General Electric (GE), in co-ordination with Endeavor Energy, Eranove and Sage, has agreed to a supply term sheet with Shell and is negotiating terms of a long-term supply agreement for the Ghana 1000 LNG project.
Ghana 1000 is an integrated gas-to-power project which is likely to deliver 1300MW in two phases of development.
Apart from that, the project will also involve construction of a floating storage and regasification unit (FSRU) and related infrastructure for LNG imports.
The initial phase of the project will supply 125MW of power to the grid and is likely to be operational by 2016.
By 2018, production from the facility is expected to go up to 750MW, which will rise to 1300MW within five years.
GE Ghana CEO Leslie Nelson said: "We are delighted to have reached agreement with Shell on the key parameters of a long-term LNG supply arrangement and have entered into exclusive discussions on a long-term LNG supply for the Ghana 1000 project.
"Securing a reliable, flexible and affordable LNG supply arrangement is a critical piece of the puzzle to make this project a reality."
The power project is the largest in Sub Saharan Africa, and is expected to bring down the cost of power generation in Ghana, as compared to projects using light crude oil.
Endeavor Energy CEO Sean Long said: "Importing LNG offers tremendous flexibility for Ghana to manage its power fleet. As a lower cost alternative to light crude oil, LNG can be used not only on a long-term basis for new power projects, but can be imported on a spot basis to balance any short-term disruptions from Ghana’s domestic gas production or from diminished hydro production in years with low rainfall."