As Ghana’s liquefied natural gas (LNG) terminal reaches its final construction phase, Fitch Solutions has projected the country’s import of the commodity to reach 1.2 billion cubic meters (bcm) this year.
The research arm of the rating agency Fitch said the increase in imports, which is due to the LNG terminal, will predominantly serve the power sector, which has suffered some downtime in the past owing to the cost of fueling with crude oil.
According to TrendEconomy, in 2019 the country imported about 631,384kg of LNG.
Fitch forecast Ghana’s gas consumption to increase by 15 percent in 2021 to 4.53bcm, as the country begins to recover from the COVID-19 pandemic and the flagship gas-fired Bridge power plant comes online.
“Our Country Risk team is upbeat about Ghana’s growth prospects and expects real GDP to grow by 4.8 percent in 2021. Accordingly, recovering industrial and manufacturing activity will support the growing demand for gas in the near term,” Fitch said.
The LNG terminal’s floating regasification unit arrived in Ghana in early January, marking one of the final steps in the project’s construction. In view of this, the operator of the terminal, Tema LNG Terminal, expects that the facility will be online by the end of the first quarter of 2021, having been delayed from the first quarter of 2020 due to COVID-19.
Currently, suppressed gas prices, due to the present state of international oversupply, has created a buyer’s market for LNG.
“However, Ghana is one of the few SSA countries that are able to capitalise on these market conditions and subsequently increase their LNG demand over our forecast period,” Fitch said.
The LNG facility is touted as significant for both Ghana and sub-Saharan Africa (SSA), as it marks the region’s first offshore LNG import terminal.
Due to the huge capital requirements needed for LNG infrastructure construction, as well as the weakened macroeconomic environment many countries find themselves in due to the Covid-19 pandemic, Fitch anticipated investments in this area as less likely in its forecast.
As a result, only Ghana and Côte d’Ivoire are set to become key LNG importers in the region over the forecast period.
Once online, Tema LNG Terminal will operate the US$350 million project for 12 years, after which the terminal operatorship will be transferred to the Ghana National Petroleum Corporation (GNPC) and the Ghana Ports and Harbours Authority (GPHA).
The new terminal has the capacity to import around 2 million metric tonnes per year (mtpa) of LNG, and in May 2018, GNPC signed a cooperation agreement with Russia’s Rosneft to supply 1.7 mtpa of LNG over 12 years. However, Royal Dutch Shell has since replaced Rosneft as the supplier of the LNG to the terminal.