Business24 Newspaper 8th February, 2021

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MONDAY FEBRUARY 8, 2021

BUSINESS24.COM.GH

MONDAY FEBRUARY 8, 2021

NO. B24 / 156 | NEWS FOR BUSINESS LEADERS

BoG unveils new liquidity policy to bolster financial T stability

Parliament builds capacity with office of budget and fiscal analysis

By Eugene Davis ugendavis@gmail.com

he Speaker of Parliament, Alban S. K. Bagbin, has said the House will soon operationalize an office of budget and fiscal analysis to strengthen its financial oversight activities, Cont’d on page 3

Tullow hires Maersk drillship for Ghana campaign

Dr. Ernest Addison, BoG Governor

By Joshua Worlasi Amlanu macjosh1922@gmail.com

T

owards achieving its financial stability objective, the Bank of Ghana (BoG) has developed a policy and operational framework for providing Intraday Liquidity Facility (ILF) and Emergency Liquidity

Assistance (ELA) within the banking sector.

The central bank said the framework has been designed to address weaknesses that were identified during the recent banking sector crisis, and it aims to promote transparency and better liquidity planning by financial institutions while protecting

ECONOMIC INDICATORS EXCHANGE RATE (INT. RATE)

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POLICY RATE

14.5% 14.77%

OVERALL FISCAL DEFICIT

11.4% OF GDP

AVERAGE PETROL & DIESEL PRICE:

4.2% GHC 5.13

O

ffshore drilling contractor Maersk Drilling has received a conditional letter of award (CLOA) from Tullow Oil for the provision of the ultra-deepwater drillship Maersk Venturer and additional services for a development drilling campaign at the TEN and Jubilee fields offshore Ghana.

Cont’d on page 3

Cont’d on page 2 INTERNATIONAL MARKET

US$1 = GHC 5.7606

GHANA REFERENCE RATE PROJECTED GDP GROWTH RATE

the balance sheet of the BoG. During the banking crisis, the BoG revoked the licences of nine universal banks, 347 microfinance companies, 39 microcredit companies, 15 savings and loans companies, eight finance house companies, and two non-bank institutions.

BRENT CRUDE $/BARREL NATURAL GAS $/MILLION BTUS GOLD $/TROY OUNCE

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$543.75

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$123.55

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Editorial / News

MONDAY FEBRUARY 8, 2021

Editorial

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Two pieces of good news

ast week, the Speaker of Parliament Alban Bagbin indicated that Parliament will soon establish an office of budget and fiscal analysis to help its work of keeping the public purse tidy.

It is important to note that while the functions of the office have been prescribed in the Public Financial Management (PFM) Act 2016, such an office conforms to best practice as seen developed economies like USA and the United Kingdom.

In the USA for instance, the Congressional Budget Office (CBO) provides congress with objective, nonpartisan, and timely information, analyses, and estimates related to federal economic and budgetary decisions.

The UK’s Office for Budget

Responsibility (OBR) performs a similar function to the USA’s CBO where it provides an independent and authoritative analysis of the UK’s public finances.

According to the Speaker of Parliament, not only does Parliament intend to fulfill the requirement of the PFM Act but it also wants to use the yet-tobe established office to provide MPs with requisite expertise and knowledge to aid them in the discharge of their duties.

There is no denying that such an office when well resourced would serve a very useful purpose that will help law makers to properly scrutinise government’s budget as well as other policy proposals brought before the house.

As seen in other jurisdictions,

the Business24 expects that the office of budget and fiscal analysis would be made nonpartisan as much as possible to protect the integrity of its work.

And in other news that bids good omen for the country, Tullow – the lead partner at the Jubilee Fields, has announced it has engaged a drillship to facilitate its work in Ghana.

Following the outbreak of the pandemic and the collapse of crude oil prices, oil companies generally stalled over spending to drive production. But this news means that slowly the economy is waking up to life beyond the virus.

This paper urges every company, while sticking to the covid protocols, to plan life beyond the virus as well.

BoG unveils new liquidity policy to bolster financial stability Continued from cover

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According to the policy framework document, the ILF is to support efficient functioning of the payment and settlement systems, whereas the ELA will provide liquidity support to eligible and solvent banks, savings and loans companies, and finance houses (BSFs) facing temporary liquidity challenges.

The bank said the two liquidity instruments are expected to supplement the Global Master Repurchase Agreement (GMRA)backed reverse repurchase facility that it currently provides to banks as part of its monetary policy framework.

The BoG has already set up the Ghana Interbank Settlement (GIS) system to settle high-value interbank payment obligations in real time.

Under this system, participating banks are required to maintain sufficient positive balances in their settlement accounts to meet their obligations within the GIS

system on a real-time basis.

This has largely help prevent settlement failures which could adversely impact financial stability and monetary policy transmission.

Acknowledging that prolonged liquidity shortages could fuel solvency challenges, with ramifications for financial stability, public confidence and the economy, the BoG said it will continue to discretionarily

exercise its lender of last resort function, subject to defined preconditions of the ILF and ELA. The ELA accessed by a regulated institution will solely be used for honouring customer withdrawals and meeting maturing noncapital-related debt obligations, as shall be indicated in the request to the BoG. All other uses, including payments to affiliates, insiders and related parties, are prohibited.

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Parliament builds capacity with office of budget and fiscal analysis Continued from cover as required by the Public Financial Management (PFM) Act 2016.

Mr. Bagbin was speaking at the opening of a three-day orientation and induction workshop for new Members of Parliament at Ada in the Greater Accra region.

“The setting up of the office is in compliance with the PFM Act, but more importantly, it was set up in response to the numerous complaints from MPs of the lack of much-needed expertise and relevant information to assist members interrogate financial proposals and other agreements brought to the House by government,” he said.

Describing the work that the office will undertake, he added: “Members don’t have the time to go through [the budget], and they do not have the wherewithal to be able to subject the budget to proper scrutiny, so we are putting a budget and fiscal analysis office

Speaker addresses 123 new MPs at an orientation workshop.

in place to undertake these analyses—not only with regard to the budget but also other policy proposals, including international financial agreements laid before the House. We believe that this will enrich the consideration of such proposals and agreements.”

The Speaker also revealed that in line with best practices in the world, a Budget Act is also

being proposed. He said it is a private member’s bill which will soon come before the House for consideration.

Furthermore, Mr. Bagbin announced that the department of budgeting, policy planning, monitoring and evaluation is nearing completion and full operationalization.

It will oversee the

implementation of Parliament’s strategic plan for 2020–2024 and report on performance vis-à-vis the desired goals and objectives.

The Speaker said the department is committed to achieve the goals set out in the plan and will leave no stone unturned to achieve its vision.

Majority Leader Osei KyeiMensah-Bonsu urged the new MPs to become well versed in the standing orders of Parliament and the Constitution, adding it will make them better legislators.

The Minority leader, Haruna Iddrisu, assured that his side of the House will not be a hindrance to President AkufoAddo’s government by rejecting all his proposals, bills, contracts or anything that would seek the interest of Ghanaians.

“We should have a unanimous action that is aimed at improving the quality of life of the Ghanaian.

Ghanaians want parliament to build consensus,” he said.

Tullow hires Maersk drillship for Ghana campaign Continued from cover Maersk Drilling said on Thursday that the duration of the final contract is around four years, with an expected start in the second quarter of 2021.

The estimated value of the final contract is approximately US$370m, excluding the value of the additional services provided and performance bonuses.

The operation will be supported by local partner Rigworld. The

final contract has a progressive day rate structure for the full duration of the contract.

However, after the initial period of 18 months, the contract has a provision to shift to a marketlinked day rate structure. The

final contract is conditional upon certain regulatory conditions being met.

CEO of Maersk Drilling, Jørn Madsen, said: “We’re delighted to get this opportunity to secure a long-term contract for Maersk Venturer, as Tullow once again shows confidence in Maersk Drilling’s ability to deliver stable and highly efficient operations to their major development projects in Ghana.

“This also means that we will be able to continue our work with the Ghanaian community and local suppliers who have previously contributed to our West African operations.”

The Maersk Venturer drillship has been working for Tullow offshore Ghana since February 2018.

The drillship in August 2020 received a 60-day extension of a contract from Tullow for operations off Ghana, under which it operated until the end of August.

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News

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FDA sensitises staff on stress management T he Human Resources (HR) Department of the Food and Drugs Authority (FDA) has organized a virtual Stress Management sensitisation training for the members of management and entire staff of the Authority. This virtual training took place on Friday, the 5th of February,2021.

The purpose of this training was to empower staff in managing both personal and work-related issues that result in stress especially during this COVID-19 pandemic. The Head of the Human Resources Department, Ms. Mary Mintah expressed the need for such a training for staff to enable them better manage stress at the workplace. She further emphasised that, stress must be effectively dealt with to achieve progress within the FDA. She also touched on some personal and work-related issues that staff experience and urged staff to participate fully in the training because of its relevance to our day-to-day activities.

Mr. Andrew Manomey,

Deputy Head, Human Resources Department took the members of management and staff through a presentation on stress management.

He indicated that stress represents any internal or external stimuli, force or event that appears challenging, threatening, promising or hurting and which has an effect on the survival of the individual whether real or perceived. According to him, everyone experiences stress to some degree. The way one responds to stress, however, makes a big difference to their overall well-being.

He further explained the positive and negative effects of experiencing stress. In addition, he touched on certain key factors that cause stress in our daily lives. Some of these include performance targets, institutional reorganizations, finances, abusive relationships, work load, work environment etc. In conclusion, he gave recommendations on how to better and effectively manage oneself and work when

experiencing stress.

The Head of the HR Department in her response to some questions reiterated the open-door policy with which the HR Department operates. She encouraged staff to contact the office anytime they were experiencing stress and needed help.

She further urged the staff to keep healthy and stay safe by following all the laid down COVID-19 protocols at all times in order to give off their best to the Authority as the well-being of staff is a priority to members of

management of the Authority.

Furthermore, she added that when all staff stay safe and healthy, the FDA can deliver on its mandate to the good people of Ghana.

Some staff who gave their feedback on the training said, “I learnt about the negative effects of stress on my output and also things to do to avoid stress. `I have been reminded on the need to exercise, eat a balanced diet and remain calm in times when I am experiencing stress’’.

Ghana receives €9.7m EU grant to improve access to power in sub-region

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he European Union (EU), through the French Development Agency, has approved a €9.7-million euro grant for the Ghana Grid Company (GRIDCo) to boost infrastructure works on the interconnection line between Ghana and Burkina Faso.

A joint press statement said the grant was expected to increase electricity access in Northern Ghana and exporting capacity to the sub-region, especially Burkina Faso.

The EU grant facility will be used to finance the upgrade of an 18km long 161kV transmission line located between Ahodwo and Anwomaso substation in Ghana’s second largest city, Kumasi.

It will also support power transfer capacity from the South of the country up to Burkina Faso, through the 330kV line from Kumasi to Bolgatanga as well as reductions in transmission losses.

The 330kV line project was initially financed with a US$174 million loan from AFD to GRIDCo and a 4.8 million euros technical assistance grant from the EU. The €9.7 million grant agreement was signed in Accra

by AFD Country Director, Christophe Cottet and GRIDCo Chief Executive, Jonathan Amoako-Baah.

The EU Ambassador in Ghana, H.E. Diana Acconcia and French Ambassador to Ghana, AnneSophie Avé, were present at the ceremony.

Mrs Diana Acconcia emphasized the project’s contribution to securing the overall GhanaBurkina Faso interconnection line, which is a priority under the West African Power Pool (WAPP).

“It is a great example of European partners coming

together to support integration of regional electricity markets.

This project will also directly benefit Ghana. It will enhance the efficiency and reliability of the transmission network, and strengthen the electricity flows to the North. Thus, contributing to the industrialization of those regions and unlock new economic opportunities”.

Mrs Anne Sophie Avé, Ambassador of France to Ghana said: “France is a long time and constant partner of GRIDCO. When GRIDCO most needed support, France was there,

through her operator, the AFD. Because the only way is up and forward, this new project, supported by EU and France, will strengthen one of the largest development investments of France for Ghana, to enhance and upgrade electricity transport in Ghana and from Ghana.

It will improve the reliability of energy distribution and bring revenues to the country through exports of over-production.

This exemplary partnership between Ghana and France will provide sustainable “greener” growth, jobs and revenues for the Ghanaian people”.

Jonathan Amoako-Baah, GRIDCo Chief Executive said: “This financial support from the EU represents a significant investment in our quest to remain the leading power transmitter in the sub-region.

Our long-standing relationship with the EU, through AFD, continues to prove instrumental in the delivery of quality access to electricity in West Africa, in line with Goal 7 of the Sustainable Development Goals (SDGs).”

GNA

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Feature

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It’s so easy to fall in love with great networking!

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OVE is in the air. Love is all around us. And why shouldn’t it be. It’s Valentine’s Day, and love will be the focus for many people throughout the day. Romance lives on around the world, and long may it do so.

Here at BforB we love our partners, those of us in a relationship; that’s in our personal lives, while professionally, love is a very important part of every day. It is so important to love what we do for a living, and for those of us who run a business we have to feel passionate about every aspect of it, ultimately so it is successful, and continues to thrive.

Networking is something you should love doing to get the best out of it. Like anything in life, if you do it half-heartedly you will struggle to make an impact.

But if you do it from the heart, then your enthusiasm will rub off on you. And that’s what we encourage at BforB. Love your networking. Love coming along to the meetings, love getting referrals, and giving them too; love the support you get from fellow members, and love that the meetings are structured

and well organised to make sure members and guests take the most out of them, but informal and fun at the same time. A little bit of fun goes a long way!

We are loving growing our BforB brand in Ghana. And we are also loving the enthusiasm of new members and guests, who are coming along to a meeting, and are completely blown away by their experience.

Take Nat for instance, a member of the BforB Ghana group. A seasoned networker, he says BforB works perfectly for him.

He said: “You name it; I’ve tried it when it comes to networking.

Some networking groups were too formal and overly zealous in how you contribute, which I felt uncomfortable with; some were too informal, where you turn up and only get to meet a handful of people for one reason or another.

“There were other networking meetings I went to which were ok, but just didn’t work for me as a PR and media specialist, and though I am in no doubt at all about the importance of getting out there and networking, I wasn’t enjoying it.

“I enjoyed the meeting from start to finish, but what really

appealed to me is that you weren’t made to feel like a naughty schoolboy if you were unable to make a contribution, there was a chance in the middle of the meeting to follow up on some of the pitches, the spotlight presentation was fascinating, and it had me hooked.

“Oh, and the 60 seconds although new to me, it was lovely– and I now look forward to it every other Tuesday since I’ve joined! Which is another thing, BforB meetings are every other week, not weekly, which suits my commitments perfectly.”

Nat’s is a great testimonial to BforB, and we’re delighted to have him on board in Ghana. If you would like to see how BforB could work for you and your business, then check us out online: https:// rb.gy/qrf4pl We think you’ll LOVE it, too!

Authored by: BforB Ghana | Networking Clubs

Business for Breakfast (BforB) is internationally recognised for creating successful networking meetings, events and training for referral marketing. Our global offices are in Australia, Germany, Czech Republic, Spain, Slovakia, Ghana and headquartered in UK. We create an environment where you can build quality relationships within your group, backed up by an ongoing member support programme. BforB is committed to helping small to medium scale businesses expand.

In our professional network, members meet regularly in business networks to develop relationships, support each other and to share and record referral business.

We are here to help you get new business from quality business introductions and referrals made through our meetings.

Kindly join our next meeting using this link: https://rb.gy/qrf4pl Contact us: 059 4 016 432 | info@bforbgh.com | Facebook & LinkedIn: @bforbghana | www. bforb.co.uk

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BOPP’s earnings continue to benefit from higher CPO prices

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enso Oil Palm Plantation (BOPP) has reported a topline growth of 29.5%, against 20.9% in the same period of 2019, to GH¢ 123.82 million in 2020 on the back of higher palm oil prices emanating from increased demand from China and India as well as production squeeze arising from labor shortages in key producing countries in the midst of the covid-19 pandemic.

Commodity data from the World Bank shows that the price of Crude Palm Oil (CPO) rose by 33.1% to US$ 1,016.37 per MT in 2020 while that of Palm Kernel Oil was up by 26.3% to US$ 1,224.87 per MT. Although operating expenses grew by 16.6% in 2020, compared to 2.2% in 2019, to GH¢ 11.19 million in FY2020, the growth was still below revenue growth. This helped to reduce the operating expense ratio (operating expenses/revenue) by 100bps to 9.0% in 2020 from 10.0% in 2019.

BOPP’s profit margins were enhanced by the rise in revenue plus the drop in the operating

expense ratio. Profit before tax jumped by 124.8% to GH¢ 29.39 million in 2020 while profit after tax surged by 155.8% to GH¢ 24.70 million in 2020. The PAT margin nearly doubled to 19.9% in 2020 from 10.1% in 2019.

Global palm oil prices are expected to remain very strong

in 2021 on the back of anticipated weak production arising from unfavorable weather pattern in key producing countries. In contrast, demand is expected to remain strong in 2021 on the back sustained robust demand from China and India, and enforcement of higher biodiesel mandates

in Malaysia and Indonesia. In addition, anticipated disruptions to the supply of competing vegetable oils (soy, sunflower and rapeseed) could lead to increased demand for palm oil, which could push prices up.

Source: Doobia.com

Ecobank Nigeria to issue US$300 million Eurobond

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he subsidiary of Ecobank Transnational Incorporated (ETI),

Ecobank Nigeria, is set to issue a US$300 million Eurobond that would be listed and traded

on the London Stock Exchange, pursuant to the United States Securities and Exchange

Commission Rule 144A and Regulation S (the “Transaction”).

The proceeds of the Eurobond will provide medium term funding and help to enhance the capacity of the Bank to support international trade and service in Africa.

Further, the Notes, which will be issued through a Dutch special purposes funding vehicle, will be listed on the London Stock Exchange.

In view of the foregoing, ETI notified the Ghana Stock Exchange and the investing public of the proposed launch of the Notes by the Bank.

“The Bank intends to list the Notes on the London Stock Exchange, with the expectation that the Notes will be traded on its regulated market,” the bank stated.

“The Central Bank of Nigeria has confirmed that it has no objection to the Transaction.

It should be noted that the Transaction is subject to prevailing market conditions and the conclusion of the necessary Transaction documentation,” it noted.

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Feature

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Carbon-Neutral or Green LNG: A Pathway Towards Energy Transition

By Dr Hussein Moghaddam Introduction According to the latest, 2020 edition of the Gas Exporting Countries Forum (GECF) Global Gas Outlook 2050, the demand for natural gas is expected to rise by 50% from 3,950 billion cubic metres (bcm) in 2019 to 5,920 bcm in 2050, as gas remains the cleanest-burning hydrocarbon. In spite of that, meeting global targets for climate change mitigation is one of the biggest challenges.

Significant emissions are released through the combustion of gas to drive the liquefaction process, while any carbon dioxide (CO2) detached before entering the plant is frequently emitted into the atmosphere.

Subsequently, investors, regulators, and customers exert mounting pressure on the gas industry, as it needs to do more to accomplish climate objectives and focus on reducing emissions.

More than 120 countries have already developed a climate risk strategy that sets target to reduce greenhouse gas (GHG) emissions to net-zero by 2050. As natural gas has a central role to play in mitigating carbon emissions, LNG producers have started to look for ways to minimise or counterbalance their carbon footprints, thus ongoing LNG decarbonisation efforts are likely to expedite. Accordingly, top LNG producers, traders, and consumers have indicated their plans in order to decarbonise the

LNG supply chain. This is being done in two ways: by offsetting emissions from individual cargoes retrospectively, as well as by building low-emission liquefaction terminals. As a result, the “Green LNG” term has appeared as a new product within the LNG industry.

Carbon-neutral or Green LNG The carbon-neutral or Green LNG market is an emerging prospect whereby “Green” indicates either the reduction of GHG, or the offset of GHG emissions, linked to some, or all elements of the LNG value chain - from production of upstream gas and pipeline transportation, to liquefaction, transportation, regasification, and downstream utilisation of natural gas.

Companies in the LNG valuechain can diminish GHG emissions in numerous ways. For instance, by using biogas as feedstock; by decreasing emissions from upstream, pipeline, and liquefaction facilities; by applying renewable energy to power their liquefaction plants; respectively, by using carbon capture, and storage (CCS), or carbon capture, utilisation and storage (CCUS) technologies by reinjection of CO2 into the subsurface after it had been detained during the processing of the feed gas before liquefaction.

Therefore, it should be taken into account that carbon-neutral does not mean that the LNG cargo generates zero emissions, rather that LNG sellers can

counterbalance their GHG emissions by obtaining offsets to compensate for all or part of their GHG emissions or the utilisation of carbon credits, which reinforce reforestation, afforestation or other green projects.

It is worth nothing that last year the leaders of the G20 endorsed the concept of the circular carbon economy (CCE) and the GECF is the part of this process. The CCE aims to include a wide range of technologies such as CCS/CCUS as a way to promote economic growth and to manage emissions in all sectors.

In contrast, Qatar Petroleum (QP) is the company that applies a combination of strategies to reduce its emissions. Its future LNG production will be lowcarbon based, as the company is building a CCS facility alongside its 126 mtpa liquefaction capacity expansion by 2027.

As part of its new sustainability strategy, QP has announced that its aim is to reduce the emissions intensity of its LNG facilities by 25% by 2030. The capture and storage of CO2 from its LNG facilities of about 7 mtpa by 2027 is another goal. Furthermore, QP aims to drop emissions at its upstream facilities by at least 15%, as well as cut flaring intensity by over 75% by the end of this decade. Additionally, by 2030, QP is attempting to abolish routine flaring, and by 2025, the company would like to minimise fugitive methane emissions along the gas value-chain by establishing a methane intensity target of 0.2% over all of its facilities .

In certain supply contracts of the company, environmental considerations are incorporated as well. In November 2020, QP signed the first long-term deal with “specific environmental criteria and requirements”, which was designed to minimise the carbon footprint of the LNG supplies with Singapore’s Pavilion Energy, and to provide 1.8 mtpa of LNG over a 10-year period.

In order to fulfil the objectives of decreasing GHG emissions, CCS also helped the case in Australia. Chevron is the operator of the 15.6 mtpa Gorgon LNG offshore Western Australia and has injected more than 4 million tonnes of CO2 in the CCS facility since its commissioning in August 2019.

Meanwhile, NOVATEK has embraced a long-term methane emissions reduction target by 2030 in Russia, mainly to diminish methane emissions per unit of production by 4% in the production, processing and LNG segments. Moreover, the company aims to decrease GHG emissions per tonne of LNG produced by 5%. In this regard, NOVATEK and Baker Hughes, which provides engineering and turbomachinery at Yamal LNG, signed an agreement to introduce hydrogen blends rather than solely running methane from feed gas into the main process for natural gas liquefaction to reduce CO2 emissions from NOVATEK’s LNG facilities.

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15 CONTINUED FROM PAGE 13 Bio-LNG will have a significant role in the coming years to form the heavy road and water transport in the Netherlands. The construction of the first Dutch bio-LNG installation was launched in Amsterdam last November.

Renewi (the waste management company), the Nordsol (for processes the biogas into bio-LNG) and Shell (to sell this bio-LNG at its LNG filling stations) have developed this project. Biogas is made up of roughly 60% methane and 40% CO2. An additional CO2 cutback takes place due to the recycling of the CO2 by-product in the market, which results in a 100% CO2 neutral fuel.

Inpex, which is Japan’s biggest oil and gas producer, has recently disclosed its strategy to become a CO2 net-zero company by 2050 by developing its renewable and hydrogen energy together with the utilisation of carbon capture technologies. Japan has also stated in October 2020 that the country would become carbonneutral by 2050.

Two major LNG importer regions, namely Asia-Pacific and Europe, have already set policies regarding long-term decarbonisation targets. It is worth noting that most of the carbon-neutral LNG cargoes have been supplied by companies are in Asia to a certain extent, where

MONDAY FEBRUARY 8, 2021

carbon policies and investor pressure are fairly fragile.

According to the 2020 Edition of the GECF Global Gas Outlook 2050, it is forecasted that LNG imports to Asia will increase to about 800 bcm (585 mt) by 2050, and with 71% of global LNG imports, the region is set to be the driving engine for global LNG demand growth. As concerns with air quality rise in numerous Asian countries, the most realistic solution to attain a decarbonised society in the future by minimising the level of CO2 on a global scale, is the combination of natural gas and renewable energy. Thus, emissions and cleaner-burning fuels are going to be the centre of attention.

Europe could be the predecessor for carbon-neutral LNG in the long-term, by sticking to its new methane strategy, which was revealed by the European Commission (EC), and in accordance with their 2050 carbon-neutral goal. Importantly, the EC suggested LNG producers to engage with their international partners to explore possible standards, targets, or incentives for energy supplies to the EU. Which part of the LNG value-chain should take responsibility?

An LNG seller will probably need to diminish and offset GHGs,

which emphasises the need for robust offset markets in order to be completely carbon-neutral through the entire LNG valuechain.

Accordingly, this highlights challenges for legacy LNG projects with limited means to decrease carbon, making them dependant on expensive market mechanisms. LNG producers have to keep the balance between the competitive fuel pricing and the expensive emissions reduction initiatives. Therefore, the question of who pays the additional costs to produce Green LNG is yet to be decided.

As noted, the balance of carbon emission is feasible for any LNG facility and can lead to carbon-neutral LNG cargoes.

Although, this is probably not a sustainable long-term process and does not directly cope with the project’s emissions, it is a good transformation for general LNG decarbonisation.

However, the GECF proposes that both sellers and buyers have to contribute to achieving emission targets. The discussions with respect to these issues should involve all LNG industry players, such as sellers, buyers, traders and policymakers, respectively.

A more focused perspective that targets minimising emissions in upstream and liquefaction might be more feasible for LNG producers. This will also associate

with the already ongoing efforts from them, as they have to control their carbon footprints under more pressure from the public and investors.

In conclusion, as LNG demand keeps expanding, the demand for Green LNG will grow as well.

Green LNG can help ensure that natural gas preserves its role as a crucial part of the energy mix, supporting climate goals over the energy transition period.

As stated in the 2019 Malabo Declaration, at the 5th GECF Summit of Heads of State and Government in Equatorial Guine, the GECF Member Countries, reiterate the strategic role of the development, deployment and transfer of advanced technologies for more effective production, and the utilisation of natural gas to enhance its economic and environmental benefits.

About the author

Dr Hussein Moghaddam is the Senior Energy Forecast Analyst, Energy Economics and Forecasting Department at the GECF Secretariat

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Markets

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