Commercial Oil Production In Ghana

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Oil

Ghana joined the legion of oil producing countries in 2010 as it marked the year, with commercial production of hydrocarbon resources.

wpid-jublee-oil.jpgProduction of crude oil begun with 85,000 barrels a day at the Jubilee Field off the coast of Ghana as announced by Tullow Ghana Limited, one of the jubilee partners.

The Floating Production Storage and Offloading has the capacity of processing 120.000 barrels of oil and injecting more than 230.000 barrels of water and 160 million cubic feet of gas per day.

Danish International Development Agency Ghana Business Development Profile 2012 said the oil production stands at 105,000 barrels a day with the discovery of more wells offshore.

In 2011, the structure of the economy changed dramatically as a result of the commercial oil production as it witnessed a significant growth in the industrial sector from 5.6 per cent in 2010 to 36.2 per cent at the end of the year.

The 2012 budget statement stated that the three oil liftings in the past amounted to 2,980,720 barrels worth $337.3 million or GH? 506 million. Of that amount, $112 million was transferred to the Consolidation Account and $54.8 million went into the Stabilisation Account, and $14.4 million was put in the Heritage Fund.

In 2012, the oil and gas sector contributed 8.0 per cent to Gross Domestic Product. Oil production during the second quarter period of 2012 fell short of projected output. Since the start of production at the Jubilee Field, Ghana has produced more than 37 million barrels of oil.

Currently the commercialisation of the oil has generated about $ two billion.

To ensure whether the state?s resource is managed effectively, Ghana News Agency sought the views of stakeholders on their perspective of the commercialisation of the country?s oil find.

GOVERNMENT PERSPECTIVE

Mr Emmanuel Kofi Armah Buah, Minister of Energy and Petroleum, at a meet the press encounter, echoed the signing of the eight new petroleum agreements to ensure improved fiscal terms.

The agreements involved the exploration and production of oil and gas in commercial quantities offshore the Cape three Points.

He said the agreements have been ratified by parliament with improved fiscal terms. The State?s initial and participatory interest, Ghana National Petroleum Company (GNPC) is to partner oil companies to operate a number of the blocks.

?The GNPC, in line with its strategy to acquire capacity to conduct petroleum operations on its own has taken commercial interest in a number of blocks and intends to operate these blocks with the contractor through the establishment of joint venture companies,? he added

He said the new agreements have paved the way for an aggressive exploratory campaign to be launched to add on new reserves in order to ensure that production profiles are maintained or increased.

However, civil society organisations including the African Centre for Energy Policy and some politicians have raised concerns that the agreements were rushed while less due diligence were done on the companies.

LOCAL CONTENT

Ghana passed the local content bill in November 2013 to encourage local participation in the oil and gas industry.

Mr Buah said there has been significant improvement in the number of local participation in the award of contracts since the inception of oil production.

From 2008 and the first quarter of 2014, $ 584 million has been awarded to Ghanaian companies.

He said the country has earned in excess of $ 2.1 billion dollars from the commercial production and export of crude from 2011 to June 2014.

Ghana is currently implementing its local content law expected to ensure that the citizens benefit from foreign investments.

Mr Buah explained that as at December 2013, a total number of 6,929 personnel were employed in the petroleum upstream sector.

?This consisted of 5,589 Ghanaians and 1,340, expatriates representing approximately 80 per cent and 20 per cent respectively,? he said.

Speaking at the 3rd Local Content Workshop for small and medium scale enterprises on the topic: ?Creating Opportunities for Local Content and Participation in the Upstream Petroleum Industry,? in Takoradi, Mr Buah said the country has a huge potential to grow and transform the economy through industrialisation, job creation and equitable distribution of wealth.

He said the passage of the Local Content Bill sought to increase utilisation of local expertise, goods and services and businesses along the petroleum value chain.

The Energy Minister noted that, the Commission has developed medium term strategies to ensure the smooth implementation of the law. This includes the development of guidelines, templates and monitoring and evaluation systems.

?The Commission regulates the engagement of expatriate workers by requiring all foreign companies in the sector to submit succession plans indicating the timelines and associated training requirements for Ghanaians to replace expatriate workers.?

He said there are about 152 Ghanaian companies out of 232 companies registered with the Petroleum Commission providing direct and indirect services to the upstream industry.

?Services provided range from catering, hospitality services, logistics supplies and freight forwarding, fabrication and waste management services.?

Mr Theophilus Ahwireng, Acting Chief Executive of the Commission, said his outfit has developed National Internship Programme, to provide graduates and technicians with the requisite skills and experience to address unemployment as well as bridge the skills gap in the oil sector.

EXPERT VIEWS

Professor Kwaku Appiah-Adu, Acting Dean, Central University Business School said the oil industry has lot of benefits in terms of financial and the opportunity to develop the country if the revenue is utilised productively.

?Many countries have used their natural resources revenue to develop their economy. For instance Trinidad and Tobago has moved from the third world to the first world working with its oil and gas resources effectively. Other countries are Norway, Brazil and Botswana which are into other sectors of natural resources,? he added.

Mr Mathew Kwaku Gyan, Manager of Jubilee Technical Training Centre said the new facility was opened on the Takoradi Polytechnic in Western Region in June 2013, funded by the Jubilee Partners.

He said the facility is the first vocational training centre in West Africa to offer NVQ level accredited courses for Instrumentation, Process, Mechanical and Electrical Engineering.

?I think were we are going is positive especially because of the creation of the local content to encourage local participation in the operations of the oil and gas industry. So far so good and we hope for the best,? he added.

CHALLENGES

Prof Appiah-Adu said there would be challenge in the industry if the proceeds earn from the oil resources go into the pocket of the few, which might end in competing interest and lead to conflict instead of developing the country.

The Fishermen Association in Sekondi in the Western Region have also expressed concern about the discovery of oil on their operations.

The members said they taught the discovery was going to improve their operations instead, it has affected their livelihoods.

They said the pre-mix oil is expensive and as such they are limited in their area of fishing.

?In fact our businesses have fallen, we are suffering, some of us find it difficult to pay our wards fees.?

The fishermen said global warming and activities of per trolling affect their work.

GNA

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