The government of Ghana under the better for Ghana agenda BOST has been mandated by the Ministry of Energy to quickly consider the installation of LPG storage to augment the existing private sector
LPG Satellite Depots
Plans are underway to build three LPG depots at Savelugu (in the North), Kumasi ( in the middle) and Mami Water (in the east) to supplement the existing LPG storage depot in Tema (in the south) and the proposed BOST depot at Pumpuni (in the west). The three depots are planned to be completed in 2012 and altogether, these depots should move the supply constraints currently facing the country.
BOST Petroleum Terminal
An application has been submitted to the Ministry of Finance for BOST to benefit from the US$ 3 billion Chinese loan to build the BOST Petroleum Terminal at Pumpuni. A feasibility study for the project has been prepared and the major outstanding issues include the Restructuring ofBOST into a holding company, the Financial Restructuring of the company, an Owner’s Engineer and the finalization of the acquisition of the Pumpuni Land.
Other companies and institutions including the Canadian Commercial Corporation(CCC) continue to express interest in the project which is expected to be an export-oriented, world class terminal.
BOST should continue to work towards the selection of an able partner for the operation and marketing of the terminal as it would face very stiff competition from both local and well- established world-class oil marketers.
The commencement of oil production in Ghana has brought about changes in the mandate of state institutions and state-owned companies operating in the energy sector, among them, the Bulk Oil Storage and Transportation Company Limited, BOST. From its original mandate of managing Ghana’s strategic stocks of petroleum products, BOST is now expected to join other sister energy sector institutions to spearhead the country’s gas based industrialization. Over the initial phase of oil production, Ghana expects to produce about 120,000 barrels a day, then, the subsequent phase starting form 2014 will double the output to almost 250,000 barrels a day. All of that oil will come from just one field, out of several to be developed. BOST’s role in the big picture of transformation Ghana’s economy through the emerging oil industry is to transport the natural gas associated with the off-shore oil and gas production once the gas is piped on-shore. So bright is the promise of Ghana’s gas fortune that since commercial oil production started in December 2010, new discoveries of natural gas have been made even as further exploration activities continue. With increasing prospects of more discoveries, industry experts project that the volume of oil to be produced in Ghana could go up to between 500,000 and 1 million barrels a day in the near future. The sheer size of the potential gas reserves of the country is better appreciated when one considers that there is ten times much natural gas crude oil in the Jubilee field, and early indications are that the newly discovered Tweneboa field holds even a greater proportion of gas to oil. It is this massive volume of natural gas that the country is counting on to transform its economy from the current lower end middle income status into an economic giant in Africa and the world. “We are looking at both associated and non-associated gas. That can become a major driver of the economy. We see the gas powering our thermal plants, supplying industry and households with low cost electricity and further downstream, we can see a petrochemical industry developing.
In pursuit of its expanded mandate as a major player in the secondary gas sector, The Bulk Oil Storage and Transportation Company Ltd (BOST) is acquiring over 300 acres of land near Takoradi to serve as the hub for the transportation of natural gas and liquefied petroleum gas (LPG) from Ghana’s oil fields to support a renewed gas-based industrialization drive. The Bulk Oil Storage and Transportation (BOST) Company is completing feasibility studies to construct a modern gas transmission system to serve Ghana and its neighboring countries in support of its additional mandate to become the national transporter of natural gas. To start with, BOST will construct a gas terminal at Pumpuni, near Takoradi in the Western Region, and also develop the first phase of the Western Corridor Transmission System, all estimated to cost US $600 million, to start this year and end in 2013. The government will solely fund the project through bilateral arrangements. The multi-million dollar project will create thousands of jobs for Ghanaians and give meaning to the local content and local participation in the petroleum industry policy which aims at indigenizing the oil and gas industry. Right from the blast, the monumental project will generate jobs for artisans, metal fabricators, welders, carpenters, caterers, drivers, engineers, among others, Some of the major industries in the Western and Central Regions that can breathe a sigh of relief are the Abosso Glass Factory, the integrated alumina processing industry of which Sekondi will now be the hub, the Bokazo and Saltpond ceramic factories and the Nsuta manganese processing project. The gas processing plant is expected to produce dry gas for power generation, minerals processing and petrochemicals; natural gas liquids, as well as deliver LPG in volumes of about five times what is currently produced by the Tema Oil Refinery (TOR).
In order to legitimize its role in the natural gas value chain, BOST’s mandate had to be expanded. In essence, what this means is that BOST would develop, build and manage the network of transmission pipelines we would need to move natural gas from its source to destinations such as markets and end users. For example, in the area of markets that we would be addressing, we are talking of power generation plants for electricity, minerals processing such as bauxite, manganese and iron ore and so forth that require natural gas. We’re also looking at using liquefied petroleum gas (LPG) and natural gas liquids derived from processing the natural gas to serve the petrochemical industry including fertilizer producers.” The company has built significant capacity from the early days of its establishment in 1993 when it started distributing refined petroleum products from its depots that are strategically located around the country. Up until 2001, BOST even announced petroleum prices on behalf of the government.
Our accomplishments have been that we have expanded from a level of about 20,000 cubic meters to 340,000 cubic meters in terms of storage capacity for our six depots. We also have pipelines of roughly 360km linking all the depots. We have built four barges about to be inaugurated to transport petroleum products on the Volta Lake through to the Northern Region as part of our distribution network. In a year, we can deliver up to a million metric tons of petroleum products through our network systems,” he said. For a country that has only one source of fuel supply, which is the Tema Oil Refinery, the strategic importance of BOST has never been underestimated by the authorities. And many analysts have lauded the vision of setting up the company to serve as a storage back-up for the country’s only refinery. It is common knowledge what will happen to regular fuel supply if there was not a company like BOST. Supply of petroleum products could be affected in three different ways: there could be industrial action at the oil refinery; there could be fire outbreak; or the plant may have to be shut down for routine maintenance. Without a BOST in Ghana, like some of her neighbours, Ghana would experience regular fuel shortages and motorists would have to endure long queues at fuel pump stations. Without BOST, even if Ghana got the oil for free there would be no place to store it. BOST has now built capacity to hold strategic reserves to meet about 6 weeks of national consumption of petroleum products and will increase this to 12 weeks in the medium to long term. Having successfully achieved its minimum target of 6 weeks of reserve capacity, Bost looks poised to take on its new additional role of becoming the logistics centre for moving the natural gas, once on-shore, to the various intended destinations. The whole idea is to be able to move the natural gas from sources such as Jubilee, Dzata and Sankofa fields to end users at the right time and to the right place at the lowest cost and in an environmentally and socially responsible manner. In addition, we will be able to store it and distribute it as and when its needed.
Funding is important to us. The funding requirement for natural gas investments is quite significant and we need to be able to partner with the right strategic partner or collaborators in order to achieve the targets we have. Firstly, the vision of the energy sector is to develop an energy economy and it means that we need to be able to ensure reliable and secure supply of energy services. Secondly, we want to become a net-exporter of petroleum products and electricity to the sub-region in the medium term so the country’s interest is to become the fastest growing destination for investments we are looking for relates to infrastructure development, which tend to be very capital intensive. We are talking of roughly US $500 million for just the Western corridor transmission system. BOST has a project that will integrate all our depots and we are talking of a petroleum terminal near Takoradi in the Western Region that would be a network of storage facilities. We require close to US$200 million for the project. These two projects are going to be a major flagship of our new mandate to move into the natural gas sector. One approach to raising funds for BOST projects is to depend solely on the public sector. This will take the form of bilateral arrangement between the Government of Ghana and any of the country’s development partner countries. We are now headed in a direction where we are going to look at the public-private partnership and bring in consortiums of technology providers or financiers who would be able to partner with us in some form to create a special purpose vehicle or joint ventures. We will ultimately have a hybrid of both public and private sector partnerships as we move forward. To enable BOST to attract suitable private partners, the government has put in the petroleum price build up, what it calls the BOST margin, which serves as some form of security for the company to borrow money commercially. BOST’s storage tanks could also be used as collateral security for any loan. We need investors who take a long term view of the projects they embark on. The reason is that , most of our projects are very capital intensive and require significant funding and resources in the area of technology. BOST would be able to provide investors with local knowledge and facilitate the investment in the country. It is important that investors consider value addition with local content in mind and ensure that they train and absorb local labour and develop local capacity.” It will take more than BOST to see Ghana’s gas –based industrialization materialized. Others such as the Ghana National Petroleum Corporation, which represents Ghana’s oil interests in the Jubilee field, the Volta River Authority, the Energy Commission, private investors as well as the government of the day, all have very important roles to play.
- Accra Plains Depot
- Akosombo Depot
- Tema – Akosombo Petroleum Pipeline (TAPP)
- Savelugu Transit Depot
- Debre Petroleum Landing Jetty
- Takoradi Petroleum Terminal
- Buipe – Debre Petroleum Pipeline
- Wa Petroleum Depot
An eight member board of directors was sworn in by Mr. Emmanuel Armah-Kofi Buah, the Minister of Energy and Petroleum on Friday 14th February 2014.
The board is made up of Mr. Ernest B. Kakra Essamuah (Chairman); Mr. Kingsley Kwame Awuah Darko(Managing Darko);
Mr. Kojo Amissah(Member); Mr. Kofi I. Adams (Member); Dr. Albert K. Akpelu Jnr(Member);Mrs. Comfort N.L Ahwoi (Member); Mr. Steven K. M. Ahiawador (Member) and Dr. Alfred A. Botchway.
During the ceremony, Mr.Buah Commended the members on their nomination; he also challenged them to harness their expertise to make decisions for the benefit of Ghanaians as a whole.
He further tasked the members to amongst other things popularise the use of LPG in rural areas in order to promote the conservation of nature;protect strategic depots and pipelines to safeguard the transportation of petroleum products as well as urged the use of barges through the Volta Lake as an alternative means of transport for petroleum products so as to reduce cost…..
MEMORANDUM OF UNDERSTANDING
BETWEEN BULK OIL STORAGE AND TRANSPORTATIONCOMPANY LIMITED
AND VOLTA LAKE TRANSPORT LIMITED
FOR OPERATION OF BARGES, TUG BOAT AND A FLOATING DOCK MEMORANDUM OF UNDERSTANDING
This Memorandum of Understanding is entered into this day of June 18, 2013 BETWEEN: Bulk Oil Storage and Transportation Company Limited of P. O. Box MB 499 Accra, with offices situate at Plot No. 11, Nortei Ababio Street, Airport Residential Area, Accra (hereinafter called BOST or Employer) represented by its Managing Director, which shall include the person(s) for the time being performing the duties of that office of the one part, AND Volta Lake Transport Company Limited of P. O. Box 75, Akosombo, (hereinafter called VLTC or Operator)represented by the Managing Director which shall include the person(s) for the timebeing performing the duties of that office of the other part.
a. BOST, among other functions is responsible for the development, maintenance and operation of infrastructure for the bulk storage and transportation of petroleum products and is mandated to procure and manage Strategic Fuel Reserves for Ghana.
b. BOST is the owner of a Tug boat (“MV Debre”), a floating dock and four (4) river barges namely BOST 1, BOST 2 each with a capacity of 750,000 litres, and BOST 3 and BOST 4 each with a capacity of 900,000 litres and ancillary facilities/equipment including a mooring jetty, generating set etc. all referred toherein as the ”Facilities”.
c. VLTC is among other functions responsible for the operation of liquid cargo barges on the Volta Lake for the shipment of petroleum products between Akosombo and Buipe ports.
d. The parties at a meeting with the Minister for Energy and Petroleum on June 05 2013 agreed that VLTC should operate the Facilities herein for and on behalf of BOST pursuant to the conclusion of negotiations for the sale and transfer of the facilities to VLTC. VLTC agreed to transport BOST’s petroleum products on the Volta Lake from BOST’s Akosombo depot to its Buipe depot, and to operate and maintain Tug boat (“MV Debre”), BOST 1, BOST 2 BOST 3, BOST 4 and the floating dock for this purpose. NOW THEREFORE, in consideration of the mutual covenants, undertakings and conditions set forth below, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:
1.0 VLTC shall operate and maintain the Facilities for and behalf of BOST to ensure transportation of bulk petroleum products from BOST depot at Akosombo to BOST depot at Buipe.
2.0 BOST confirms that it shall make available at Akosombo, a minimum cargo volume of three (3) million litres of petroleum products weekly into BOST storage tanks at Akosombo for transportation to Buipe.
3.0 Under circumstances where it is agreed between BOST and VLTC that the BOST tug boat cannot be used for a period of time, VLTC may use its own Tug boats to push the four (4) barges named herein to ensure that transportation of petroleum products to Buipe as stated herein is not unduly interrupted; under such circumstances, BOST and VLTC shall negotiate appropriate compensations for the use of the VLTC tug boat.
4.0 In the event of MV Debre pushing BOST barges and VLTC solid cargo barges simultaneously, BOST and VLTC shall negotiate appropriate compensation.
5.0 VLTC shall at all times provide flow meters duly calibrated and certified by the appropriate authorities at the barge inlet at Akosombo depot and discharge point at Buipe to measure fuel delivery at the respective destinations.
6.0 VLTC shall prepare a preventive maintenance schedule for the Facilities and submit same to BOST for approval for execution by VLTC and subsequent payment by BOST.
7.0 VLTC shall submit to BOST for approval and procurement a recommended list of spare parts and consumables that shall be required for the operation of the Facilities for the duration of this MoU.
8.0 VLTC shall report to BOST immediately any unusual incident(s) or defect(s) that are detected on the Facilities.
9.0 VLTC shall at the approval and cost of BOST carry out all required repair or breakdown maintenance on the Facilities and submit appropriate reports on work done within fourteen (14) days to BOST and BOST may opt to witness any such maintenance works.
10.0 VLTC shall keep records of maintenance activities on the Facilities and submit monthly reports to BOST.
11.0 VLTC shall provide crew inclusive of Captain, Chief Officer, Navigators, Chief Engineer, Electricians and Liquid Cargo Officers for the Facilities.
12.0 BOST shall have two owners’ representatives (super cargo) to be part of the crew and at least one (1) of them shall always be on board the Tug boat “MV Debre” when transporting petroleum products.
13.0 VLTC shall bunker the BOST Tug boat in accordance with the limits agreed between BOST and VLTC and the cost of bunkering paid to VLTC within thirty(30) days.
14.0 All revenue from BOST1, BOST2, BOST3, and BOST4 shall accrue to BOST.
15.0 VLTC Shall charge BOST 17.5 % of the gross revenue per barge.
16.0 VLTC shall invoice BOST for services rendered in respect of operation of the facilities and payment shall be made within thirty (30) days after submission of invoice.
17.0 Payments to VLTC by BOST for operating the Facilities shall be as agreed between the two parties.
18.0 BOST shall provide insurance for the Facilities whist VLTC provides insurance for the goods in transit.
OBLIGATIONS OF PARTIES
BOST shall sell, assign and convey to VLTC as follows:
(i) The Tug boat (“MV Debre”), four (4) barges (BOST 1/BOST 2/BOST3/BOST 4), floating dock and ancillary facilities at Debre
(ii) All governmental approvals, permits and licenses with respect to the fleet of vessels.
(iii) All contracts and agreements with respect to the fleet of vessels.
(iv) All plans and other documents with respect to the fleet of vessels.
(i) VLTC shall secure funding for the purchase of the Facilities. Transactional advisors of both parties, BOST and VLTC are to determine the amount of the purchase price and the terms and conditions of
(ii) Volta Lake Transport Company Limited (VLTC) undertakes to provide payment guarantee in a form acceptable to BOST in respect of the proposed transactions by VLTC to acquire a fleet of vessels from BOST.
BOTH PARTIES AGREE
(i) That a Sale and Purchase Agreement (SPA) shall be concluded within ninety (90) days.
(ii) That BOST and VLTC confirm that they are in full agreement to the sale and purchase of the Facilities and will act in good faith to ensure that no impediments arise to conclude the SPA within the planned ninety (90) days.
(iii) That any dispute or difference regarding the negotiation of the SPA which cannot be settled amicably shall be settled definitely and conclusively by an arbiter appointed by the Minister for Energy and Petroleum.
BOST and VLTC shall each designate a representative (“Designated Representative”) to act on its behalf in overseeing the performance of this MOU. The designated Representatives shall be Manager of Corporate Planning for BOST and Director of Corporate Affairs for VLTC. The Designated
Representatives of the parties shall be the primary means for communication and all other interactions between the parties that are required under this MOU.
If either Employer or Operator is rendered wholly or partially unable to perform its obligations under this Agreement (other than payment obligations) due to a Force Majeure Event, the party affected by such Force Majeure Event shall be excused from whatever performance is impaired by such Force Majeure Event, provided that the affected party promptly, upon learning of such Force Majeure Event and ascertaining that it will affect its performance hereunder, (i) promptly gives notice to the other party stating the nature of the Force Majeure Event, its anticipated duration, and any action
being taken to avoid or minimize its effect and (ii) uses its reasonable commercial efforts to remedy its inability to perform. The suspension of performance shall be of no greater scope and no longer duration than that which is necessary. No obligations of either party which arose before the
occurrence causing the suspension of performance and which could and should have been fully performed before such occurrence shall be excused as a result of such occurrence. The burden of proof shall be on the party asserting excuse from performance due to a Force Majeure Event.
This Agreement shall be binding upon and inure to the benefit of the successors-in-title of the parties hereto.
This Agreement shall be governed and construed in accordance with the laws of Ghana and the courts of Ghana shall have exclusive jurisdiction to hear and decide any suit, action, proceedings and any dispute that may arise out of or in connection with this Agreement.
Any notice or notification to be given by either party to the other shall be delivered by hand or sent by registered post or facsimile or e-mail addressed in each case to the relevant party at its address specified in this Agreement.
EFFECTIVE DATE AND TERM
This MoU shall be effective and shall govern the rights and obligations of the parties from and after June 17, 2013 or a period of ninety (90) days pending the conclusion of SPA.