As Trouble Brews Over Multimillion Dollar Russian Gas Supply Deal

To the ordinary mind, the Ghana National Petroleum Corporation (GNPC) on Friday, May 24, 2018, simply signed a 12-year agreement with a Russian oil giant Rosneft, for the supply of natural gas to Ghana, but insiders have raised red flags over the multimillion dollar deal, saying there is more to it than reported.
The signing took place on the sidelines of the 26th St. Petersburg International Economic Forum, St. Petersburg, Russia, with Board Chairman and New Patriotic Party (NPP) acting National Chairman, Freddie Blay, appending his signature on behalf of the Corporation according to a press statement from the GNPC.
But The Herald’s contacts inside GNPC, want management of the Corporation to be questioned on the total cost of the 12-year agreement, especially so when Ghana, has huge natural gas reserves and could have invested money into it as happened with the construction of the Atuabo Gas Plant, a Natural Gas Processing Plant in the Western Region.
Ghana Gas Company, is the state Agency mandated to operate infrastructure required for the gathering, processing, transporting and marketing of natural gas resources in Ghana. It currently manages Atuabo Gas Plant.
The GNPC insiders, also want management questioned on why there wasn’t a competitive bidding process for the gas supply contract to ensure that Ghana, got value for money, insisting that simply saying, “Gazprom’s supply obligations under the GSA, have been assumed by Rosneft, an affiliate” leave room for suspicion.

The Herald’s independent findings are that, GNPC management lied when it said, Rosneft was an affiliate of Gazprom.

Although, the two companies are from Russia, their ownerships vary. While Gazprom is state owned, Rosneft and Novatek, are Russia’s largest non-state gas producer. Indeed, the rivalry between Rosneft and Gazprom, is a global knowledge.

The GNPC insiders, also wish to know, what exactly happened to Gazprom’s supply obligations, hence its replacement by Rosneft; a rival company.

Edward ‘Bumpty’ Akufo-Addo, a younger brother of President Nana Akufo-Addo, is known to have brought Gazprom to Ghana, shortly after his senior brother, assumed the presidency, last year.

Gazprom is reported to have written recently to GNPC, saying it could not meet the terms and conditions surrounding its agreement, therefore abrogated it, therefore GNPC, simply substituting Gazprom’s name with Rosneft, poses contractual issues, particularly when ownership is not the same and there is affiliation between the two, aside their Russian ties.

The Herald’s GNPC contacts, further wish to know the names of those who brokered the deal, and the involvement of Edward ‘Bumpty’ Akufo-Addo.

Furthermore, the GNPC insiders, want to know why Freddie Blay, signed the agreement with Rosneft, but not the GNPC Chief Executive, Dr. Kofi Kodua (KK) Sarpong, revealing that the entire GNPC board, is not in support of the Rosneft transaction.

GNPC from the Petroleum House in Tema on May 30, 2018, said it had on Friday, May 24, 2018, signed a 12-year agreement with Rosneft, for the supply of natural gas to Ghana. The signing took place on the sidelines of the 26th St. Petersburg International Economic Forum, St. Petersburg, Russia.

It said “GNPC Board Chairman, Hon. Frederick Blay, signed on behalf of GNPC, with Igor Ivanovich Sechin, Chief Executive Officer and Chairman of the Management Board of Rosneft, signing for his company”.

The GNPC statement said that “the supply contract is a hybrid Liquefied Natural Gas (LNG)/Gas supply agreement, where Rosneft delivers LNG to a regasification terminal located at the Tema Port, to be processed, and the gas delivered to GNPC at the existing Tema metering station”.

“The gas delivered by Rosneft, in the volume of ca. 1.7 mmtpa (or 250 mmscf per day) will provide a competitive and secure source of fuel, supplying 25percent of Ghana’s overall power generating capacity”, adding “access to LNG places Ghana at the centre of West Africa’s rapidly growing energy market, providing opportunities to create jobs and build local capacity”.

It went on to say, “GNPC and Rosneft have also agreed to cooperate in the development of opportunities in the upstream and downstream sectors. Rosneft is an established upstream operator.

Mr. Blay, is reported to have expressed the hope that “this large transaction will stimulate further opportunities for investment between the two countries, both within the oil and gas sector and beyond. We hope that, through this strong cooperation, Ghana can also act as a gateway for Russian investment within the wider West African region.”
CEO of Rosneft, Mr. Sechin noted that “The signed documents open a new stage in the development of cooperation between Russia and the Republic of Ghana,” adding, “Ghana has placed itself among dynamically developing world economies with the energy demand growing year on year.

Also present in St Petersburg were the Deputy Minister of Energy, Dr. Mohamed Amin Adam, the Ghanaian Ambassador to Russia, Oheneba Dr. Lesley Akyaa Opoku-Ware and another member of the GNPC board, Ogyeahohoo Yaw Gyebi II.

Also in attendance were some members of the GNPC Management Team, including Joseph Dadzie, General Manager, Commercial; Matilda Ohene, General Manager Administration and Board Secretary; Dr. Patrick Ofori, Manager Sustainability; Legal Manager, Adwoa Wiafe; and Principal Legal Counsel Louisa Amoako-Quaicoe.

“It is recalled that in September 2017, GNPC entered into a gas sales and purchase agreement (“GSA”) with Gazprom. Due to a corporate restructuring, Gazprom’s supply obligations under the GSA, have been assumed by Rosneft, an affiliate”, the GNPC statement revealed.

“We are happy to be working with Rosneft on this LNG transaction and already the two parties are looking at greater cooperation and partnership in the upstream sector,” the CEO of GNPC, Dr. K. K. Sarpong, had remarked at the end of the Tema LNG negotiations.

Interestingly, it is not clear, if GNPC, has a regasification infrastructure needed to process the LNG from Russian, when it arrives in Ghana.

More to come!

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