Jiangnan to build regas barge for Ghana’s first LNG import project

Tema LNG Terminal Co Ltd has selected two Chinese companies to build the infrastructure required for what will be Ghana’s and sub-Saharan Africa’s first LNG import project.

Tema LNG, which is backed by Helios Investment, the world’s largest Africa-focused private equity firm, has signed deals with Jiangnan Shipyard for the construction of a floating regasification unit (FRU) and with China Harbour Engineering Company (CHEC) covering the provision of the associated marine jetty facilities and subsea pipeline connections.

Helios points out that the receiving terminal project will be funded by the private sector and will not require capital investment from government. Rosneft of Russia will be the scheme’s principal gas supplier, having agreed to provide Ghana National Petroleum Corp (GNPC) with 1.7M tonnes per annum (mta) of LNG for 12 years.

No details of the FRU were given at the signing of Jiangnan contract, but earlier this year a barge-based vessel with a storage capacity of 20,000 m³ in IMO Type C storage tanks and the capacity to regasify up to 2 mta of LNG had been mooted for the Ghana scheme.

The permanently moored FRU would work in tandem with a floating storage unit (FSU) within the Tema port zone. Located exactly on the Greenwich Meridian and in the eastern part of the country, Tema is the largest of Ghana’s two main seaports.

Tema LNG reports that the overall project is set to be realised at a cost of US$350M and completed in 18 months. Such a schedule would enable LNG imports to begin in March 2020.

The regas vessel will be able to provide enough gas to meet 30% of the West African nation’s electricity-generating capacity. The government is keen to substitute the use of clean-burning gas for oil fuel in its power plants to the greatest extent possible.

After 12 years, control of the terminal will be transferred to the government, namely GNPC and Ghana Ports and Harbours Authority (GPHA).

Ghana currently gets its natural gas from offshore domestic fields in the west of the country and from Nigeria in the east via the West Africa Gas Pipeline (WAGP). As the country seeks to develop the gas-to-power option, it is estimated that these pipeline supplies will be insufficient to meet the growing needs of the country’s electricity-generating stations from 2020 onwards.

Crucial to the increased use of gas in Ghana’s energy mix will be the ability of individuals and businesses to pay electricity bills. As a result, Tema LNG will need to ensure the availability of import cargoes at competitive prices and provide the receiving terminal infrastructure at the lowest possible cost.      

Evidence of the price sensitivity issue is given by the fact that Ghana has been trying to launch an LNG import project for several years. Both Golar and Höegh LNG had provisionally agreed to provide an LNG receiving facility at Tema by making use of a 170,000 m³ floating storage and regasification unit (FSRU), but both projects have been shelved due to delays over contracts.

Regasification vessels enable LNG imports to commence at lower cost and much more quickly than would be possible with a shore-based receiving terminal. As the floating regas vessel sector has matured in recent years, charter rates for FSRUs have become much more competitive.

The FRU barge-based infrastructure option that Tema LNG is developing with CHEC and Jiangnan Shipyard provides Ghana with one of the lowest-cost routes to LNG imports possible. The Ghana example might prompt other sub-Saharan nations seeking to develop gas-to-power projects, like Senegal, Namibia and South Africa, to weigh up the FRU barge option.