GNPC: Ghana;s Oil is Safe

By J. Ato Kobbie, Managing Editor

The Ghana National Petroleum Corporation (GNPC) has assured Ghanaians that

partners in the Jubilee Field have put in place a comprehensive system to guard

against theft of oil to be produced from the field next month.

According to the corporation, all partners in the field have put together

effective monitoring mechanisms that would ensure that Ghana’s oil production

does not follow the path of some countries whose oil resource could be described

as a curse rather than a blessing.

Speaking to The Business Analyst in an interview, Mr. Victor Sunu-Attah, Chief

Petroleum Engineer of the national oil company, said the GNPC participated in

the designing of the floating, production, storage and offloading vessel (FPSO)

which is facilitating the Jubilee Field production and therefore was assured of

the safety of the oil.

The chief petroleum engineer outlined the elaborate process, which is in place

to ensure that the oil and gas to be produced from the Jubilee Field and other

subsequent fields for that matter is properly accounted for.

He mentioned some of these measures to include: meters attached to all wells to

measure oil and gas flowing from each one of them before getting on board the

FPSO, where meters have been installed to take measurements again.

Asked how GNPC could ensure that total oil from wells would be accounted for,

and not get lost along the line, Mr. Sunu-Attah said data in its native form

(i.e. raw data) would be transmitted electronically to GNPC as well as the other

partners at the same time and therefore each would independently be monitoring

and observing events.

He explained further that apart from the economic reasons for monitoring the oil

flow, the technical component is to assess how wells are performing.

“When the oil comes to the FPSO, it would be measured again before storage,” the

chief petroleum engineer disclosed, adding that apart from GNPC, the Customs

Division of the Ghana Revenue Authority (GRA) would have access to the meters as

well as supplies to tankers.

The GNPC official disclosed that supplies to tankers would also be monitored (in

the tankers), by personnel from international hydrocarbon inspection companies

such as SGS, DNV etc.

THE NUMB3RS

The Jubilee Field is the name given to an area that straddles two oil blocks,

Deepwater Tano and West Cape Three Points, following successive commercial oil

discoveries made in Mahogany-1 and Hyedua-1 exploration wells during Ghana’s

Golden Jubilee Anniversary year in 2007.

The field is offshore Ghana, with the nearest town, Bonyere, being 50 kilometres

away.

After the discoveries, the two blocks, which were close to each other, were

unitized or consolidated to ensure efficient and cost effective production of

the oil from the two fields. Several other successful wells following the first

two have increased the estimate of the Jubilee Field to between 800 million and

1.5 billion barrels of crude oil of the highest grade. Initial production

expected from the field under the first phase is 120,000 barrels of crude a day.

Production however commences at 50,000 barrels a day from December this year and

would peak and stabilize at 120,000 bpd from early next year.

Under the first phase of the development of the Jubilee Field, production is

expected to be in excess of 300 million barrels of recoverable oil, Kosmos

Energy, Technical Operator of the field had announced in July 2009.

The interest holdings of the Jubilee Partners were consolidated, assuming 50%

for Deepwater Tano block and 50% for the West Cape Three Points block.

The GNPC exercised its option of taking additional paying interest of five

percent (5%) in Deepwater Tano and two-and-a-half percent (2.5%) in the West

Cape Three Points blocks.

The Jubilee Field has Tullow Oil as Operator with the highest stake of 34.7046%,

whilst Kosmos Energy, the Technical Operator (to lead in exploration issues),

just as Anadarko, each holds 23.4913%. GNPC holds 13.7500%, whilst Sabre Oil

and Gas and the E.O. Group, hold 2.8127% and 1.7500% respectively.

The interest holdings of the partners determined how much contribution they make

in meeting the current costs of development of the field before and during

production.

The stakes of the partners determine what profit they would eventually be

reaping from the oil.

Before the unitization of the area straddling the two blocks, Tullow Oil

operated the Deepwater Tano block, where it held 49.95% interest, with Kosmos

and Anadarko holding 18% interest each. Sabre Oil & Gas held 4.05%, whilst GNPC

had a 10% carried interest.

However, GNPC exercised its option of taking up additional paying interest

following a discovery, and increased its stake to 15%.

The WCTP, on the other hand, has Kosmos Energy as the Operator, holding 30.875%

interest, just like Anadarko Petroleum, while Tullow Oil held 22.896% interest.

The other partners in that field were the EO Group, which held 3.5%, Sabre Oil &

Gas, 1.854% and GNPC having a carried interest of 10%. Here again, GNPC took up

additional interest of 2.5%, to increase its stake to 12.5%.

Development of the Jubilee Field has been on schedule.

FPSO Kwame Nkrumah has a production and processing capacity of 120,000 barrels

of oil and 160 million cubic feet (mmcf) of gas per day, with storage capacity

of 1.6 million barrels of oil.

The Jubilee development is based on a conventional subsea design located in

approximately 1,300-meter of water using a turret-moored floating production,

storage and offloading vessel (FPSO).

Even though under the plan of development approved for the phase-one development

17 wells, including up to nine oil producers, five water injection wells and

three gas injection wells, only 16 have however been drilled, with a shortfall

in the gas injection wells.

The development process has been designed so that gas produced would be

available for export to shore and/or be re-injected into the reservoir, in line

with the ‘zero-tolerance for gas flaring’ policy of the project.

The first 200 billion cubic feet of natural gas is being provided to the

national oil company, GNPC to form the basis for the development and

construction of a gas processing complex, which is currently planned to be sited

at Bonyere in the Western Nzema Area of the Western Region.

Expert Explains Africa’s Dev’t Challenge

By Liberty Amewode

There is absolutely no programme in Africa to entice the youth into agriculture

amid the rapidly dwindling numbers of those engaged in this important industry.

Consequently, Africa’s comparative advantage in the production and trade in

agricultural commodities since the mid-1980s has seriously been compromised.

And according to Mr. Kwaku Owusu-Baah, Director of Economic Studies,

Inter-African Coffee Organization (IACO), who made these assertions, if the

youth in Africa had had some sustained assistance programmes, many of them would

rather prefer to live in their rural environments than hustle in other urban

areas for nonexistent jobs.

“This is the time to begin to find solutions to the problem”, he stressed.

Mr. Owusu Baah made the remarks in an interview on the sidelines of the

just-concluded 5th African Economic Conference (AEC) in the Tunisian capital,

Tunis, held under the theme: “Setting the Agenda for Africa’s Economic Recovery

and Long Term Growth.”

He said the continent had no viable excuses for continued failure given the

immensity of its natural resources and expertise, but added that there was still

hope.

According to him, it is possible today for national governments to pursue

policies of good governance, infrastructure and private sector

development, internal resource mobilization and still fail to create an

appropriate agricultural business environment that could help give the

continent’s economies grassroots lease of life or resilience.

He said while the economic growths being witnessed today could be attributable

to the long-term impact of the Economic Recovery Programmes (ERPs) adopted by

most African countries in the 1980s and 1990s, the countries, as a matter of

policy, also pursued liberalization programmes under which they reduced their

support to agriculture.

“This was predicated on the erroneous assumption that market forces would pick

up the incentives so created”, he noted.

He observed that the expectation that market forces would lead countries to

agricultural efficiency should not have arisen at all since the private sector

which was to fill the gap left by government was not ready.

Asked what could explain the private sector’s failure to fill in the gap, Mr.

Owusu-Baah, who is also an Agricultural Economist, noted that authorities

usually failed to realize that poor people in agriculture, including the

individual household farmers who have been responsible for the bulk of the

African agricultural outputs also form part of private sector practitioners,

adding that despite their efforts, poverty is prevalent among them.

He said the ‘private sector’ that had the necessary resources for real

investment was not involved in agriculture.

“Agricultural relegation under government liberalization policies consequently

resulted in decline in investments in agricultural research, human development,

women empowerment, extension services, technological innovation, trade, among

others”, he observed, adding that the private sector should not be expected to

come from another planet when the government was doing nothing to invest in its

people’s brains and agricultural services.

According to him, agricultural cooperatives were even neglected, with SMEs and

women empowerment to credits and access to land being left out of government

policies, noting that this was a grave mistake.

Prompted to suggest solutions to some of these problems, Mr. Owusu-Baah was

emphatic. “Simply go back to agriculture” was his response.

“It is not entirely a private sector affair. At least the government should

participate to develop a motivating environment in the sector”, he offered,

stressing that governments should undertake more business development

services to support farmers and help them set up and manage cooperatives and

small scale processing plants.

He called on the African Development Bank to assist to find ways to capacitate

African countries on how to manage their resources and also increase its current

level of commitment to agriculture, while encouraging African countries to

commit at least 10 per cent of their budgetary allocations to agriculture as

required under the Maputo Declaration.

“The African Development Bank should continue to help African countries to set

their growth priorities right”, he said emphasizing that we should address the

issue of poverty if we want growth to be inclusive. See Page 10 for the full

interview.