Focus on LNG imports risks investment into gas subsector – 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 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 were required in the gas sector to convert flared gas into economic value and enforce government’s desire to use gas as a transition fuel.

He said the government’s decision to import LNG had implications on how much investment Ghana could attract for domestic gas production.

The government, through the Tema LNG terminal when fully operational  is anticipated import LNG for power generation so as to meet the industry’s demand for electricity which have many 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 Development 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,” Edmund Agyeman-Duah, the project manager of the terminal said.

OgbemiOfuya 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.