Fuel tankers await their turn at one of the storage facilities of BOST

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 industrialisation. Over the initial phase of oil production, Ghana expects to produce about 120,000 barrels a day, then, the subsequent phase starting from 2014 will double the output to almost 250,000 barrels a day. All of that oil will come from just one field, the Jubilee Field, out of several to be developed.

BOST’s role in the big picture of transforming 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 as much natural gas as 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,” said Dr. Yaw Akoto, managing director of BOST, in an exclusive interview with GB&F.

In order to legitimise its role in the natural gas value chain, BOST’s mandate had to be expanded. Dr. Akoto said: “BOST’s new mandate is to become the natural gas transporter. 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 toserve the petrochemical industry including fertiliser producers.”

Pipelines at BOST help the firm to deliver up to a million metric tonnes of petroleum products every year

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.

“Some of 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 360 km linking all the depots. We 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,” said Dr. Akoto.

“In a year, we can deliver up to a million metric tonnes 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 neighbors, Ghana would experience regular fuel shortages would experience regular fuel shortages and motorists would have to endure long queues at fuel pump stations.

Without a BOST, even if Ghana got the oil for free there would be no place to store it.

According to Dr. Akoto, 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.

Dr. Akoto explains: “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.”

“In line with the policy of zero gas flaring, we expect that BOST will be able to facilitate and help promote the industrialisation of our economy through the use of gas-based activities and projects.”

According to Dr. Akoto, 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.

BOST ready to spearhead Ghana’s gas-based industrialisation


Dr. Yaw Akoto, Managing Director of BOST

“Funding will be 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 partners or collaborators in order to achieve the targets we have,” he said.

“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 and most of the types of 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, tanks and pipelines as well as export and re-export facilities. We require close to US$200 million for this project.”

“These two projects are going to be a major flagship of our new mandate to move into the natural gas sector.”

Dr. Akoto said one approach to raising funds for BOST projects is to depend solely on the public sector.

This he explained will take the form of bilateral arrangement between the Government of Ghana and any of the country’s development partner countries.

“But I believe 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. I believe we will ultimately have a hybrid of both public and private sector partnerships as we move forward,” he said.

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 and collaborators 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 and capital,” said Dr. Akoto. “BOST would be able to provide investors with local knowledge and facilitate the investment in the country. I think 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 industrialisation materialised. 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.

BOST now has the capacity to hold strategic reserves to meet weeks of national consumption of petroleum products