Ghana’s oil and gas sector will maintain its position as a key driver of growth in the domestic economy, the Oxford Institute of Energy – University of Oxford, has said.
In a new report titled “Ghana’s oil industry: steady growth in a challenging environment”, the Institute said with some of the country’s challenges solved, such as the maritime border dispute with Côte d’Ivoire, the industry is expected to retain its position as a key driver of growth in the domestic economy.
“This is expected to generate revenue for the national government and, as gas production comes on-stream, to alleviate a long-standing electricity shortage,” it adds.
It further noted that unlike many producers on the African continent, Ghana’s oil industry has advanced at a steady pace in recent years despite a drop in international oil prices.
“In its first decade, Ghana’s petroleum industry has experienced a highly volatile price environment that has remained below US$65/barrel since mid-2015. Yet since the discovery of the Jubilee oil field in 2007, Ghana’s industry has seen three offshore projects come on-stream,” it said.
On the political front, the report said Ghana’s vibrant democracy, with competitive elections and frequent turnovers in government, presents the West African nation with mix fortunes.
“Political polarization between the two main political parties, the National Democratic Congress and the New Patriotic Party,” it indicated, “led to review and reversal of industry contracts in 2009, resulting in Kosmos Energy negotiating an exit strategy before production started at the Jubilee field.
“Across political party lines, there is agreement about the need for a strong state presence in the petroleum industry through the Ghana National Petroleum Corporation (GNPC). However, polarization has led to different strategies for developing national petroleum companies, limiting their long-term technical and financial stability.”
The Voltaian Basin which covers 40% of Ghana’s land mass, is also said to be the country’s most promising site for onshore oil and gas production. The basin has been promoted by GNPC since 2015 and has positive geological preconditions for oil and gas deposits.
The current president of Ghana, Nana Akufo-Addo, has pledged to develop projects in the basin in the next 2 years.
However, the Oxford report warned that development of the basin carries significant financial risk, and projects will rely on foreign investment.
“Current economic systems in the area including fish resources and transportation networks would be impacted by development in the basin. Petroleum activity would further require resettling of entire communities.
“This makes development significantly more challenging here than in Ghana’s offshore projects. Still, there is a potential for oil and gas discoveries, and political will in Ghana to develop the basin,” it stated.