a fellow West African in the audience. Hannah Tetteh, the Ghanaian minister of Trade and Industry, chose my intervention to vent her anger at how Nigeria, in her view, was deliberately treating the delivery of gas to Ghana with levity. “You just wait and see, Ghana will soon start producing gas in abundance, once the Jubilee field (in deepwater, off  the Ghanaian coast) comes on stream. Then we wouldn’t need your gas anymore”.
It was a stinging rebuke. And it got to me because the honourable minister saw me as representing Nigeria, despite the fact that I’d introduced myself as working for Africa Oil+Gas Report, a Pan African trade journal on the hydrocarbon industry.
Still Ms Tetteh’s expression of disappointment was instructive. I had heard this sort of frustration attributed to Ghanaian officials before. At the Nigeria- Ghana Business Summit in Accra last October, I witnessed the Nigerian High Commissioner to Ghana, Musiliu Obanikoro, carpeting the Nigerian Operations Manager of the West African Gas Pipeline Company(WAGPco), in a room full of 100 or more participants. “This is a breach of contract”, Mr Obanikoro complained, in a loud voice. “We promised to deliver the gas. We signed a contract and the Ghanaian government has been asking me why you can’t do what you say you would do”.  Obanikoro said that the Ghanaian Finance minister, Baah Wiredu (now late), “called me almost every day to find out when we would deliver”.
With Ms Tetteh’s comments, I concluded that the Ghanaian establishment was clearly convinced that Nigeria simply wasn’t keen on supplying the gas.
I knew that Ms Tetteh and her colleagues are wrong. The producers and suppliers of the gas, sourced from Nigeria’s Niger Delta basin and to be ferried through a 1033km pipeline to the Ghanaian port town of Takoradi, are Shell and Chevron, two oil majors with more interest in profit than politics. I also knew that Ghana’s state hydrocarbon company GNPC, Nigeria’s NNPC, Togo’s Sotogaz and Benin Republic’s SoBegaz were all equity partners in the West African Gas Pipeline Corporation. The last time there was a headline story in Nigeria on the WAGPco, it was about the quality of gas from Shell’s Utorogu Gas Processing Plant, which is one of the feed points into the gas line that goes to Ghana, through Lagos. But the plant has been upgraded and there’s no problem with the quality of gas anymore.
Still I needed to coherent story on why Ghana is, as of today, not receiving gas from Nigeria, as demanded in the framework agreement and contracts concluded as far back as 2004.
At the new Southern Sun Hotel in Ikoyi, a leafy suburb of Lagos, I tracked down two ranking officials of the NNPC, and the Department of Petroleum Resources, Nigeria’s regulatory authority, who have been closely involved with the project. I filled in the gaps in the conversation with material generated from phone calls to other impeccable sources. Here’s what I found out:
“The reason why the West African Gas Project is not being delivered”, my sources said, “is the Force Majeure”.
Force Majeure was declared for two reasons: One was the problem, largely unanticipated, with construction of a section of the pipeline. The other was the militant activity in the Niger Delta Basin.
The construction of the WAGP was anchored on four major contracts:
A 57km onshore pipeline up to compressor in Badagry, in the west of Lagos (contracted to Willibros)
An offshore pipeline construction, from Badagry, through Cotonou(Benin Republic), Lome(Togo), Tema(Ghana) and Takoradi(Ghana). (contracted to Horizon)
Pipe coating contract, all the way through to Takoradi
Metering stations in all the four countries on the pipeline route.
The first major challenge to the project, after construction started, was the decision of the onshore pipeline contractor to leave Nigeria. Complaining of incessant raids on its facilities and projects, Wilibros, the American engineering company, walked out of Nigeria in 2006. No one had anticipated that the situation in the Niger Delta would be adverse enough to force the major contractor out of the country
By December 2008, the pipeline had been completed, but then there were issues about the chemistry of the gas in Utorogu, which had the tendency to liquefy in the lower temperature environment of the offshore leg of the pipeline. Shell did a total overhaul of the processing plant and even increased the plant size.
But militant attacks have continued, with the Nigerian military unable to safeguard the security of strategic installations. The infrastructure of hydrocarbon production and transportation in the Western Niger Delta is almost lying prostrate. Shell Nigeria’s onshore and shallow offshore production have been reduced from about 900,000 Barrels of Oil Per Day to 140,000 BOPD. The Bonga deepwater field production helps the company to claim 340,000BOPD, as operated production in Nigeria. Militants’ bomb attacks have affected mostly the gas line and production infrastructure that feed the WAGP. Chevron’s supply line: The Escravos to Warri North leg of the Escravos-Lagos Pipeline system, which delivers Nigerian gas to the West Africa Gas Pipeline, has only recently been blasted again by militants(repairs were only just completed after a blast 2006). “The source of the gas is compromised”, my sources state flatly. “This means you aren’t sure you can put enough gas into the pipeline system that can run at optimal pressure all the way to Takoradi”.
For this reason, my sources say “you make an operational decision: Do I have enough pressure to push it all the way to Takoradi. Although I have already declared a Force Majeure, but I will give them free flow. You can take it if it gets to you and whatever you get, you pay for”.
Ghana’s anger is justified by its inability to replace expensive light crude, with which it fires its turbines at the 660MW Takoradi Thermal Power Plant.
But Nigerian operators tell me that they cannot deliberately foot drag on the issue, no more profound reason than that they have alternatives for the dollar invested in the project. “The cost increases”, says a Shell project engineer, “whereas the volume of gas to be supplied remains the same. So why will you hold on to the gas?”.
When I told them that Ms Tetteh informed me she thought that Nigeria didn’t consider the project something of a mutual benefit, they said they could understand her comment as coming from someone who wants something desperately and is not getting it. “The truth is”, they explained, “the  growing domestic demand in Nigeria is not being met for the same reasons that WAGP is not being delivered. The Nigerian Gas Company-the arm of the NNPC which receives gas from producers and distributes to industries and power plants -has itself declared a Force Majeure.
“There’s nothing that’s happening now that constructively amounts to gross negligence. You need to solve the Niger Delta problem. You need the compression”.
The anger in Accra can be seen in the context of how Ghana itself was persuaded to buy into the WAPCo idea. The initiative to pipe Nigerian gas into three neighbouring countries to the west took off from the drawing board in Chevron in 1996.  Ghana was reluctant, even though, as West Africa’s third largest economy, it was the main, potential gas market outside Nigeria. The country was being offered gas by Cote D’Ivoire, its western neighbour; a tempting offer since the two countries share a border, but the Ivorien reserves were not huge. Successive top management brass from Chevron spent time in Accra between 1997 and 2000, meeting with members of Ghana’s parliament and a number of executives in the Ghanaian cabinet, to convince them to buy WAGP gas.
While Ghana was sorting out its papers with the World Bank, to raise the capital to pay about $75 million, which amounts to its 14.6%  equity investment in WAGPco, the Nigerian government paid for it, while the country finalized the papers. So, you could say that Ghana was almost brought into WAGPco kicking and screaming.
Now, with crude oil prices three times higher than they were in 1995 and at least double what they were in 2000, Ghana is paying dearly for Nigerian crude to generate its electricity. And the same Nigeria appears unable to provide the cheaper gas (about $4 per million btu).
And yet, for all the anger bottled up in Accra, there’s no immediate guarantee of significant flow of Nigerian gas anytime soon. The Nigerian government claims it is offering amnesty to militants who have destroyed facilities and kidnapped expatriates working in the Niger Delta basin. But just the day after the government released Henry Okah, the leader of the major militant group: Movement For The Emancipation of the Niger Delta(MEND), from detention, the organization bombed the Single Point Mooring(SPM) of the Atlas Cove Jetty near Lagos, the major delivery and re-distribution point for petroleum products in the country.

While Ghana was sorting out its papers with the World Bank, to raise the capital to pay about $75 million, which amounts to its 14.6% equity investment in WAGPco, the Nigerian government paid for it, while the country finalized the papers.