Ghana Oil Industry: All You Should Know!
Whoever said African countries should desist from exploring for oil and gas within their domains over climate change deserves to have a rethink. Saying such in the midst of Africans, you might risk an arrest. The reason is, it is illogical to ask African nations to abandon God-given minerals that should have been extracted and developed to provide electricity, a major factor in production.
Africa is currently suffering from energy poverty and this has greatly undermined economic development on the continent.
Africa has well over half of its 1.2 billion still without access to electricity. However, luckily enough, some tangible oil and gas have been found in several African nations in the past 10 or so years which is a sign of hope that the solution to its age-long problem has finally arrived.
Ghana is one such African nation that has enjoyed the blessing of having a significant volume of oil and gas with which to lift many of its citizens out of energy poverty.
Between the last decade of the 1800s and the late 1990s, over a hundred onshore exploration oil wells had been drilled in Ghana without a significant find save for the Saltpond discovery of 1970, which was better than nothing to count on.
Post-1970, and after a series of bad luck with prospecting for oil, the oil explorers decided to ramp up exploration activities, this time with more attention focused on offshore.
To add gusto to that resolve, in 1983 the Ghana National Petroleum Corporation (GNPC) was established to help manage and coordinate the country’s oil and gas resources.
Estimated Oil & Gas Reserves
Ghana is among the top 10 oil-rich countries in Africa today. It has three major offshore oil and gas fields. These are the Jubilee, Tweneboa Enyera Ntomme (TEN) and Sankofa-Gye Nyame fields, each boasting huge reserves.
As of September 2023, there were 17 oil blocks in Ghana.
In 2004, the Ghanaian government entered into a direct negotiation with US-based oil firm Kosmos Energy and partners Anardako (a US leader in deep water exploration), Ghana Oil Company, and E.O Group (a firm formed by two US-based Ghanaians in 2002).
Luckily in 2007, these struck a huge deepwater find of an estimated 700 MMbbl and 800 Bcf of natural gas at the Jubilee Fields. This first commercial oil was specifically drilled at the Mahogany 1 exploration well and help projected Ghana into the ranks of oil-rich nations.
This was a big game changer for the former British Gold Coast, which for decades depended on gold and cocoa as a means of foreign exchange earnings.
This huge oil discovery marked Ghana’s entry into the league of major hydrocarbon-bearing nations. Also, it gradually began to attract Western oil investors who once classified Ghana as a high-risk area thanks to Jubilee which altered the equation.
Without delay, Irish company Tullow Oil Plc in 2010, announced its entry into the market when it successfully acquired the Ghanaian interests of EO Group Ltd for $305 million in cash and shares by December 1, 2010, and in that same month, oil production had already started at the Jubilee offshore field, shooting the West African nation into an oil-producing one.
As if that wasn’t enough, Tullow Oil and Kosmos recorded two new offshore finds; the TEN Fields (discovered in 2009) and the SGN Fields (found in 2011). TEN is short for the three drilling fields of Twenneboa, Enyenra, and Ntomme, while SGN is an acronym for the Sankofa, Gye-Nyame fields, a predominantly gas acreage operated by Eni and Vitol in JV with GNPC. The Sankofa field is also known as the Offshore Cape Three Points.
Given the abundant gas blessings found, the Ghana National Gas Company (GNGC) was formed in 2011 to handle infrastructure development for processing and transporting natural gas found alongside the oil.
TEN, Ghana’s second major field after Jubilee, with an estimated 240 MMbbl and 396 Bcf of gas, started production in August 2016, whereas SGN, with an estimated 500 MMbbl and 1.45 TCF of gas, started production in May 2017.
In October 2017, the Ghanaian government approved a development plan for the Greater Jubilee field to start drilling the Mahogany and Teak fields to up its production levels.
Search for New Finds
In search of more hydrocarbons offshore and attracting more foreign oil players, Ghana launched its first oil bidding round in October 2018, and none have been held since then, which suggests the fact that the government prefers direct agreements with industry contractors to have an open, competitive bid.
In December 2018, Ghana Oil (GOIL) announced a partnership with ExxonMobil and Ghana National Petroleum Corporation (GNPC) and they embarked on a deep-water exploration campaign in the Cape Three Points area in a bid to bolster Ghana’s presence in the petroleum industry as a continental player and increasing local oil production.
In 2019, Springfield Energy reportedly found proven reserves of 1.5 billion barrels and 700 billion cubic feet of gas in the West Cape Three Points (WCTP) Block 2, which was recently drilled. The firm’s CEO Kevin Okyere said that further explorations are to be made since the block is believed to host a total of 3 billion barrels of oil and gas.
With this discovery, the company became the first independent Ghanaian oil firm to have drilled a deep-water well and found oil and gas.
Today, Ghana —a West African nation of 33.34 million people – boasts 2.5 billion bbls of oil reserves as well as 22.7 billion cubic meters of natural gas.
Ghana currently produces around 200,000 barrels per day of oil, of which 150,000 originate from the Jubilee oilfield operated by Tullow Oil.
Major oil companies in Ghana
Following the Jubilee Wonder and others that came after it, international oil companies began to flock to Ghana to own a share of its finds.
Aside from the state-owned Ghana National Petroleum Corporation (GNPC), which is responsible for managing Ghana’s oil and gas resources, and the Ghana National Gas Company (GNGC), which focuses on the infrastructure for processing and transporting natural gas, other players are actively engaged in exploration and production activities.
These include Tullow Oil, Kosmos Energy, Eni, and Vitol, Exxon Mobil, Hess Corp., Norwegian company Aker Energy, Anadarko, Petro SA, and Ghana Oil (GOIL) Company Ltd.
The last —GOIL – debuted in 1960 as a private company, but became public in 2007. GOIL, owned by the government, is Ghana’s top oil company and is the only indigenous petroleum company in Ghana.
The Ghana National Petroleum Corporation (GNPC) enters into petroleum agreements on behalf of the government and functions as the national aggregator of natural gas from upstream operators to meet local market demands.
The major regulators in the industry are the Ministry of Energy, the Petroleum Commission of Ghana and the National Petroleum Authority.
The first serves as the central institution responsible for exercising Ghana’s sovereignty over its natural resources.
The second is tasked with the regulation and management of petroleum resources and also coordinates policies relating to these resources to ensure effective use.
The third supervises downstream operations in the natural gas sector, including activities from processing and storage to transmission and distribution.
Oil Revenue Allocation
The Petroleum Revenue Management Act (PRMA) set the rules on how oil earnings in Ghana are shared alongside the Public Interest & Accountability Committee (PIAC) which monitors monetary allocation from oil production.
Usually, a part of revenues from oil production goes to fund the Ghana National Petroleum Corporation (GNPC), another goes to the annual national budget, and the remainder is saved in the Ghana Petroleum Fund for future generations.
In the aspect of the budget, 70% of the oil fund that goes in is primarily earmarked for capital expenditure, with 30% meant for recurrent expenditure.
Impact on Ghana’s economy
The positive impact of the oil and gas sector on Ghana’s economy cannot be debated. They are there for all to see. The commencement of oil production in late 2010 brought huge revenues to the Ghanaian government, and this contributed to an annual economic growth rate of between 6 – 7% from then to before the pandemic.
Oil production in Ghana increased from 3,236 bbls per day in 2010 to 183,361 bbls per day in 2020.
Between 2011 and 2020, Ghana earned about $6.55 billion in oil revenues. By 2011, the GDP of Ghana had shut up by 40% from the previous year.
The three major oil fields in Ghana collectively produced a combined total output of 55.06 million barrels in 2021 and this translated to billions of dollars in earnings during this period.
Like elsewhere, the COVID-19 pandemic of 2020 dealt a blow to the Ghanaian economy and slowed its growth rate to 0.4%.
However, after the pandemic in 2021, the economic growth rate bounced back to 4.4%. And in 2022, it grew by over 5%.
Nevertheless, the pandemic had a significant negative effect on the economy as Ghana spent excessively on many unplanned eventualities. Also, the nation scamped for foreign aid to address expedient needs in its annual budget which was bloated at the time. Today Ghana is in a debt crisis and witnessing double-digit inflation as food prices soar.
Petroleum Opportunities in Ghana
Albeit a smaller producer compared to counterparts like Nigeria and Angola, it costs relatively less to develop oil in Ghana.
The nation is one of the fastest-growing hydrocarbon markets in Sub-Saharan Africa, and the government is incentivizing key areas in a bid to reduce over-dependence on imports. It imports significant volumes of refined petroleum products annually from Italy, the Netherlands and the UAE.
That suggests huge investment gaps or opportunities in its midstream and downstream petroleum sector. Isn’t it?
Though it boasts one of the oldest refineries in Africa (the 45KBPD Tema Oil Refinery built by Shell in 1956), Ghana currently doesn’t refine enough crude to meet domestic needs. It has only one operational oil refinery.
That’s the US$1.98 billion 5MTPA integrated refinery plant built by Chinese Sentuo Group, in the port city of Tema. The Sentuo refinery project is ongoing and will be completed in phases until 2025.
It is expected that Ghana will commence 17 oil and gas projects between 2023 and 2027.
(Bavijas)
