Ghana - An analysis of the natural gas market and the role of LNG

Ghana’s gas market has seen significant evolution since 2000, with new upstream developments and the construction of a pipeline allowing imports from Nigeria.

The Ghanaian gas market remains in a state of flux, as a new LNG terminal is being commissioned and significant gas demand increases are expected over the coming years. As such, Ghana makes for a particularly interesting case study of the role of gas in the energy development pathway of an emerging economy.

Baringa’s analysis has utilised information in the public domain, with some limited stakeholder engagement with local market participants to validate findings.

Key findings from the report include:

• Gas is expected to play a central role in the Ghanaian energy mix in the 2020s and beyond, as gas demand will increase significantly to support the country’s GDP growth, industrialization and electrification. The availability of stable gas supplies is a prerequisite to the unlocking of the benefits of growth for Ghana.
• With indigenous production too low to meet demand increases without additional volumes being delivered in the medium to long term, and against the backdrop of uncertain supply from the WAGP pipeline, the Tema LNG project will become an increasingly important part of meeting Ghana’s growing energy needs. The associated supply contract will enable the delivery of a stable and secure gas supply, which will likely be within the merit order of gas supply sources in Ghana, assuming the LNG is competitively priced.
• Increased availability and diversity of gas supplies is also expected to deliver a range of wider benefits to the country, contributing to Ghana’s energy transition away from oil products and potentially positioning Ghana as a regional energy hub.
• For these reasons, it will be essential to create a policy framework strengthening gas demand and ensuring a fair treatment of imports alongside indigenous sources, including through the adoption of policies and contractual positions ensuring high levels of utilisation of the LNG terminal and limiting fiscal and regulatory charges which may cause adverse price effects on Ghanaian consumers.

For more information on Baringa's work in this area, please contact:

Mashal Jaffery, Generation & Trading Team, Energy & Resources sector
E-mail: Mashal.Jaffery@baringa.com

Peter Thompson, Energy Markets & Analysis Team, Energy & Resources sector
E-mail: Peter.Thompson@baringa.com