Ghana's $500 Million Gas Terminal Could Save $250 Million in Fuel Costs

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Written by Richard Finlayson, Senior International Editor for Industrial Info Resources (Sugar Land, Texas)--Pan-African industrial investment group Quantum Pacific (Hong Kong) has signed a deal with Golar LNG (NASDAQ:GLNG) (London, England) to develop a liquefied natural gas (LNG) storage, regasification and delivery facility offshore the eastern Ghana port city of Tema.

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Quantum Power Ghana Gas (QPRGG), Quantum's Ghana subsidiary, will develop the $500 million facility, which will provide gas directly to the state-operated Volta River Authority (VRA) by mid-2016, said Don Ackah, chief executive QPRGG.

The project initially will have the capacity to receive, store, regasify and deliver 1.75 million tons of LNG annually (250 million cubic feet per day). A state-of-the-art floating storage and regasification unit (FSRU) will be purpose-built and moored offshore, with associated sub-sea and onshore pipeline networks to deliver the natural gas feed to power generators in Tema. Samsung Heavy Industries (KSE:010140.KS) (Seoul, South Korea) is building the FSRU. The unit is expected to arrive in Ghana under a lease agreement by January 2016, following the completion of all sub-sea construction by December 2015. The project design allows for increased capacities at a later stage.

Technip (OTC:TWHPF) (Paris, France) is holding discussions on the subsea and onshore pipeline networks to deliver gas to Tema.

The project is part of a national plan to provide cheaper alternatives to light oil for power generation. The VRA is reported to spend $20 million every fortnight on crude oil purchases, adding to national budget pressures. QPRGG is in talks with international oil companies, including BP plc (NYSE:BP) (London, England), for the supply of gas. The Ghanaian government also plans a state-to-state supply arrangement with Qatar for LNG to be delivered to the terminal.

"A lot of work has already been done with payments committed to parts of the Tema LNG project," Ackah said. "We now aiming to complete all government approvals and secure gas supply and sales agreements for a final investment decision in the last quarter of this year."

Matty Vengerik, managing director of Quantum Power, said that conservative estimates show that the project could save power producers more than $250 million in fuel costs, with a multiplier effect on the economy at large.

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