‘WAPCo not considering pipeline expansion now’

Harriet Wereko-Brobby is the General Manager Corporate Affairs, West African Gas Pipeline Company Limited (WAPCo). In this interview with journalists, she speaks on the demand for Nigeria’s gas in West Africa and the successes of WAPCo in the region, among other issues. STANLEY OPARA was there

How would you describe the activities of WAPCo in recent time?
Things have developed for us at West African Gas Pipeline Company Limited (WAPCo), and those that have followed our history from the time we started will realise that we have had challenges with gas supply, pipeline breaches here and there. Now, we can say that things have greatly improved for us. We started off with N-Gas being our sole shipper and we know the issues we have been complaining about with N-gas.  N-Gas is the shipper that supposed to ensure gas flow through the WAGP, so that we also make some money. Now we have registered other shippers on the pipeline. Currently, we have about five shippers registered with us on the pipeline and recently we have signed an agreement with one of them – Axxela Limited.  This is a wonderful progress report. The agreement will ensure that very soon they will also flow gas through the pipeline. So, that is something that has happened. Then on our operation team, we have been able to make some modifications in our stations.

Before, we were restricted on the amount of gas we can release, so anytime that pressure is low we were disadvantaged. Any time it is low, gas couldn’t flow.  So, they made some modifications and because of it, we can flow any amount of gas that is nominated.  So that has helped us a lot.

We have also expanded the Tema RM station; you know Ghana is our largest off-takers and Ghana has discovered oil and gas also in the Takoradi area. So, the country has also decided to use its gas  in the Takoradi area. Since WAPCo, the initial concept was  that Takoradi will be the main off-take point , so the off-taker in Ghana decided to take off gas  from Tema; and so, the country even funded the Tema RM station. Right now, that station has been expanded, it can even take more than we were giving Takoradi. So, right now, we are in a good position.

Last time we talked about legacy debt.  We mentioned that VRA the off-taker was owned for gas supplied, now that has improved greatly, about more than 50 percent of the debt has been paid.  And there is no accumulation of debt anymore. Because right now the off-taker is paying for the gas it consumes.  So, the legacy debt has been re-fenced and they have started paying off.  They informed us that they were going to pay off the balance by December, but it doesn’t look like that will happen this year. We are hoping that they will go ahead and settle the rest of the debt sometime next year probably in the first quarter of 2019. But in the meantime the off-taker is paying for all the gas it is consuming. So we are making money through the delivery of gas right now, and because of that we have been able to honour our obligations to our stakeholders. Because of our past challenges, we have not been paying our shareholders; but this year, we have made quarterly payments that we are supposed to make.

What is the level of agreement WAPCo signed with Axxela?
It is expedient to mention that Axxela is just a shipper like N-Gas is a shipper; so, it has its source of natural gas and that will be pushed through the WAGP. It has its off-takers different from N-Gas – one of the organisations in Togo is one of its off-takers. Its off-taker is taking more now than the CEB is taking now. Axxela is prepared to transport over 15 million standard cubic feet per day (mmscf/d) of natural gas via the West African Gas Pipeline to Lome, Togo while CEB in Togo is prepare to take about five million standard cubic feet per day (“mmscf/d”) of natural gas.  That is something positive, we hoping that after signing the agreement, they will start transporting and shipping the gas very soon. Hopefully this will happen in 2019.

What are the measures you put in place to secure the pipelines?
A lot of the vandalism talked about is not on the WAPCo pipeline. The problem that we have had on our pipeline is the pipeline breach, which happened by ships. One happened before we started operation in 2007 and the second one happened in 2012. It wasn’t an intentional thing as pirates attacked a ship and were trying to escape from the Togo naval officers, they didn’t lift their anchor and it ran through the pipeline. So, that is the kind of threat we are facing and we are hoping that the Niger Delta onshore pipeline threat  will not spread to the Lagos area. We are hopeful that the Nigerian government will do all it can to curtail the spread of activities of the vandals in the region.  Definitely it will not be in the interest of the country if vandalism continues. Having said that we do have measures in place to safeguard the pipelines; we have arrangements with the naval officers in various countries. So, those arrangements are still in place.

Do you consider Ghana’s gas a threat to WAPCo?
We have challenges, and it is not only Ghana. The requirement of gas for Nigeria was also a threat. So, the important thing is to be proactive and try to make the company relevant and that is why we have the western interconnection for example. We have our intelligence on ground. Immediately we heard the information that Ghana want to take gas from the west to the east and it was planning to build a pipeline, we went to them and told them that there is one in place and why try to build another one. At the time we don’t have any money to invest, so we discussed with them so that the investment can be made by another party that will benefit from the transportation of the gas. So, that is the project that is going on right now. It is quite well advanced and apart from that, there is a threat of (Liquefied Natural Gas (LNG), like in Benin for example they are considering using LNG. So, we are trying to make it attractive to them. Even if they are doing LNG they move it through the WAGP.  So, we are taking the advantage , thus turning the challenges into utilities for us.

What about the extension of the pipeline?
We have noted over the years that it is an ECOWAS dream, because when they conceptualized it, the pipeline was supposed to end in Dakar, but the challenge is that it needs to be commercially viable. The countries are not willing to invest their money, so we need investors that are prepared to pay for the extension of the pipeline. We know that with the sum that have been spent so far on WAGP, the investors have not been able to get their money back; so, it is not likely they will invest more to extend the pipeline.  However, if the countries are willing to come up with other investors, those investors may consider extending the pipeline. For now, we are not considering investing on the extension of the pipeline. More so, we may not invest for the extension when we are not sure of off-takers.  At the moment, we know that ECOWAS has done a feasibility study on the extension of the pipeline.

What are the challenges of gas tariff for the off-takers?
On the tariff, when we started off, it was only gas from Nigeria being delivered to Benin, Togo and Ghana. At that time gas was cheap, and so the cost of the product itself was quite low.  So, when you put the cost of the product together with the tariff being paid to us, it was still being competitive. What has happened over time is that the price of gas has gone up.   Those who were buying gas from Nigeria were paying  higher compared to those going through the WAGP, because that one was subject to an agreement .Now that we have many shippers  and all the gas coming from Nigeria were considered as one product   to CEB of Togo and VRA of Ghana for the same price.  What is happening is that for any additional gas that is coming in, it is not going to be as lowly priced as the original one.

So, it means that when you put the price of the gas and tariff together it goes up to a certain level.
Now, we have agreement for the review of the tariff, which is supposed to be every five years. The last time we reviewed was when we had one customer that is N- Gas. Subsequently, we had an open access, other shippers registered; now, we have Axxela and we are signing off Ghana for the western gas. We must say that the issue you are talking about is about Ghana. That is for the gas coming from the west of Ghana, because we already have the price from the gas coming from Nigeria into Ghana. It the gas coming from the west of Ghana that is of different entity all together negotiating with WAPCO for their tariff. They are the ones, because they have some of their commitment, they want a tariff that is on the lower side. Right now we have different shippers and you can’t have a low tariff for one shipper and leave a high tariff for other shippers.  At the same time we also want to ensure that we are making enough money to honor our obligations.  So the average tariff should be on a level that will help us meet up with our various obligations.  Therefore, we are in the tariff discussion phase right now, and the aim is to have a tariff that will be competitive and will meet the needs of the company and will be acceptable to different shippers.   Because it is not only Ghana, Benin is also asking for a tariff for the LNG, Axxela and other shippers are also asking for various tariffs.  We are in the discussion now and we will soon come up with a good tariff that will be acceptable to all parties, it will be a win-win situation.

What is the update with sand mining challenge and other shippers?
The sand mining challenges right now has been resolved. It was resolved because we got the backing of the state authorities, that is the marine police and since then we have not witnessed the incident of sand mining in recent time.  It may be happening in other places but not in our right of way.  Also we have regular meetings and discussions with various authorities in ensuring   safety of the pipelines and no interference through sand mining activities.

Other shippers have registered and that is one step. It is when we sign transportation agreement with you that we know that something tangible will happen.