The Africa Centre for Energy Policy (ACEP), has said government’s ambition to switch from fuel oils and hydro-electric power to Liquified Natural Gas (LNG) as the back bone of power generation will be a disincentive for oil and gas exploration in the country.
Making the assertion in reference to the Tema LNG Floating Storage Regasification Unit (FSRU) which is expected to commence operations end-March this year, ACEP posits that gas supply from the various oil fields and Nigeria have been suppressed to make way for the imports of LNG at the Tema LNG terminal.
“The capacities of domestic sources have been suppressed to make way for the import of LNG. OCTP gas has been suppressed to the take-or-pay volume of 171mmscd, OCTP makeup gas has also been deferred to 2022 instead of 2021. Jubilee and TEN gas has also been capped at 120mmscfd,” said ACEP.
“There are also plans to suppress supply from Nigeria Gas, which is cheaper than LNG, from 60mmscfd to 30mmscfd starting from 2021,” added ACEP.
With the suppression of domestic gas supply and imports of LNG, ACEP posits that the country’s gas sector will be burdened by ‘Take-or-Pay’ commitments which will result in the accumulation of more debts in the power sector.
ACEP also asserts that contrary to assertions by government of the need for LNG by industries for operations and power generation due to the use of more expensive fuel oils hence its pursuit of LNG, there is very little industry support for the use of LNG.
Further noting that GNPC’s claim of having a market beyond Ghana for LNG cannot be verified as ACEP’s findings indicate otherwise.
“ACEP can also confirm that there is no single binding contract between GNPC and any potential consumer of the LNG to warrant the Corporation taking the risks,” noted the energy policy think tank.
ACEP in a press briefing on Thursday, March 11, urged government to suspend its LNG importation plans and optimize the use of domestic gas supply.
The group further urged government to negotiate with Nigeria Gas to use the Tema LNG FSRU as a buffer to smoothen gas supply through the West African Gas Pipeline.
The Tema LNG FRSU is Sub-Saharan Africa’s first liquefied natural gas (LNG) import terminal and has the capacity to receive, re-gasify, store, and deliver around 1.7 million tonnes of LNG a year, about 30 per cent of Ghana’s general capacity.
The Tema LNG terminal aims to meet Ghana’s growing energy demand through an innovative yet cost-efficient and reliable supply.