Ghana LNG regasification unit arrives, start-up expected Q1

Issue 430 - 14 Jan 2021 - By Dan Marks | 7 minute read

A floating regasification unit built by China State Shipbuilding Corporation arrived in Tema on 7 January, keeping Tema LNG Terminal Company (TLTC) on track to start LNG deliveries in Q1 this year. The scheme emerged from a fraught and crowded field of LNG import projects in West Africa, which has included several failed schemes in Ghana.

TLTC is backed by major private equity firms Helios Investment Partners and Africa Infrastructure Investment Managers. It will act as an infrastructure provider, with LNG supplied by Shell through a long-term contract with Ghana National Petroleum Company (GNPC). Spain’s Reganosa Servicios SL will operate and maintain the terminal, associated 6km gas pipeline, and pressure reduction and metering station linking into the existing gas pipeline network. Once operational, the terminal will be able to deliver around 1.7m t/yr of LNG, around 30% of Ghana’s gas demand, and could be scaled up to 3m t/yr.

“I think the main reason the TLTC project ended up working is that the technical and commercial solutions are tailored for Ghana,” TLTC director Kwaku Boakye Adjei told African Energy. “That means that the infrastructure was sized to meet demand requirements. Having a regasification barge and a floating storage unit (FSU), as opposed to a [floating storage and regasification unit] FSRU, requires more equity capital because you’re having to build more infrastructure as well as bespoke pieces of marine equipment, but it also means you are building something fit for purpose for Ghana.

Power infrastructure in Ghana - Revised January 2021


Revised in January 2021, this map provides a detailed overview of the power sector in Ghana. The locations of power generation facilities that are operating, under construction or planned are shown by type – including liquid fuels, gas and liquid fuels, natural gas, coal, hydroelectricity, solar (PV), wind, thermal, wave and biomass/biogas. Offshore oil and gas fields are also shown. See more here.

“Some of the alternatives proposed in the region are trying to fit available infrastructure – whether that’s second generation FSRUs or large-scale FSUs – that has been sized for other projects into African markets. What you find is that, for various reasons, whether technical or commercial, it just doesn’t work. It’s not always obvious from the beginning, but it becomes apparent later on,” he said. “By starting from the perspective of what was needed by the country, we had a far better chance of achieving an outcome that everybody was happy with.”

One of the distinctive features of the TLTC project is that it is situated within Tema port rather than out at sea. This is particularly significant in Ghana, where sea swells can be very severe, particularly in the spring.

“Some of the previous solutions required vessels to be located 20-40km offshore, which would mean you have very poor availability,” Boakye Adjei said. “Delivering a solution that might not be available 10% of the time because of maritime conditions won’t work, so we needed to build something that was in the port and protected, which would have availability 99% of the time. The port didn’t have space for a FSRU or FSU and regasification barge so that required real risk capital. You can lease a FSRU but you can’t lease a new breakwater, dredging etc.”

The FSU and regasification barge approach means capacity can be increased at low cost and in smaller increments to meet demand, Boakye Adjei said. Within Ghana, Shell’s existing agreement with GNPC will allow conversion of most gas plants at the Tema gas enclave, but TLTC also expects LNG trucking to industrial consumers to be a major proportion of sales. The company is also looking at trucking LNG to regional customers, particularly in Togo, Côte d’Ivoire and Burkina Faso.

Early on, TLTC decided that the import terminal needed to be located in a country that could support LNG imports on its own, which in West Africa meant Ghana or Nigeria. Boakye Adjei said Ghana was attractive for two reasons: it has a lot of off-grid gas demand and an unreliable gas supply that is quite expensive.

Existing gas supply

The gas supply situation in Ghana has been in flux for several years. Associated gas from Tullow Oil’s offshore Jubilee oil field, which supplies Takoradi, is free for the first 200bcf, but power officials say it is not reliable enough for baseload power generation. Associated gas volumes fluctuate as they are used for oil reservoir management and maintenance. This means they are usually supplied based on reasonable endeavour and cannot guarantee the high levels of supply required for baseload power generation.

For Tullow, having an outlet for the associated gas is important to maintain oil output. The company provides gas into the Atuabo gas processing plant in the Western Region, some way from Tema, and industry sources say demand is unlikely to be affected by the LNG imports. “Overall, I think that gas supply continues to fall a long way short of demand for domestic power in Ghana. That said, they are paying for this gas when they still have plenty of ‘free’ gas at their disposal from Jubilee,” said one source.

The start of production at the Sankofa field in 2019 helped to stabilise supply in the west of the country. This has allowed power plants in Takoradi to convert to gas and resulted in Karpowership’s 470MW Osman Khan vessel being relocated from Tema. However, Sankofa is deep offshore and gas is relatively expensive.

Although reverse flow from Takoradi to Tema through the West African Gas Pipeline (WAGP) is now possible, it is also expensive, and supply is limited. This leaves the other major thermal power enclave in Tema – which was intended to use gas supplied by the WAGP from Nigeria – still predominantly using light crude oil as WAGP has proven highly unreliable.

TLTC will not feed WAGP as there is not currently a reverse flow mechanism from Tema eastwards, but will supply the gas enclave at Tema. Because gas for all IPPs is aggregated by GNPC, the introduction of LNG, which Boakye Adjei believes will be more affordable than supplying Tema with gas from Sankofa and as much as 35% cheaper than gas from WAGP, will reduce the cost for nearly all major gas consumers in the country.

Most of the IPPs in Tema are likely to convert to gas soon after supply becomes available, which is expected to be straightforward for all but Aksa Enerji’s 370MW plant. The government has been putting pressure on IPPs to convert and to change power purchase agreements to tolling agreements, so the benefit of reduced fuel costs filters through to the beleaguered Electricity Company of Ghana, with IPPs benefiting from reduced fuel risk. Cenit Energy Ltd converted to a tolling agreement last October while Cenpower converted to gas around the same time (AE 424/9).

The TLTC facility was designed to allow LNG trucking to off-grid customers. Boakye Adjei said project stakeholders had been approached by significant energy users to see if they could switch their off-grid plants to LNG using the same trucking routes that already supply diesel/HFO, with mines showing particular interest. TLTC has also been approached by fuel providers already active in the country, which are looking to supply LNG rather than face being undercut, as well as logistics companies.

“It’s a ready-made business because you are displacing fuels that are in some cases 60-70% more expensive than landed LNG,” Boakye Adjei said. “In order to make it really cost-effective and efficient, you probably need to see a private sector aggregator.”

TLTC estimates off-grid demand in the region that could be supplied by the import terminal is around 400,000-500,000 t/yr, making it a major potential source of sales. Boakye Adjei expects demand to translate into LNG revenue fairly quickly.

“I know that some of the investors in Tema have been looking at and planning for this infrastructure for a long time and the infrastructure that we’re talking about is not rocket science. In Europe and China, we have third-generation LNG trucks now working very efficiently. There are skid mounted solutions that are modular and very easy to build. From the conversations we have had with potential suppliers, we don’t think it will take more than 14-16 months for trucks to start delivering LNG in Ghana and the region,” he said.

Tagged with:

Pin Ghana

Dan Marks

Power editor (2018-2022)

Dan oversaw the research and development of the African Energy Live Data platform and acted as power editor for African Energy’s newsletter between May 2018 and September 2022. Read more

Dan Marks