Oil and gas midstream infrastructure investment opportunities

Manuela Watson-Reed, Kumasi, Ghana
February 19, 2024

M idstream activities cover processing, storage, and transportation. It also comprises marketing and trading of oil and natural gas. The midstream oil and gas is going through a profound transformation. This sub-sector wants to close the country's oil and gas infrastructure deficit and offer modern, safe and efficient services. But, to achieve these goals, most of the country's dilapidated and rusty storage facilities need renovation. Processing and transportation must meet modern environemntal standards and incorporate the challenges of climate change. State institutions and private companies say that they rely on digitization to improve operations, adopt sustainable practices and provide optimal serve customers.

Ghana exports crude oil but imports finished refined petroleum products. This business model does not stimulate transformation and value addition along the midstream value chain. The government argues that a diversification of services in the midstream will reduce economic risks stemming from the volatility of oil and gas prices. The country's authorities hope that a developed midstream segment will have a positive impact on the economy. It will create jobs through the optimization of local content along the value chain. Ghana refined about one third of national daily domestic demand for petroleum estimated at 83,000 barrels in 2020.

In 2020, Ghana published a new plan to attract investment in the petroleum industry. One key goal of this plan is to develop ‟a competitive, sustainable and enabling environment for investments”¹. Another goal is the creation of a brand new regional petroleum hub. This hub is a modular platform, which will enhance and connect existing infrastructure.

Midstream gas infrastructure

Ghana National Gas Company (GNGC) or ‟Ghana Gas” started operations in November 2014. Today, the company is the largest operator of a network of midstream infrastructure in Ghana. The GNGC’s midstream infrastructure includes over 300 km of pipelines and six facilities, which include processing plant, terminal, distribution, and metering stations.

Pipelines

Ghana Gas operates a pipeline network that spans the Western Region and connects to major natural gas demand centers in the country. Pipeline facilities include a 58 km long sub-sea pipeline. This pipeline transports gas from two offshore production fields to GNGC’s processing plant. A second pipeline, 110 km long, connects three important plants in the West region. The third pipeline, also found in the Western region consists of a 75 km from the cities of Esiama to Prestea. Onshore, GNGC supplies gas to Twyford Ceramics Company and WangKang Ceramics Company. Gas reaches these two private companies through two onshore pipelines of 0.8 km and 9 km length, respectively. The Northern part of the country is still underserved. However, the government has developed pipeline projects that will deliver gas to the Northern regions.

Facilities

The Gas Processing Plant (GPP), at Atuabo in the Western Region of Ghana, handles gas sales LPG and condensate, which it exports via pipelines. Ghana Gas has three regulating and metering stations (SRMS) and two distribution stations. The GPP receives raw natural gas from the Jubilee and TEN offshore fields, and processes it to remove impurities such as water and other contaminants. It conditions raw gas and separates into various products such as Lean gas, Liquefied Petroleum Gas (LPG) and Condensate.

Bulk Oil Storage and Transportation Company Ltd (BOST)

BOST started operations in December 1993. The Government of Ghana remains the sole shareholder. The company has the mandate to build reserve stocks and keep a fluid distribution system around the country. It has six oil and gas depots around the country.

BOST uses pipelines, trucks, and railroads to transport petroleum products on land. It uses tankers to transport liquefied natural gas (LNG) but also outsources to haulage contractors.

Some regions in Ghana do not have access to oil and gas depots. The Middle and Northern regions, for example, share three gas storage facilities. This area is half of the national territory in term of surface area. But authorities plan to redress this imbalance through the constructio of a South-Nord gas pipeline. This new 600 km infrastructure has three segments. The first segment is 140 km long and runs from Kumasi to Sunyani. Between Sunyani-Tamale and Tamale, a second pipeline covers 304 km. The last segment, stretches from Tamale to Bolgatanga, over 158 km.

Ghana also has 37 BIDECs (Bulk Oil Import, Distribution & Export Companies), seven Storage Depots Specialists and three other PSPs (Petroleum Service Providers). Together the BIDECs own 40,000 cubic meters of storage facilities which can hold up to 1.76 million tons of petroleum products.

The West Africa Gas Pipeline (WAGP)

The WAGP is a regional infrastructure, which takes gas from Nigeria fields to Takoradi in Ghana, after supplying Togo and Benin. The 678 kilometer offshore infrastructure connects the hinterland to Tema via a 14 kilometer on-shore pipeline. Takoradi is the termination point of the main pipeline. WAGP began operating in 2011, and open access to the system began on July 1st, 2012. Ghana uses this gas for electricity production.

Crude Oil midstream infrastructure

Like gas, the infrastructure also comprises storage, processing, and transportation. It connects upstream and downstream and includes transportation, storage, and processing. Midstream companies must comply with health and safety regulations. They use pipelines, trucks, railways, and ships to move crude oil.

Ghana consumed over 4.1 million metric tons of petroleum products in November 2023. The country has a persistent storage deficit. Ghana’s storage capacity (excluding fuel for power generation) for petroleum products stood at 1.914 cubic meters at the end of the same year. Government-controlled entities remained the largest storage providers of both crude oil and refined products storage, with the exceptio of the Tema Tank Farm Ltd, which maintained its position as the largest private sector storage provided with a capacity of 192,000 cubic meters. Industry analysts estimates that the country has a a storage deficit of 50 percent. The the Ghana Investment Promotion Center (GPIC), argues that this storage deficit represents an opportunity for investment for the private sector⁶.

Tema Oil Refinery (TOR) Limited

Tema Oil Refinery (TOR) Limited is the only refinery in Ghana. At inception, this company had a production capacity of 45,000 barrel per day (bpd). But, its capacity has fallen below 25,000 bpd because of maintenance issues and neglect. Debts, inadequate working capital and years of neglect continue to beset the company, despite several attempts by the State to revitalize it.

TOR deals in refining, importation, storage, and distribution of petroleum products. It has a total capacity of 9,000 metric tons to produce and store LPG. The total storage of the refinery for both crude oil and finished petroleum products is 2.6 million barrels. Tema Oil Refinery also provides storage services for the Bulk Distribution Companies (BDCs) for a fee subject to the availability of storage space.

Sentuo Oil Refinery Limited (SORL)

Sentuo Oil Refinery Limited (SORL) is a Chinese venture. In 2019, SORL announced plans to built in two phases, with the goal of processing light crudes from Saudi Arabia, Kuwait, and Nigeria. The company received an operational license from the governmen of Ghana in January 2024. The facilitly is a multi-product crude oil refinery based in Tema, with promised production capacity of 40,000 at the compeletion of phase one, rising to 120 000 bpd after the completion of phase two.

The Petroleum Hub

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