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Gov’t Changes Plans For Ghana’s Oil   
 
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21-Dec-2009  
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The policy objective for Ghana’s oil and gas sector has changed from what the New Patriotic Party defined in its draft petroleum policy of October 2008, Public Agenda can confirm.

The final draft of Ghana’s new petroleum policy, embedded in a National Energy Policy document date November 2009 states the new multipronged policy objective as “…the judicious management of the oil and gas revenue for the overall benefit and welfare of all Ghanaians, present and future; increasing local value-added investments in the sector; and the indigenization of knowledge, expertise and technology.” The new policy objective has been hailed as progressive and forward-looking in terms of positioning Ghana to maximize benefit from the exploitation of its hydrocarbon reserves.

It is recalled that, in February 2008, following Ghana’ s discovery of oil and gas in commercial quantities off Ghana’s western coast, the New Patriotic Party government, with the support of the country’s development partners organized and national forum to gather input into a national petroleum policy to guide government’s actions in the sector. By October 2008, a draft national petroleum policy was already doing the rounds. The objective of that particular policy document was to make Ghana a net exporter of oil.

Concerns were ex-pressed at the time to the effect that, the policy objective was too narrow in focus and did not appear to take into account lessons from the mineral sector. Publish What You Pay-Ghana, a local chapter of the global campaign for increased transparency and accountability in the payments and receipts of extractive sector revenues made the point in their critique of the Ghana’s Extractive Industries Transparency Initiative (EITI) audit reports in 2008 that Ghana’s mining sector has become an enclave economy, not linked in any way to the rest of the national economy, because of the lost opportunity for value addition.

The critique, submitted to the Ghana EITI multi-stakeholder Steering Committee argued that, if Ghana had had a policy with a holistic view of what role the country expects gold, for instance, to play in the national development agenda, then it would have maybe made sense to sometimes take the country’s royalties from the sector in kind, and feed the gold into the domestic jewelry industry.

In that way, it argued further, the country would have added value to its gold exports, created jobs, and in the process created tax opportunities to help finance development. The government however seemed bent on getting more out of the gas rather than the oil, for which reason it stuck to the objective of making Ghana a net exporter of oil.

The National Democratic Congress’ shifting of the national policy goal brings some hope to Ghanaians, especially those in the communities bordering Ghana’s oil find, and who are nurturing hopes of findings jobs in the oil and gas sector. Expectations are indeed high, not only in terms of the impact of future oil revenues on growth and poverty reduction but perhaps more importantly n terms of job opportunities that the sector promises. The need to manage expectation is an issue that is not in contention. However, ensuring that benefit maximization goes alongside revenue maximization makes it imperative to ensure value-addition across the mid to downstream value-chain of both oil and gas streams.

The new policy objective, though promising, appears inconsistent with activities on the ground, in the run-up to production. It will for instance require that a certain quantity of Ghana’s oil is refined locally and therefore the need for expansion of the current refinery capacity of the Tema Oil Refinery (TOR). It might also require attracting investments into the construction of new refineries to introduce competition and therefore efficiency into the refinery link in the value chain.

The Deputy Minister for Energy in Charge of Petroleum, Hon. Emmanuel Kofi Buah told the Public Agenda in an exclusive interview, that “if the government had its way, it would refine all of Ghana’s oil locally” but given that there are the companies’ interests to be accounted for, that in his view, will have to be negotiated.

He disclosed that. Government has plans to expand the TOR capacity from the current 45,000 bpd to 145,000 bpd, but gave no indication of the timing. Currently, the country’s total crude consumption is in the region of 60,000. What is not clear is how the crude from the Jubilee Field would be transported to the refinery. Since, there is no plans currently to construct pipelines from the production platform to the refinery, one would assume that the crude would be transported as usual by tankers, raising questions about cost efficiency and security.
 
 
Source: Public Agenda/Ghana
 
 

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