Jubilee shutdown cut production by 40%

Last year’s shutdown of the Jubilee Field reduced Ghana’s oil and gas production by 40%, a report by the Public Interest Accountability Committee (PIAC), has revealed.

According to the report, there was a 13.7% year-on-year decline in crude oil production with annual production dropping from 37.41 Million Barrels (mmbbls) in 2015 to 32.30 mmbbls.

The production of indigenous natural gas also suffered a decline by a magnitude of 27%, dropping from 52.455.91 Million Standard Cubic Feet per gas (MMScf) in 2015, to 38,420 MMScf in 2016.

This was in spite of the fact that Ghana’s 2nd major production field – Tweneboa-Enyenra-Ntomme (TEN) Fields - came on stream in August 2016 and actually contributed 16% (5.32 mmbls) to annual production.

It will be recalled that oil production from the Jubilee Field suffered a major setback in February 2016 when the turret bearing of Floating Production Storage Offloading vessel (FPSO) began to malfunction.

Due to the 34-day shutdown of the field, coupled with low prices of crude (averaging $46.13per barrel), revenues from the sector in 2016 was 29% lower than the budgeted amount.

An amount of $247.18 million was earned as petroleum receipts against $396.17milion realized in 2015, translating into a 38% decline in annual production (year –on-year)

Expressing concern about the non-payment of surface rental fees by some companies at the launch of the report, Chairman of PIAC, Mr Joseph Winful, called on the Ghana Revenue Authority (GRA) to ensure that all outstanding annual surface rentals are paid with interest.

“GRA must ensure that auditing of tax returns filed by the Jubilee Partners is carried out expeditiously so that any additional assessment payable is paid,” Mr Winful said.

He cautioned GNPC to desist from spending part of its dwindling allocations on non-core businesses such as financing of the western Corridor Roads.

In addition, the Bank of Ghana and or the Ministry of Finance should seek expert advice on hedging and consider undertaking hedging activities as part of strategies to mitigate Ghana’s exposure to commodity price risk /volatility associated with future oil production.

The ABFA allocation to road infrastructure should continue to be spent on fewer road projects to ensure timely completion of beneficiary projects.