WAGL has secured LNG for the project, but has not revealed the name of the supplier.
Ghana is preparing for the startup of its first LNG import project in Q2 2016 – potentially the first of its kind in sub-Saharan Africa.
West African Gas Ltd (WAGL) – a 60/40 joint venture between Nigerian National Petroleum Corp. (NNPC) and Sahara Energy Resources – has contracted the Tundra FSRU from Golar LNG for five years, with the option to extend the deal for a further five years.
The Tundra, which has a send-out capacity of 14 million cubic metres per day, is undergoing final modifications in Singapore before it sets sail for Ghana. It will be moored in the port of Tema at a jetty now being adapted by WAGL.
Whether the project will meet its proposed startup date depends on how quickly WAGL is able to finish building this associated infrastructure, Jubril Kareem, an energy research analyst at Ecobank, told Interfax.
"While the vessel may be ready by the take-off date, it is highly unlikely that operations will commence at that time," he said.
WAGL has secured LNG for the project, but has not revealed the name of the supplier. However, as WAGL was specifically established to trade NNPC’s equity offtake from Nigeria LNG’s (NLNG’s) 22 mtpa Bonny Island plant, the assumption is the cargoes will come from there, said Kareem.
A source told Interfax that BP will supply the LNG, at least in the short term.
But given Ghana’s location, it would still make sense to source cargoes from Nigeria – or potentially Equatorial Guinea.
"BP has been a buyer of Nigerian LNG cargoes – mainly through tenders for [free-on-board] cargoes," Andy Flower, an independent LNG consultant, told Interfax. "I can see Nigeria being part of its supply source for Ghana, if indeed it has secured the contract to supply the FSRU."
An alternative source would be Trinidad & Tobago, where BP has access to LNG from Train 4.
A further supply option – which may make more sense if WAGL extends the contract with Golar – would be the Freeport LNG project in Texas. BP has contracted the full 4.4 mtpa of capacity from Train 2, which is scheduled to start production in 2018.
To secure LNG from Equatorial Guinea, BP would have to buy cargoes from BG Group, which is contracted to take the full 3.7 mtpa of LNG from the plant on Bioko Island. "Perhaps a swap with the BP-operated Tangguh LNG plant in Indonesia could be an option," said Flower. This could also be an option for the Nigerian cargoes.
BP was previously named as one of the potential suppliers to WAGL’s predecessor, the Tema LNG-to-power project proposed by Quantum Energy. Quantum had initially signed an agreement with Golar to use the Tundra FSRU for Tema, which Quantum had hoped would reach FID by June 2015. But Ghana’s shaky credit rating and a failure to secure the necessary government guarantees for power offtake have stalled the project, Interfax understands.
NNPC may have directly secured LNG from Bonny Island to export to Ghana. The drop in global LNG demand means there is plenty of supply available from the project.
Most of NLNG’s output is contracted for delivery to Europe and the United States, but in the past few years more than 50% has been diverted to alternative destinations, mainly in Asia but also in Latin America, said Flower.
"With the differential between European prices and Asian prices narrowing, less Nigerian LNG is being delivered to Asia. Volumes were down by 1.1 mt in the first 11 months of 2015 and I expect them to decline further in 2016," he said.
But relying on NNPC to secure offtake from NLNG would depend on the WAGL partnership enjoying the same support under Nigerian President Muhammadu Buhari’s government as it did under his predecessor Goodluck Jonathan – and "this is unclear at the moment", according to Kareem. "Since the change of government, a lot of contracts and JVs have come under scrutiny."
In August NNPC cancelled a 90,000 barrel per day crude swap agreement with Sahara on the grounds the contract was opaque and did not offer value for the NOC.
"If the government opened up the crude swap contract it could also open up the JV between NNPC and Sahara, [meaning] Sahara will no longer have the offtake – which would mean the regasification project in Ghana will have to source LNG from somewhere else or renegotiate with NNPC," said Kareem.