Ghana is set to open sub-Saharan Africa’s first liquefied natural gas-to-power project as it moves to position itself as a hub for the cleaner and cheaper fuel in West Africa.
Liquefied Natural gas-to-power projects have been booming from Asian to Latin American in recent years as they allow nations to switch from dirtier fossil fuels to keep the lights on. And for sellers, integrated LNG-to-power provides a guaranteed outlet for the fuel.
Tema LNG Terminal Co. received the floating regasification unit from Jiangnan, China, paving the way for the supply of 1.7 million tons of natural gas per year for power generation Edmund Agyeman-Duah, project manager at the company, said.
The company, backed by Helios Investment Partners and Africa Infrastructure Investment Managers, began building the $350 million project about two years ago.
“Ghana can now start to service the rest of West Africa with fuel that is continuously growing in popularity because of the cost and the significant environmental benefits it provides,” Agyeman-Duah said.
Liquefied Natural Gas Lower Emissions
On a lifecycle basis, Liquefied Natural Gas emits around half the greenhouse gas emissions that coal does when burnt to generate electricity, and compared to a typical new coal plant, Liquefied Natural Gas emits 50 to 60% less carbon dioxide when combusted in a new efficient natural gas power plant, according to the International Group of Liquefied Natural Gas Importers.
Tema LNG Terminal is getting its gas under a long-term contract with Royal Dutch Shell Plc, said Agyeman-Duah, who isn’t related to the analyst. State-owned Ghana National Petroleum Corp. is currently the mandatory off-taker who will receive regasified Liquefied Natural Gas to fuel plants in the Tema power and industrial enclave.
“There’s quite a bit of suppressed demand in the system,” he said. “There are a lot of industrial customers who work off-grid because of the interruptions they suffer in the power supply.”
The company has given Spain’s Reganosa Servicios SL the contract for the operation and maintenance of the unit and associated 6 kilometers (3.7 miles) gas pipeline, it said in a statement.
The project was financed with a combination of equity and debt from a consortium of international banks, according to Agyeman-Duah, and its processed Liquefied Natural Gas is expected to be 30%-35% cheaper than heavy fuel oil, he said.