“For instance, if you enter into a 10-year supply contract and within the 10 year period, economic conditions change. The question is: Are you going to continue paying for it? These are big decisions that you need to think through before you take the step rather than jumping in and before you realise, you don’t need it anymore,” Mr Ellis added.
Currently, the authority does not have an LNG supplier and indications are that the current move would help diversify the country’s gas-to-electricity mix from the local market to external sources, where imported LNG would complement processed gas from the Atuabo Gas Plant.
Present gas supplies from Atuabo are unable to meet the national demand, thereby creating a deficit of about 350 million standard cubic feet of gas (mmscf). This informed the decision to turn to LNG, Mr Ellis said.
He, however, declined to mention when the negotiations would be completed to pave the way for the first electricity to be generated from LNG. “I am only saying that the case has been made that we need some amount of gas from somewhere and LNG seems to be the most available source to get the gas from,” he said.
He added that forecasts showed that in the near future, gas would take centre stage in the power production business.
Currently, electricity generation from both hydro and thermal sources have dipped because of low water levels from the hydro dams, inadequate fuel for thermal plants and a consumption from an expanding economy.
“Thermal energy production is dominating power production now and going into the future, we expect that thermal generation will take the centre stage of our energy production,” he said.
The case for LNG
Ghana’s gas reserves are estimated at approximately five trillion cubic feet (TCF).
Current estimates, however, show that thermal plants throughout the country required about 350 million standard cubic feet of gas (mmscf) per day to operate at installed capacity compared to the 150 mmscf that they currently get.
The shortage in supplies has translated into erratic power supply, which has impacted negatively on businesses.
“As we sit here, we are short of fuel to run our thermal plants. Therefore, there is a need to look for another source of gas and we are considering LNG, but the question is when we do need it and at what price,” he asked.
The supply of LNG to Ghana is expected to be on a long-term supply basis and this requires careful planning on the part of Ghana, Mr Ellis said. The country’s electricity demand is expected to move from 2,000 MW to 6,000 MW in the medium term before peaking to 8,000 MW in the long run. “The sources that we need to meet this demand are either hydro or thermal. Most of the high hydro sites have been exploited and what is left is very low; they can only give about 64MW and 95 MW,” he said.
VRA’s debt to WAPco
The VRA owes the West Africa Gas Pipeline Company (WAPco) more than US$80 million for gas it supplied to the country. Although WAPco continues to supply gas despite the indebtedness, its Managing Director, Mr Walter Perez, told the GRAPHIC?BUSINESS on the sidelines of the 3rd Ghana Gas Forum that VRA pays what was supplied to them on a monthly basis.
“VRA continues to pay what they owe us on a monthly basis. For us to remain a viable commercial entity, the debt must be paid,” he said. The 678-kilometre West African Gas Pipeline (WAGP) links the existing Escravos-Lagos pipeline at the Nigeria Gas Company’s Itoki Natural Gas Export Terminal in Nigeria and extends to a beachhead in Lagos. From there, it moves offshore to Aboadze, with gas delivery laterals from the main line extending to Cotonou (Benin), Lome (Togo) and Tema.