Ghana’s uncontrolled focus on LNG imports risks investment attraction in gas sector – ACEP
The African Centre for Energy Policy (ACEP), has said heightened focus on Liquified Natural Gas (LNG) imports by the government risks investment attraction into the the country’s gas subsector.
The assertion by ACEP is on the back of some 47 billion cubic feet (bcf) of gas flared between the period of 2019 and 2021.
According to the energy think tank, the flared gas amounts to some $300m in value, further asserting this was at a time when domestic consumption of processed gas, known as Liquified Petroleum Gas (LPG) was growing exponentially.
Policy Lead at ACEP, Charles Ofori, commenting on the issue at the CSO Budget Forum, averred significant investments are required in the gas sector to convert flared gas into economic value and enforce government’s desire to use gas as a transition fuel.
Adding that, government’s decision to import LNG has implications on how much investment Ghana could attract for domestic gas production.
Government, through the Tema LNG terminal – when fully operational – is anticipated import LNG for power generation so as to be able to meet the industry’s demand for electricity which have mostly relied on heavy fuel oils and diesel imports.
Ghana has one of Africa’s highest rates of electrification, yet industrial development has been hampered by unreliable supply. Over-reliance on hydro-power led to a prolonged crisis in power supply, which included electricity rationing, between 2012 and 2015.
According to the African Develoment Bank (ADB) which is a financier of the Tema LNG project, current natural gas demand in the country is not being reliably met by local gas production or serviced by the West African Gas Pipeline, hence the Tema project will facilitate electricity grid expansion.
With the arrival of a floating regasification unit (FRU) for the terminal, the terminal 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.
“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,” said Edmund Agyeman-Duah, the project manager of the terminal.
Ogbemi Ofuya of Helios Investment Partners said: “The Tema LNG terminal project supports Ghana’s ambitions to continue on its trajectory as one of the fastest growing economies in Africa, by delivering the energy infrastructure to support accelerated industrialisation. As evidenced in similar fast growing economies in Asia and Latin America, the introduction of LNG into the energy mix serves as a catalyst for industrial and economic growth.”
“The year-round, guaranteed supply of LNG and piped gas through the Tema LNG terminal facilitates forward planning and investments in receiving infrastructure by power plants, mines and industries across the West Africa region who are currently reliant on more expensive liquid fuels. The switch to gas also delivers a significant environmental benefit and supports the transition to cleaner burning fuels in the region by reducing CO2 emissions and eliminating sulphur emissions, in line with the Paris Climate Accord objectives,” he added.
Meanwhile, the CSO Budget Forum, has demanded of government that it abandon plans to import Liquified Natural Gas (LNG) for power generation in the country.
The demand for government to halt importation plans of LNG by the CSO Budget Forum, is informed by the availability of unutilised excess gas supply from the country’s three oil and gas producing fields – Sankofa, TEN and Jubilee.
According to the group, government is not making optimum use of its gas reserves given that most of the gas produced from the oil fields are either flared or re-injected.
The group asserts that in 2020 alone, over 64 percent of total gas produced from the three oil fields was not utilised. In the case of the Sankofa field where gas produced from the field is on take-or-pay basis, about 20 percent of the total gas produced were unutilised resulting in the continuous payment for unutilised gas.
“The case is no different from the first half of 2021 where about 58 percent of the gas produced was unutilised with about 42 percent being reinjected. Government’s decision to go ahead with the importation of LNG would only result in excess gas supply which would create significant pressure on the budget to account for the take-or-pay commitments,” the CSO Budget Forum noted.
According to the CSO Budget Forum, the country’s domestic gas reserves are enough for power generation in the country and as such, there is no need for additional gas imports for at least in the medium-term.
