Dr Kwabena Donkor, former Energy Minister, has called for a renegotiation of the gas purchase agreement contained in the 20-year-deal between Ghana and Italian Oil Company, ENI for the development of the Offshore Cape Three Points (OCTP) integrated oil and gas project.
This call may have come a little too late, even though a very much opportune. The agreement prices gas from the Sankofa fields at US$9.8/MMBtu (one million British Thermal Units).
What sent tongues wagging was a similar arrangement between Ghana and Nigeria which was pegged at US$8.3/MMBtu, some US$1.5/MMBtu less a situation that raised critical questions.
Arguments against the agreement pointed to bad negotiation resulting in what was suspected to be an over payment by more than US$2 billion.
At the time, calls were made by the New Patriotic Party, NPP, then in opposition to the visiting Italian prime Minister to use his good offices to prevail on ENI and the Government of Ghana to review some of these terms, in order to maximize our mutual benefits from this project.
Comparative analysis revealed that the negotiated gas price of US$9.8MMBtu for gas from the Sankofa fields was too high by world standards of between US$5-7/MMBtu.
It is even higher than price of gas sold to Ghana from Nigeria, which stands at US$8.3/MMBtu, delivered at Takoradi.
At the same time, Atuabo Gas delivered at Takoradi was priced at US$8.8/MMBtu.
Thus if the ENI agreement should hold at the negotiated gas price of US$9.8/MMBtu, Ghana risks losing its potential of becoming the petrochemical hub of the region to Nigeria, due to that country’s lower gas prices.