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Ghana still waiting for gas-fired growth

DATE:2014-03-14 | comments: | posted by:liuailin

The Eirik Raude semi-submersible rig operating on the Jubilee Field, Ghana. (Tullow Oil)

Ghana remains chronically short of gas, but there are a series of projects in the works that could close the gap. In the meantime, the country is struggling to meet demand and pay for expensive fuel oil imports.

Ghana promises to be one of West Africa’s key gas demand growth areas in coming years. The country consumes 244 million cubic feet (6.91 million cubic metres: MMcm/d) of gas, but this is expected to rise to 22.66 MMcm/d by 2018, according to figures from regional financial services group Ecobank.

Key to meeting this demand is a gas gathering and processing project currently under construction. The project will use associated gas from the offshore Jubilee oilfield to generate power onshore. The facilities were expected to be finished by the end of last year, but technical and financial issues have held up progress.

This week, the Ghanaian Gas Company told Interfax that project developer Sinopec now expects the facilities to be completed in the third quarter this year. Minister of Energy and Petroleum Emmanuel Armah-Kofi Buah told journalists on Monday the gas processing plant at Atuabo would be ready by 31 March. The $750 million plant is being built by Chinese group Sinopec and will have an initial capacity of 4.3 MMcm/d. Buah was talking after a meeting with Minister of Finance Seth Tepker and Tullow Oil’s Country Manager Charles Darkey, according to the Ghana News Agency.


Missed deadlines

However, the government’s track record in meeting deadlines has been patchy. The original target startup date for the facilities was the end of 2012, but this was pushed back last year into 2014. Analysts at Ecobank see the facilities starting up in the fourth quarter, while Jubilee’s operator Tullow has said it does not expect the plant to be ready until the second half of the year.

Tullow said earlier this year that oil output from Jubilee is being constrained by the delay, as the company is not allowed to flare gas and has only limited capacity for reinjection.

Output from the Jubilee field finished the year at around 100,000 barrels per day – below the targeted 120,000 b/d. The company attributed this to problems with the water injection system on its floating production storage and offloading vessel, as well as the delay in building gas export infrastructure. The company has applied for a temporary gas flaring licence from the government.

“Any ‘good news’ from the government this year is likely to come from the successful completion of the Jubilee gas project,” Teneo Holdings analyst Manji Cheto told Interfax. “Unfortunately, as things stand, they are not looking really positive on that front either.”

The main problem, according to Cheto, is a delay in receiving funds from the project’s Chinese backers. “About a third of the government-hyped $3 billion loan from the Chinese Development Bank has been earmarked for the Jubilee gas projects, yet only about $600 million has been received. Meanwhile, the government has already had to pay $100 million as ‘commitment fees’ for the loan,” she added.

The $3 billion loan from China was unveiled in a wave of publicity during the summer of 2011. Buah flew to China last month to discuss further investment, including a new coal-fired power station and potentially also a hydropower project.


Gas to lead expansion

Despite these overtures, Accra still expects gas-fired plants to lead the expansion of power capacity in the country. Ghana’s main electricity provider, the Volta River Authority (VRA), generates most of its power using hydro (47% of its total generation capacity), with thermal plants accounting for 36%.

However, some of these thermal plants are running on liquid fuels rather than gas as supply problems persist in the country. In late January, for example, a source at the VRA told Interfax the 220 MW Takoradi 2 power plant in Ghana was running entirely on crude oil rather than gas because of a shortfall in volumes coming from Nigeria via the West Africa Gas Pipeline (WAGP).

Other plans to help ease the burden on Ghana’s power sector include the development of the offshore Sankofa field by Italian group Eni, as well as the Tweneboa, Enyenra and Notomme offshore developments. The government has also stated plans to build an FSRU to produce up to 1.5 GW of electricity by 2016. The facility would be able to handle up to 12.74 MMcm/d of gas to fuel new gas-fired turbines.

Another option for the country is boosting supplies from the WAGP, although not necessarily by increasing Nigerian volumes. London-listed Gasol is planning an LNG import facility in the Benin harbour of Cotonou. This facility would feed into the WAGP and supply customers along the network. And there will be room for both this project and another FSRU on the other side of the country.

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