Investment Opportunities
Due to the emerging nature of the industry, opportunities exist in virtually every area of the petroleum industry, both upstream and downstream.
Areas of Cooperation and Investment - Exploration & Production
Source: GNPC
Other Value Chain Investments (Gas Power projects)
Source: GNPC
Upstream Petroleum Sector:
Drilling Products and Services:
Production Support Services:
Reservoir Engineering:
Down Stream Sector Business Opportunities (Marketing, Storage, Distribution, Transport, Refining):
Gas Sector Opportunities
SECTOR OVERVIEW
Ghana is an emerging oil and gas producer with enormous potential and with over 5 years of commercial production since December, 2010.
The first significant deepwater discovery for Ghana’s Oil and Gas sector was in 2007. A consortium of companies comprising Kosmos Energy Ghana (Kosmos), Tullow Ghana Limited (Tullow), Anardarko Petroleum Corporation, Sabre Oil and Gas Limited, E.O. Group in conjunction with the GNPC announced discoveries of significant quantities of oil and gas in the offshore deepwater Tano/Cape Three Points basins located in the southernmost part of Ghana.
Under this circumstance, the Petroleum Law required that the discovered oil and gas resources in the two blocks be produced as one unit to reduce cost and optimize the recovery of oil and gas in the field. The two discovered fields were therefore unitized and designated as the Jubilee Field, in commemoration of Ghana’s Jubilee Year celebration.
There are four (4) major oil and gas fields in the country namely: the producing Jubilee field, the sub-commercial producing Saltpond field, the Tweneboa-Enyenra-Ntomme (TEN) field and Sankofa-Gye-Nyame fields. In addition to this, twenty-three (23) post Jubilee discoveries (between 2008 and 2014) have been made offshore Ghana on six different blocks in the Tano/Cape three points basin which have resulted in over 80% exploration success rate.
SUB- SECTORS
The petroleum industry comprises mainly of the upstream and downstream sectors and these encompass the process of exploration, production, refining, transporting and marketing of petroleum products. The upstream sector, regarded as a high risk, high reward and high investment sector, identifies deposits, drills wells and recover raw materials from underground. The sector includes areas such as rig operations, feasibility studies, machinery rental and extraction of chemical supply. Downstream sector, also regarded as a low risk, low reward and low investment sector, comprises of operations such as refineries and marketing. These operations turn crude oil into usable products such as gasoline, fuel oils and petroleum-based products. Marketing services help move the finished products from energy companies to retailer or end users.
There is also the midstream sector which links the upstream and the downstream entities. These mostly include resource transportation and storage, such as pipelines and gathering systems.
The broad objectives of the upstream and downstream sectors for Ghana’s oil and gas industry are:
Upstream Objectives:
To ensure the effective management of the oil and gas resources of Ghana and also accelerate exploitation of the development of new hydrocarbon resources for the overall benefit and welfare of all Ghanaians.
Downstream objectives:
To rehabilitate and expand petroleum refining, storage, distribution and marketing infrastructure, ensure fair distribution of petroleum products to all parts of the country and reduce heavy burden of oil imports on the country’s economy by accelerating the exploitation of indigenous resources.
SECTOR COMPOSITION
Figure 1 below gives a pictorial view of the composition of players in Ghana’s Oil and Gas sector and a brief on these entities is explained below.
The Ministry of Energy is the entity that provides policy direction for Ghana Petroleum Industry by formulating policies, and monitoring and evaluating.
The Petroleum Commission (PC), Energy Commission and the National Petroleum Authority (NPA) provide the regulations for the industry.
Petroleum Commission is mandated by the Petroleum Commission Act, 2011 (Act 821), to regulate, manage and co-ordinate all activities in the upstream petroleum industry for the benefit and welfare of all Ghanaians.
National Petroleum Authority (NPA), established by NPA Act 2005, ACT 691, ensures that the downstream sector of the petroleum industry remains efficient, profitable, and fair and at the same time, ensures that consumers receive value for money.
Energy Commission and Public Utilities Regulatory Commission regulates the midstream oil and gas sector.
There are a host of players in the industry and these include the IOCs, GNPC (GNPC Explorco, GNPC Tradco), Ghana National Gas Company, Tema Oil Refinery (TOR), BOST and Licensed Bulk Distribution Companies, a host of licensed oil marketing companies, petroleum entities and bulk distribution firms, Environmental Protection Agency (EPA), Maritime Authority, Ghana Navy and other Security Services.
The main agencies of the Oil and Gas sector in Ghana are:
The Ghana National Petroleum Corporation (GNPC) is Ghana’s National Oil Company (NOC), established in 1983 by PNDC Law 64 as a commercial strategic vehicle for state participation in the oil and gas industry. It was to support the government's objective of providing adequate and reliable supply of petroleum products and reducing the country's dependence on crude oil imports, through the development of the country’s own petroleum resources. The objects of GNPC as enshrined in section 2 (1) of PNDC Law 64 are “to undertake the exploration, development, production and disposal of petroleum”. The Petroleum [Exploration and Production] Law, 1984, PNDC Law 84, was subsequently enacted to provide the regulatory framework for the exploitation of the country’s hydrocarbon resources. PNDC Law 84 establishes the contractual relationship among the state, GNPC and prospective investors in upstream petroleum operations. This law also grants GNPC the right of entry into any open acreage to undertake exploration activities.
Tema Oil Refinery (TOR) has been refining crude oil into petroleum products for the past 50 years and continues to produce quality petroleum products for the Ghanaian market. TOR Limited refines and distills many forms of petroleum products including Liquefied Petroleum Gas (LPG), Gasoline (Petrol), Kerosene, Aviation Turbine Kerosene (Jet A1), Gas Oil (Diesel), Premix, Naphtha, Fuel Oil and Cracked Fuels. It is the premier and only refinery in Ghana. The refinery was among the first eight refineries in Africa as at 1963. Our refinery is a 45,000 barrel per stream day (bpsd) capacity Crude Distillation Unit and supplies this quantity out of the national demand of 65,000 bpsd.
Bulk Oil Storage and Transportation (BOST) Company Limited was incorporated in December 1993 as a private limited liability company with the Government of Ghana as the sole shareholder. Until May 2001, BOST was responsible for the distribution of refined petroleum products from its strategic depots located throughout the country. Additionally, BOST also holds the Natural Gas Transmission Utility License granted to it by the Ghana Energy Commission (EC) on December 19th, 2012. The NGTU as per EC Act 541, 1997, will provide transmission and interconnection services for natural gas without discrimination throughout the country. The transmission license given to BOST as per Natural Gas Licensing manual shall permit BOST:
THE OIL AND GAS SECTOR PLAYERS
Upstream industry is made up of a mix of Majors (ENI), Independents (Hess, Anadarko, Tullow, Kosmos etc), NOC (PetroSA) and Local Ghanaian companies: E&P and Service providers. Figure 2 below gives a list of the operators in exploration of Oil and Gas, with their investments made to date.
Figure 2a: List of operators in the exploration of oil and gas with investments made to date.
Figure 2b: List of operators in the exploration of oil and gas with investments made to date
Figure 2c: List of operators in the exploration of oil and gas with investments made to date
Source: GNPC
Other players in the Upstream Sector
For a list of other players in the upstream sector, kindly see the website of the Petroleum Commission
Downstream sector players
For a list of players in the downstream sector, kindly see the website of the National Petroleum Authority
CURRENT TRENDS
Ghana’s oil and gas industry is growing at a steady pace, with a total proven reserve base as at August 2014 of approximately 883.4 million barrels of oil and 2,312.4 billion cubic feet of gas.
Currently, Ghana is a small hydrocarbons producer, but new output from TEN and Sankofa fields, as well as increasing production from the country's flagship Jubilee field will significantly boost Ghana's oil and gas production by 2020 as shown in table 1 below. Further upside potential comes from Ghana's active exploration scene offshore.
The year 2016 marked another milestone in Ghana’s Petroleum Sector. The year witnessed the amendment of the country’s Exploration and Production law to bring it in line with recent industry practices, enhance transparency and accountability and align it with recently passed laws that affect the sector’s fiscal regime. The FPSO for the TEN fields arrived in 2016 and production of crude oil from the field commenced in the same year, with the first oil in August, 2016. 2016 was also the year in which crude oil prices, output and revenue fell significantly short of their original projections, leading to expenditure realignments in the year.
Some key developments that affected the Petroleum sector
KEY PETROLEUM PROJECTS
Jubilee Field
Table 2 below gives a breakdown of annual production volumes from the Jubilee field
Table 2: The annual production from the Jubilee Field from 2010 to 2016
Tweneboa, Enyenra, Ntomme (TEN)
OCTP - Sankofa-Gye-Nyame (SGN) Project
Voltaian Basin Project
In 2016, the Voltaian Basin project completed the following tasks:
Tables 3, 4 and 5 below provides the expected volumes of oil and gas from the discovered wells of Jubilee, TEN and Sankofa-Gye-Nyame from 2017 to 2021
Table 3: Jubilee Production Profile – 5 Years: Full Field Development
Date |
Oil Production (BBL/Day) |
Gas Production (Excl Teak)(MSCF/Day) |
---|---|---|
2017 |
68,466 |
88,508 |
2018 |
93,407 |
123,235 |
2019 |
94,661 |
146,257 |
2020 |
96,516 |
152,000 |
2021 |
97,588 |
146,170 |
Table 4: TEN Production profile (5 years): Full Field Development
Date |
Oil Production (BBL/Day) |
Gas Production (MSCF/Day) |
---|---|---|
2017 |
49,650 |
60,254 |
2018 |
54,705 |
51,750 |
2019 |
69,979 |
98,470 |
2020 |
68,303 |
98,946 |
2021 |
63,597 |
94,172 |
Table 5: Sankofa-Gye-Nyame Production Profile (5 years)
Date |
Oil Production (Incl. Condensate) (BBL/Day) |
Gas Production (MSCF/Day) |
---|---|---|
2017 |
7,214 |
- |
2018 |
35,441 |
158 |
2019 |
51,932 |
171 |
2020 |
51,700 |
171 |
2021 |
51,232 |
171 |
PETROLEUM RECEIPTS AND UTILIZATION IN 2016
Table 6: Crude Oil proceeds on Lifting Basis for 2016
CURRENT TRENDS
Ghana’s oil and gas industry is growing at a steady pace, with a total proven reserve base as at August 2014 of approximately 883.4 million barrels of oil and 2,312.4 billion cubic feet of gas.
GOVERNMENT'S POLICY DIRECTION
Medium-Term Policies and Strategies for the Development of the Oil and Gas Industry
In the medium-term, the development of the oil and gas sub-sector will be a major factor to the transformation of the economy. The transformation agenda will be driven by the following priorities: oil and gas industry development and its effective linkage to the rest of the economy; strengthening of the regulatory regime with the passage of relevant laws including the Petroleum Production and Exploration law; local content development; employment creation; protection of the environment; and transparency in revenue management.
Oil and Gas Industry Development and its linkage to the rest of the Economy
The oil and gas industry can deliver a transformation dividend to the economy if its development is linked to other sectors of the economy. In the medium-term, the implementation of the priority interventions aims at
The development of the oil and gas industry is expected to reverse the country’s overreliance on the exports of primary products by ensuring value addition in the industry and effective linkages across the sector. The priority strategies to be implemented include
Local Content Development
To ensure local content and participation across the oil and gas value chain, Ghanaian enterprises will be supported in the exploration, development, and production of oil and gas, to go hand-in-hand with dedicated efforts to expand and strengthen the capacity of Ghanaians to participate in all segments of the industry. In addition, impetus will be given to the effective implementation of the Local Content Law. In the process, SME incubation centres will be developed for the oil and gas industry and supported to facilitate the growth of local companies operating in the industry.
Employment Creation
In the medium-term priority strategies will focus on leveraging the opportunities offered by the oil and gas industry for accelerated jobs creation, especially for the youth. The strategies to be implemented will include: fully implement the Local Content and Participation Law; ensure that companies and other players in the industry comply with prevailing regulations in labor recruitment for all opportunities for which there is available Ghanaian talent; and continue to take special precautions to protect young boys and girls against exploitation.
Protection of the Environment
Government will strengthen emergency preparedness to manage disasters in the oil and gas industry. Another strategy to achieve the policy objective is to strengthen the Exploration and Production Law to maximize national benefits and minimize environmental cost of the industry. Government will continue to manage Ghana’s oil and gas resource endowments to ensure sustainability by optimizing resource exploitation whilst increasing the nation’s total z reserves by accelerating the pace of exploration in other sedimentary basins.
Transparency in Revenue Management
The capacities of new and existing revenue collection and management institutions will be strengthened to address the peculiar needs of the oil and gas industry. Moreover, monitoring, evaluation and reporting systems in the oil and gas industry will be given special attention.
Priority interventions for the Development of the Oil and Gas industry
Government will prioritize some strategic initiatives such as:
Source: GSGDA II by the National Development Planning Commission
SECTORAL DEVELOPMENTS
Developments in Exploration and other Petroleum Activities
Since the Jubilee discovery in 2007, additional discoveries have been made. Table 7 below presents the status of discoveries at various stages of appraisal, development and production.
Table 7: Discoveries at various stages of appraisal, development and production
Source: GNPC
Expected Developments
Policy frameworks, institutional measures and civil society monitoring are playing important roles in ensuring that the benefits of Ghana’s oil revenues are grafted in sustainable and inclusive growth.
As a consequence, transparency in revenue management remains one of the key policy objectives for the oil and gas sector. For the first half of 2016, a total revenue of US$ 126.4m was earned, from which US$22.7m was allocated to the Ghana National Petroleum Corporation (18%), US$13.5m to Ghana Stabilization Fund (11%), US$64.4m to annual budget funding amount (51%), and US$5.8m to Ghana Heritage Fund (4.6%). ABFA funding is the percentage of petroleum revenues allocated to national budgets to support development financing, specifically financing of infrastructural projects within the oil and gas sector. It is for this reason that 71% of ABFA funds went into roads and other infrastructure followed by capacity building (22%) and agriculture (6%).
Another important policy objective is interventions to build the capacity of Ghanaians to participate in all segments of the oil and gas industry. This was established in the 2013 petroleum (local content and local participation) regulations (L.I 2204). This regulation requires a contractor, subcontractor, license, the Corporation or other allied entity carrying out a petroleum activity to ensure that “local content is a component of the petroleum activities engaged in.” According to the Petroleum Commission (2015), nearly all the 85 of the 415 registered companies which submitted their local content report met this requirement. The percentage and number of Ghanaians employed in the sector in addition to number of Ghanaians in management, technical and other positions in the industry are among critical indicators for local participation. An estimated 413 Ghanaians are employed by the 32 major oil companies in Ghana – 10% in management positions, 56% in technical positions and 34% in other positions. Unavailable is empirical data on whether the Ghanaians in these positions are receiving work benefits equivalent to their foreign counterparts.
This grueling history of oil spillage makes concerns for human and aquatic habitability of the world in the face of petroleum activities, well grounded. The oil and gas industry in Ghana is required to operate in consistency with international standards on environmental sustainability. The Environmental Protection Agency (EPA) audits activities at the jubilee field to examine compliance with conditions and standards set out in the environmental management plans (EMP) permit. The 2015 audit showed 95% compliance, marginally short of the 100% target.
Budgetary
According to the Minister for Finance, the total petroleum receipts for 2016 recorded US$247,175 million as compared to the 2016 budget estimate of US$348.42 million, leaving a variance of US$101,241 million dollars. The total ABFA receipts in 2016 amounted to GHȻ388.85 million, with actual utilization amounting to GHȻ311.12 million, leaving an unutilized balance of GH¢77.73 million in the Petroleum Holding Fund.
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