Kwaku Boakye-Adjei, Commercial Consultant, TEMA LNG
LNG is playing a key role in Africa’s move towards a lower carbon economy – tell us more about Tema LNG and its proposed impact to Ghana and more widely, Africa.
I believe that the economic and social development of Ghana, and Africa more widely, has long been held back by the extremely high price that consumers have been forced to pay for power and electricity. This affects all walks of life, from basic day-to-day living to long term development plans. The Tema LNG terminal aims to solve this issue by connecting Ghana to a reliable global supply of cheap, environmentally friendly energy in the form of LNG.
I think that Tema LNG will show that African-led projects, financed and built by those that really understand the market, can contribute significantly to a cleaner economic future for the continent. As the terminal comes online, a significant number of industrial and commercial businesses are predicted to move away from dirty fuels currently in use and to adopt LNG, which is much cleaner to use yet also commercially preferable.
Tema LNG shows that Africa can have economic development in a way that is commercially attractive and environmentally sustainable.
Attendees at the ‘Spotlight on Africa’ session at the World Energy Capital Assembly (WECA X) were asked ‘Do the capital markets understand the transition story in Africa?' with 73% of the audience saying ‘No, they are using Western criteria around ESG even in developing countries’ – how can this state of affairs be reversed? How can this message be best conveyed to the capital markets?
The capital markets need to take the same nuanced and bespoke approach to investment in Africa as they do in other jurisdictions. That means acknowledging that Africa has its own path to achieving a carbon neutral future. In Africa’s case, for example, that means focusing on the losses that result from electricity transmission which could reduce carbon emissions by up to 25%.
This, coupled with a move to gas, could lead to a 50-60% reduction in carbon emissions. The equivalent reduction in emissions in the developed world can only be achieved through a wholesale adoption of renewables, but in Africa’s case a different transition approach can yield the same results. Investors should therefore adapt their strategies to reflect these sorts of realities.
Tema LNG is sub Saharan Africa’s first regasification facility and a project that you spoke passionately about at the World Energy Capital Assembly (WECA X) – the project has created quite a buzz. What should differing profiles be looking for here and how are you looking to engage with them?
There are a number of lessons that investors and anyone doing business in Africa can learn from the development of this terminal. I think that, irrespective of industry and area of operation, it is vitally important to have strong fundamentals to underpin any project. This breeds confidence and ensures that everyone along the value chain – from the supplier, to intermediaries, to the eventual client – are all aligned towards the same goals and are all pulling together to overcome any obstacles in order to make the project work.
Take LNG. West Africa as a whole has for some time flirted with the idea of introducing a supply of LNG, but the Tema LNG Terminal Company (TLTC) is the first to have succeeded. I believe this is down to a combination of factors: firstly, the operational context of Ghana – stable politics, respect for contracts and the strong rule of law – was attractive and reduced the risk for investors; secondly, TLTC was planning to build a solution that was bespoke for Ghana and met its precise needs, not merely adapting an offering from a previous project; and thirdly – and perhaps most importantly – the demand was there from the start.
These strong fundamentals allowed everyone to work together to make this project a success, from Shell as the supplier, to financial institutions like the Emerging Africa Infrastructure Fund that provided capital along the way, to the Ghana National Petroleum Company (GNPC) as the client.
Finally, what objectives do you have for 2021, what excites you about the next twelve months and what should the Energy Council network keep their eyes peeled for?
My immediate objective is to work hard to ensure the success of Tema LNG! But more broadly, I am looking to identify more opportunities to support low carbon development across the continent. The next year should see a real buzz around Africa as the world re-emerges from the pandemic, and I believe the fundamentals for success are in place in a whole host of countries in a wide range of areas.
We expect to see many more countries following Ghana’s approach and investing in gas infrastructure as the means to expedite their journey to a low carbon future.
Tema LNG Terminal Company (TLTC) is Ghana’s first LNG import, storage and transportation company. TLTC was incorporated in 2017 and is headquartered in Accra.
TLTC is owned by a consortium led by Helios Investment Partners, the largest Africa-focused private investment firm. TLTC will employ the innovative combination of a purpose-built floating storage and regasification unit (FSRU) twinned with an existing LNG carrier, to receive, store and regasify the LNG. This system provides Ghana with all the functionality of a large scale FSRU-terminal, but with added flexibility and at a reduced cost.
The Tema LNG facility will have the scalable ultimate capacity to deliver roughly 3.4 million tonnes of LNG a year, which is equivalent to approximately 500 million cubic feet per day of natural gas. That is 30% of Ghana’s generating capacity, allowing LNG to displace crude oil for a cleaner, cheaper energy solution.
TLTC aims to leverage the skills and technologies of our strategic partners to develop world class LNG infrastructure in Ghana and achieve top performance in its operations by investing in its people and footprint area.
The project will position Ghana as a regional hub for LNG, providing a significant opportunities for long-term growth for Ghana and for the wider West African region.