GLM FOCUS: Ghana’s LNG import project finally approaches start up

MADRID (ICIS)–The floating LNG terminal in the port of Tema could start receiving cargoes at some point in the second quarter of this year, following the arrival of the floating storage unit.

The project, owned by Access LNG, a joint venture of London-based investment company Helios Investment Partners and German LNG infrastructure developer Gasfin Development, has been delayed several times in recent years, largely because of slow domestic gas demand.

The project also saw a change in future LNG supplier after Russian exporter Rosneft exited in 2019 and was replaced by Anglo-Dutch portfolio major Shell.

The project is also backed by infrastructure investment company Africa Infrastructure Investment Managers.

After the arrival of the 28,000 cubic metre Torman floating regasification unit (FRU) in early January, the project is still waiting for the arrival of the floating storage unit (FSU), which is expected in March, before it can start operation.

Demand uncertainty

A major obstacle for the Tema project has always been a lack of firm demand in the country.

Aside from the Tema project, other supply and LNG-to-power projects have been cancelled in recent years because forecast growth in power demand was lower than Ghana’s government expected.

This was because production from the country’s Sankofa, TEN and Jubilee offshore gas fields has been enough to satisfy local demand.

“They do not have space for both domestic production and LNG supplies, so the government has to decide who they are going to pay and not take from,” a market source previously told ICIS.

But unreliable supplies through the West Africa Gas Pipeline (WSGP) have supported the case for the development of an LNG import terminal in Ghana.

“Once operational, this FRU will allow the Tema LNG facility to receive, regasify, store and deliver roughly 1.7m tonnes of LNG a year – 30% of Ghana’s general capacity (demand)”, said Edmund Agyeman-Duah, managing director of the Tema LNG Terminal Company (TLTC) in January.

“Tema LNG’s year-round supply of gas will enable the Ghana National Petroleum Corporation (GNPC) to supply reliable and cost-effective gas into the Tema power and industrial enclave, while strengthening West Africa’s energy security.”

Operator contract awarded

Spanish LNG terminal operator Reganosa announced in January that it had been awarded the contract to operate and maintain the Tema terminal.

Reganosa is the operator of the Mugardos LNG import terminal, in the port of Ferrol, in northwest of Spain.

The company also maintains and operates the Delimara LNG regasification terminal in Malta.

Reganosa’s experience with the Maltese terminal could have been a key point for winning the operator contract at Tema as the Delimara terminal also uses a vessel, the 125,000cbm Armada LNG Mediterrana, as an FSU.

Reganosa will also operate and maintain a 6km pipeline associated with the Tema LNG terminal, and a pressure reduction and metering station connected to the existing pipeline network in the power and industrial enclave of Tema, according to the company’s statement.

The FSU circle

Initially, the 125,000cbm LNG Flora was selected to serve as the FSU in the project, said shipping sources at the end of 2018.

But the vessel needed to be converted into an FSU, which meant up to six months in a dry dock.

The possibility to switch to a vessel with a larger capacity also became a question for the project promoters, ICIS understands.

It was likely as a result of this, that the 141,000cbm Galicia Spirit sailed all the way from Japan to Ghana last October.

Following a brief stay offshore Tema, the vessel lifted a cargo from Nigeria’s Bonny plant and delivered it to Spain.

Subsequently, market sources said that TLTC was on the charter market again looking for a vessel to replace the Galicia Spirit as the FSU.

It now seems likely that the LNG Flora will be used, with the vessel currently going through conversion work in Singapore’s Sembawang shipyard.

The wider regional picture

The Tema project has faced delays in recent years.

Similar LNG import projects in west Africa have encountered the same barriers.

A lack of demand, limited pipeline infrastructure and inadequate market legislation have been the key issues for projects in Ivory Coast and Benin.

FSRU development in Ivory Coast has been halted, adding further to previous delays.

The country’s government has the opportunity to ramp up domestic gas production in the east of the country, as well as importing LNG, to satisfy demand.

The local government must decide if it wishes to push domestic gas production would likely leave the FSRU – in which the government has made long-term financial commitments – under used.

The FSRU project in Benin is unlikely to start operations this year, as previously expected, according to a source close to the matter.

State-owned utility SBEE and France’s Total have already signed a contract for the development of an FSRU and a 0.5mtpa supply agreement for 15 years.

The project is expected to supply two power plants, including the 127MW CCGT facility in Maria Gleta in southern Benin.

Benin will need significant fiscal support to realise its FSRU project, according to a separate source.