Accra, Dec. 5, – A decade after
oil discovery in Ghana, the commodity’s revenue generation developmental
impacts so far are questionable, Professor John Asafu-Adjaye, Senior Research
Fellow, Institute of Economic Affairs (IEA), has stated.
He said the fact that some of the
revenue generated from oil had been saved for future generations, and it had
increased exports and improved the trade balance; it had added very little to
economic growth, and by extension, employment and poverty alleviation.
Prof Asafu-Adjaye said this in
his presentation on Tuesday in Accra, during a roundtable organised by the IEA
on the theme: “A Decade after Oil Discovery in Ghana: The Economic Impacts and
Policy Implications.”
The presentation sought to
address the economic impact of oil production so far, the extent to which
Ghanaians are benefitting and what can be done to enhance the developmental
impacts of oil and gas production.
In 2007 a substantial discovery
was made by Kosmos Energy LLC in the Gulf of Guinea’s Tano Basin with
recoverable reserves of more than 600 million barrels of oil an upside
potential of 1.8 billion barrels.
First oil was in November 2010
with an initial output of 25,000 barrels of oil per day.
Prof Asafu-Adjaye said Ghana had
therefore, experienced six years of oil production a decade after the
discovery.
He said since the Jubilee
discovery, 25 other discoveries of oil and gas condensates had been discovered
in the Deep Water Tano and West Cape Three Points Blocks.
He said these include the
Tweneboa, Enyenra, Ntomme (TEN) and the Sankofa-Gye Nyame (SGN) oilfields. Oil
production from TEN commenced in August 2016 and is expected to plateau at
76,000 bopd between 2017 and 2020.
Prof Asafu-Adjaye said oil and
gas production at the SGN field in the same area was expected to commence in
2018 and that over the next five years Ghana was expected to produce 250
Million standard cubic feet of gas per day (MMscfd) and 190,000 Barrels Of Oil
Per Day (BOPD).
He said although modest by
international standards, these discoveries confirm Ghana’s potential to
establish a hydrocarbon industry.
Prof Asafu-Adjaye said the
resolution of the International Tribunal for the Law of the Sea (ITLOS)
Boundary dispute with Cote d’Ivoire in favour of Ghana now means these
developments could proceed with certainty.
On the question whether Ghanaians
were getting the best out of the oil find, Prof Asafu-Adjaye answered no.
He said oil had, however, made
some minimal impacts on output and job creation due to weak linkages between
the oil sector and the rest of the economy.
“In spite of the local content
provisions, many individuals and SMEs are unable to participate in the industry
due to lack of skills and capacity,” he stated.
“Furthermore, Ghana has not
benefited from previous oil contracts in terms of the economic rent extracted,”
he added.
Prof Asafu-Adjaye, who is also an
Associate Professor of Economics, University of Queensland, Brisbane,
Australia, said oil exploration had been documented as having taken place in
Ghana in the late 1800s and early 1900s in the onshore Cape Three Points area,
however, the initial exploratory wells did not return any evidence of
substantial deposits.
He recounted that the first
discovery of oil was in 1970 by the US firm AgriPetco off the coast of
Saltpond; adding that the reserves were not in sufficient commercial quantities
and were initially abandoned.
He said the field was currently
being exploited by a joint venture comprising the state-owned Ghana National
Petroleum Corporation (GNPC) and Lushann Eternit Energy Limited of Houston.
Prof Asafu-Adjaye recommended
that as a matter of urgency, government should make the necessary investments
required to facilitate onshore processing of oil and gas.
He said this would enhance the
developmental impacts of petroleum in terms of job creation and backward and
forward linkages with other sectors.
He noted that the Government
should also invest in human capital in this area to promote significant local
participation.
Prof Asafu-Adjaye made a strong
case for re-negotiating all oil contracts, to enable the nation have its fair
share of the oil wealth.
“Much can be learned from Norway
which began oil production in 1969/70 and has done very well in terms of the
management of its resources,” he said.
GNA
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