The Volta River Authority (VRA), the state power company of Ghana was seeking to replace oil-fired power generation with gas, and use gas to fuel new IPP investment. It appointed Gas Strategies to help it develop a rigorous understanding of the commercial and technical feasibility of an LNG-to-power project in Ghana. The key commercial drivers of the LNG-to-power project were: to provide a reliable source of gas to meet the growing demand for thermal power generation; to develop an import facility that can supply gas in a short lead time; and to ensure that commercial arrangements provide suitable flexibility to accommodate possible uncertainties in import volume and duration.
Our input moved the project approach from being one of gas/LNG “procurement” (on a fuel-on-fuel substitution basis) to identify how the role and supply of LNG could be optimised across the gas to power value chain within the full VRA portfolio, and understanding the risks and opportunities for VRA in the participation within an LNG-to-power project.
We worked with VRA to build up a detailed understanding of the potential evolution of gas and power supply and demand in Ghana at an annual, peak day and average day level; to understand the advantages and disadvantages of different project structures and business models and LNG/EPC contracting strategies; and to run two tender processes to receive and evaluate bids relating to (i) developing the integrated LNG supply & FSRU facility, and (ii) undertaking technical feasibility study for an FSRU import project.
As a result of our work, VRA further developed its capability and skills to make key decisions regarding the future role of gas within the wider power industry in Ghana, within the context of the Ghanaian gas industry’s own developments and also gained clarity on the role that it wished to take in a potential LNG-to-power project.