Ghana has begun processing gas from its offshore Jubilee oil field through a pipeline project that could save the government US$300 million a year on fuel costs even with the current steep drop in oil prices, state-owned Ghana Gas said on Wednesday.

The Atuabo gas plant is supplying 50 million cubic feet of gas per day to nearby thermal power generators operated by the Volta River Authority (VRA) power utility in the western town of Aboadze, a statement said. It has also produced 3,000 tonnes of liquefied petroleum gas and condensate as by products.

The project, financed by a loan from the Chinese Development Bank and delayed by several months, aims to ramp up production to 150 million cubic feet by the end of December.

"Atuabo remains a vital cushion for the current unreliable gas supply from Nigeria and would remain in operation for the long haul," Ben Asante, director of technical operations at Ghana Gas, told Reuters.

He referred to the West African Pipeline Company, which has failed to deliver the anticipated supply of gas from Nigeria.

Ghana suffers from an energy deficit that has led to power cuts for homes and businesses and helped slow economic growth in a country that has seen rapid expansion in recent years on its exports of gold, cocoa and oil.

Two more gas fields are expected to come onstream by 2017 to add to Jubilee, which is operated by British firm Tullow Oil.

The government is in talks with the Qatari government for the supply of natural gas and there are other private investments underway, including planned production by Italian energy firm Eni from the Offshore Cape Three Points (OCTP) block beginning 2017.