An overview of the potential for Ghanaian oil and gas investors Introduction With the discovery in 2007 of a major untapped oil and gas field off the coast in Ghana, the die was cast for the future of the West African country. Since then a revolution has taken place to begin the process of farming the huge amount of natural resources present and transforming Ghana.
Oil has been mined in Ghana in a small way since the late nineteenth century, but the discovery of a commercial level field in 2007 has brought Ghana into the realms of becoming a major producing nation. The three blocks of crude oil deposits uncovered 65km off the coast of Ghana have been grouped together and named Jubilee field, and already the field has reaped millions of barrels of oil.
“The financial benefits alone are immense, with the Ghanaian government estimating a yield of some $400 million dollars this year, a figure expected to rise to some $1 billion dollars a year once drilling is at full capacity.”
And further explorations around Ghana have revealed two more major fields, Enyenra and Tweneboa, both of which possess potential for huge amounts of oil and gas for years to come. Today, progress is well under way. In November 2010 history was made when UK-based Tullow Oil began drilling on the Jubilee field, and already the pumps are producing around 120,000 barrels of oil a day. The financial benefits alone are immense, with the Ghanaian government estimating a yield of some $400 million dollars this year, a figure expected to rise to some $1 billion dollars a year once drilling is at full capacity.What is happening in Ghana today? With the historic first phase of drilling underway, the government and investors are looking to progress rapidly.
The impact of Ghana’s new oil and gas industry are already being felt across the nation and employment is booming. In towns like Takoradi, the closest port to the Jubilee field, thousands of new jobs have been created and the flood of new workers has brought an instant turnaround in the fortunes of a town that had been in a state of decline. To prepare for the new oil and gas age, the Ghanaian government has fast-tracked a programme to set in place a legislative and regulatory framework fit to cope with the challenges and maximise the opportunities ahead. Managing the huge surge of investment that has come into the country has been one of the key challenges, and keeping the balance between attracting backers from outside while continuing to reap the rewards within Ghana is a key priority. Also vital to the government of Ghana is to ensure that the whole industry remains transparent and accountable from top to bottom. And it has set in place ambitious targets to use the major new revenue to reduce poverty by 2015 throughout Ghana.
“...growth in the economy surged to 23 % in the first quarter of 2011, compared with 9.5 % in the last quarter of 2010 when drilling began.”
Further exploration has been green-lighted and has been taken up in earnest by oil companies both international and domestic. One of the key players, the Ghana National Petrolium, which has already drilled 79 separate wells, has secured some £550 million dollars of foreign investment to date, and is continuing with major exploration and production operations in four of the major sedimentary basins, Cote d’Ivoire-Tano Basin, Central Basin, the Accra/Keta Basin and the Inland Voltaian Basin.
Already the boost has been felt. In June the Ghanaian government revealed that growth in the economy had surged to 23 % in the first quarter of 2011, compared with 9.5 % in the last quarter of 2010 when drilling began. The world is looking in at Ghana as the potential for major investment remains exceptionally high. International oil companies and suppliers are already benefiting from early investments made in 2007 and 2008, and as more discoveries are made this trend is set to continue.Opportunities for investment The opportunities that exist in Ghana are immeasurable. Gas and oil production is nowhere near capacity and as more natural resources are discovered this potential continues to grow.
“With low crime and a stable political landscape Ghana is a safe and secure country for investment” Described by the UK Department for Trade and Investment as a “peaceful and politically stable country”, Ghana is by no means solely dependent on its new found natural resources. Already a major producer of cocoa and gold, it is estimated will account for only 6% of the national economy, compared with neighbouring Nigeria where oil and gas make up 92% of GDP. With low crime and a stable political landscape Ghana is a safe and secure country for investment. “Ghana offers oil and gas investors the highest returns of any country in Africa...a massive 18 to 20 % yield” So much so in fact, that Ghana offers oil and gas investors the highest returns of any country in Africa. Compared with an average yield for foreign investors of between seven and ten per cent, the Ghanaian oil and gas industry brings a massive 18 to 20 % yield, and has been describe as one of the best investments currently in the world.
The key areas for investment are as follows:
Exploration
A series of new discoveries (see above) has opened the floodgates for major new exploration and development opportunities. Some 23,000 sq km of untapped coastal basins rich with oil are awaiting companies ready to seize the initiative, and experts both within the government and from outside predict that many more thousands of kilometres of oil deposits probably exist offshore and onshore. These opportunities are in offshore deep water, offshore shallow water and onshore basins.
Refining
Currently Ghana’s only refinery, the Tema Oil Refinery, is in the process of being upgraded to meet the increased demand. A major project which will more than triple the refinery’s capacity, outside private investment is being sought.Export-orientated refining An initiative by the Ghanaian government, the Export-Orientated Refinery Project, has been set up to attract global investors to the huge potential for exports. Some 70 % of the oil and gas produced in Ghana will be sold for export, and investors are being invited to establish private refineries in the Free Zone Enclaves of Ghana.
Technology
The government is seeking private companies to offer a huge range of technologies to provide solutions to the many logistical challenges currently being handled. Technology providers will find countless opportunities for investment in all aspects of petroleum operations throughout the Ghanaian oil industry. Education With the creation of thousands of new jobs the need for skilled labour is exponentially growing.
Outside companies that can provide education and training solutions at this crucial time will reap a great many short and long term rewards. Looking ahead a national framework in Ghana for continuing education and training for generations needs to be established and the opportunities to capitalise on this great demand still exist in abundance.
Sustainability
As a fledgling oil and gas producing nation, Ghana is highly conscious of the need to bring in sustainable technologies to prevent today’s drilling and refining being the seed for major environmental damage of the future. An initiative by the government is already underway to attract private companies with expertise in green technologies to come forward and be involved in research and development.
Conclusion
The potential for growth in Ghana is huge. With some 1.5 billion barrels of oil in the Jubilee field alone, and many more fields expected to be discovered in the coming years, there are countless opportunities for the right investors. Knowledge, timing and the right solutions to the challenges that exist in this burgeoning market will be the key to unlocking its potential. The Ghana Energy Summit 2011 (November 14th & 15th, Accra).
The Ghana Energy Summit 2011 (Conference & Exhibition) will be examining the latest developments, strategies and opportunities in Ghanaian oil and gas. Attending the event will be a wide range of government ministers, local and international oil & gas companies, market experts, and solution providers.
If you are interested in finding out more about the opoportunities in Ghana's booming oil and gas markets, then why not attend the Ghana Energy Summit 2011
For further details on how to attend the event as a delegate, exhibitor or sponsor, please visit: www.ghanaenergysummit2011.com or email: info@oliverkinross.com
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