Ghana 1000 misses 2015 FID, but on track for 2018 startup
The Endeavor Energy-led Ghana 1000 power project will not make FID as planned before the end of the year. But the partners are negotiating a gas sales agreement with the government and still plan to start construction on the 1.3 GW project in 2016.
The implementation of the International Monetary Fund’s austerity programme in Ghana has delayed power projects across the country, which is suffering a 500 MW deficit.
“[Nevertheless], during this time, Ghana 1000 has significantly advanced, having completed most of its development activities,” Sean Long, Endeavor’s chief executive, told Interfax.
“The DFI [development finance institution], multilateral and ECA [export credit agency] lending community remain eager to finance Ghana 1000. Due diligence on the project is being conducted by the World Bank, the African Development Bank, OPIC [Overseas Private Investment Corp.] and others, and we expect to achieve financial close in 2016,” he added.
The $1.9 billion project, which will be located in Aboadze in western Ghana, will be brought online in stages. While it has been referred to as potentially sub-Saharan Africa’s first LNG-to-power project, “[it] was always conceived as a flexible project to take into account indigenous gas”, said Long.
The first 750 MW, which is due online by 2018, will be supplied by Eni and Vitol’s Sankofa gas field, which lies 60 km off Ghana’s coast. The remaining 750 MW is expected onstream by 2020, although the final fuel supply mix for this phase has yet to be decided.
“We are currently working with the government of Ghana to ensure the project utilises a fuel mix that will ultimately lead to the best value and reliability for Ghana,” said Long.
Excelerate Energy has been selected to supply a 14 million cubic metre per day (MMcm/d) FSRU – which would be capable of regasifying enough fuel for up to 3 GW of power. Shell will supply the LNG under an oil-linked contract.
Ghana has already committed to buy all the gas produced from the Offshore Cape Three Points (OCTP) complex – of which Sankofa is part – between 2018 and 2036 for use in domestic power generation. However, having an end-user such as Ghana 1000 guaranteeing offtake “will be even more positive for the [OCTP] project”, Jubril Kareem, an energy research analyst at Ecobank, told Interfax. If Ghana 1000 and Sankofa can reach an agreement for offtake by Q1, Kareem is sure OCTP can reach an FID by Q3.
The OCTP development, which will cost an estimated $7.9 billion, comprises five fields: Sankofa East Cenomanian Oil, Campanian Oil, Sankofa Main Gas, Sankofa East Gas, Gye Nyame Gas. It will tap around 42.5 billion cubic metres of gas-in-place and around 500 million barrels of oil-in-place. IHS Energy estimates peak production at the complex will be 5.38 MMcm/d.
The financing for the project has already received a major boost following a $700 million guarantee from the World Bank. The agreement is in two phases: the first $500 million is to guarantee payment for offtake by Ghana National Petroleum Corp. under the gas sales agreement; the second phase is a $200 million enclave loan guarantee to enable to help Eni and Vitol secure project financing.
OCTP is slated to come online in 2018, but “as with just about any deepwater gas project, there is some likelihood of delays to the projected startup date”, said Josh Holland, a senior analyst with IHS.
“Probably the biggest area of concern for potential delays is gas commercialisation. The question is whether the necessary regulations and infrastructure will be in place and functioning properly by the time commercial production is set to begin. If not, at least some of OCTP’s gas will likely have to be reinjected or stored, as was the case with the Jubilee gas [field] and the Atuabo-related delays,” he said.
Ghana’s power deficit is estimated at 500 MW – excluding households not yet connected to the grid. To meet demand in the short term, the Ghanaian government has leased two power ships from Turkey’s KarPower. The first, a 225 MW vessel, was delivered into the port of Tema in November. The second should dock in H1 2016.
In the longer term, President John Mahama has promised to build an additional 3.67 GW of capacity over the next five years. More than 1 GW of this will come from OCTP, as well as associated gas from Tullow Oil’s TEN development and other offshore oilfields.