Ivory Coast, Ghana and South Africa are tipped to become front-runners in setting up integrated LNG-to-power projects. Developers can arrange attractive import terms as a glut of new gas supply is entering global markets while demand from key Asian buyers remains subdued.
“In the face of reduced offtake from traditional buyers” in northeast Asia, sub-Saharan Africa holds potential as a new market, BMI analyst said; yet "government support through pricing and offtake agreements is crucial for long-term gas import growth.”
Analysts anticipate that sub-Saharan Africa will become a “niche market for LNG” which will be mostly used for decentralised power generation. Plant operators have for long struggled with shortfalls in gas supplies, caused by a lack of pipeline infrastructure, illegal fuel syphoning or domestic gas shortages due to slow development of gas upstream assets at times of low oil prices.
Anchor for demand creation
As Ivory Coast, Ghana and South Africa have limited domestic consumption and infrastructure, BMI expects that integrated LNG-to-power projects in these nations will become “an anchor for wider demand creation. While alleviating electricity shortages at home, the small-scale liquefaction projects – often FSRUs – could help soak up the LNG glut on global markets.
South Africa’s Department of Trade and Industry created a gas industrialisation unit in May, which will initially focus on importing LNG as part of a gas-to-power program to add 3,126 MW of capacity between 2019 and 2025.
Ghana earlier this year signed a deal with Quantum Power for construction and operation of LNG storage and regasification facilities. The first floating unit (FSRUs) is meant to start up before the end of this year. Pointing at Ghana’s two main power hubs - one in the west, one in the east - energy minister John Abdulai Jinapor said ”nothing prevents us from putting in two LNG facilities.”
GNPC was appointed as Ghana’s gas aggregator. GNPC is currently negotiating the TEMA LNG project both as a short term answer to gas supply/electricity demand – ready to fill the supply gap until the Jubilee Field comes onstream. The Ghana-1000 project – backed by GE, Endeavor Energy and Finagestion – envisages to get a 360 MW simple cycle unit into operation by early 2017, which will be converted to combined cycle mode by 2018 produce 540 to MW.
As for South Africa, the Transnet National Ports Authority has identified Saldanha Bay and Richards Bay as appropriate ports to host FSRU vessels that are meant to underpin the country’s gas-fired IPP programme. An ambitious plan by the current government pushes to get over 3,000 MW of gas-fired generating capacity online between 2019 and 2055.