AfGen signs joint-venture agreement for Ghanaian FSRU

28 April 2014  |  By: Ludovic Aldersley and Edward Cox

London-based energy company Gasol has moved a step closer to developing gas markets across west Africa through LNG after its sister company African Power Generation (AfGen) signed a formal joint-venture (JV) agreement with state-owned Ghana National Gas Co, it announced this week.

The JV parties will explore the development of a “fast-track” floating storage regasification unit (FSRU) located in Ghana – the second FSRU that Gasol has planned for the region. This would supply the country directly and independently of the existing but underutilised West African Gas Pipeline (WAGP).

Before the implementation of a Ghanian FSRU, the JV would be responsible for the sale of regasified LNG in Ghana via the WAGP sourced from Gasol’s first planned FSRU in Benin, according to Gasol. 

“Initial gas volumes to be sold into Ghana are expected to be a minimum of 100 million cubic feet (mcf)/day – or 2.8 million cubic metres (mcm)/day – for at least five years,” it said.

The development of the Benin FSRU, however, still appears at a relatively early stage. Its timeline depends on necessary agreements and financing being in place only after which it could be active 18 months later, Gasol’s COO Alan Buxton told ICIS on 23 April.

That would place the current timeline for first LNG imports into west Africa in 2016 at the earliest.

Disappointing flow rates of natural gas imported through WAGP from Nigeria since 2010 have been unable to address continued blackouts across the region, which are caused by insufficient feedgas for electricity generation.

The 13.4 mcm/day capacity WAGP – which runs from Nigeria westwards across Togo, Benin and Ghana – averages gas flows of only 2.3-2.5mcm/day, Gasol has said previously, forcing power generators to rely on costly fuel-oils.

Consequently, there have been various plans looking at LNG as a stop-gap measure until more offshore production can be brought on line. Cote d’Ivoire’s state-owned oil and gas company PETROCI launched an LNG supply tender for a planned FSRU last year, while Ghanaian state-owned utility Volta River Authority (VRA) has long harboured ambitions to accommodate an FSRU.

The JV between AfGen and Ghana National Gas Co builds on a memorandum of understanding (MoU) signed last year. A formal gas sales agreement could now be set up by AfGen and Ghana National Gas Co in the following month, according to Buxton.

Gasol has an option to purchase the entire issued share capital of AfGen that runs until 24 August and could assume 100% ownership of the company in the coming months.

AfGen is currently a wholly owned subsidiary of Gasol’s major shareholder, African Gas Development Corp. 

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