The petroleum industry of Ghana is divided into the upstream and downstream sectors. Upstream activities include the procurement and refining of crude oil by the nation’s only petroleum refinery, Tema Oil Refinery (TOR). Downstream activities include the marketing and distribution of petroleum products by Oil Marketing Companies (OMCs) and the pre-mixing of petroleum products for other industrial uses. OMCs operating in Ghana are mainly multinationals; however, the last decade has seen an increase in the establishment of several small- to medium-scale local OMCs.

Prices of petroleum products, which have steadily increased since 2003, are regulated by an independent board. The nation consumes significant volumes of petroleum products and importation of crude oil constitutes a significant portion of gross domestic product (GDP).

The Ghana National Petroleum Council (GNPC) has the mandate to explore for oil within the nation’s territory. The petroleum sector has since 2003 experienced significant growth, particularly since the discovery of oil in commercial quantities in the Jubilee fields in 2007. Some of the major oil and gas activities are done by IOCs such as Tullow Ghana, Cosmos Energy, ENI and Hess Ghana Limited. Their sub-contractors include Schlumberger, Baker Hughes, Weatherford, Ocean Rig and Technip. Since Ghana’s first commercial oil lifting took place, over 4.7 million barrels of crude oil have been produced, at an average of 90,000 barrels per day.

Ghana’s oil and gas prospects are significant. Recent discoveries appear to indicate oil and gas resources stretch across the country’s shoreline from Cape Three Points in the west to Keta in the east. The Volta Basin is also believed to hold oil and gas reserves onshore. There are currently about 11 petroleum agreements between the Government of Ghana, GNPC and petroleum operators signifying the increased interest in Ghana’s oil industry. Government, through GNPC, now seeks to fully maximize the country’s prospects in the oil and gas sector. It has recently sought to extend the country’s continental shelf to increase the sector’s scope.

Ghana at an Energy Crossroad

Today, Ghana is at a crossroad. The energy transition has accelerated the withdrawal from non-core areas for the super-majors and IOCs, and, unfortunately, very few areas in Africa are on the priority list for these companies. Capital is being shifted from investments in fossil fuel into renewables. Long cycle, capital intensive projects offshore are the least popular for the moment. BP is not entering into new countries. TOTAL withdrew from its acquisition of Oxy’s stake in Jubilee and TEN. Ghana is left with three comparatively smaller companies in country: ENI, Tullow, and Aker, and a production that is steadily declining. By some industry sources, the current three producing fields in Ghana would have reduced their production by 80% by 2035. All of the undiscovered oil in Ghana is at stake.

There is a very desperate need for Ghana to comprehensively mine its oil resources before 2050 when the Paris Agreement stipulates we should all go green and as a consequence, GNPC has to step up. But where does Ghana start from? The national oil company, GNPC, has existed for decades and is part of all the petroleum agreements in the country. It has several hundred employees. Still, it does not have any operational capacity and is only able to assume the passenger role in field development and production. It needs a partner. Just as the likes of Statoil in Norway were trained by the American oil companies in the 1970s, GNPC is in need of a trainer—a mentor; a partner.

This was the backdrop against which GNPC reached out to Aker and AGM. After careful consideration, Parliament gave its bi-partisan support for GNPC to negotiate with Aker a transaction that delivers on Ghana’s long-standing ambition to control its own resources. If successful, the transaction will be a landmark one; potentially, the most important acquisition any Ghanaian company has made at any point in time.

Opportunities for U.S. companies

• Two offshore oil blocks are reserved for the GNPC,which will likely seek partnership with independent oil companies to support exploration and production.
• The Ghanaian government is considering revising the regulations of the sector in an effort to shore up Ghana’s oil recovery rate of about 25%, which is lower than anticipated.
• The Ghana’s government intends to reward investors willing to invest and meet Ghana’s local content requirements.
• Ghana’s oil sector needs technical training for local companies.
• Ghana lacks storage facilities for its gas products.

Sub-Sector Best Prospects

There is an immediate need for oil and gas service firms that can partner with indigenous Ghanaian companies to support the offshore activities of the international oil companies. Domestic Ghanaian companies do not have the ability to provide a broad range of services despite local content requirements mandating a minimum level of local participation. Joint venture firms with foreign partners contributing technology and know-how to a partnership with a reliable local company will be highly sought after. In addition to providing equipment and services directly to the exploration and production companies, training programs to increase the capacity of Ghanaian firms to provide these services are likely to be highly successful. 

Local Content

Ghana’s government passed a local content law in 2013 that requires a minimum 5 percent equity stake in hydrocarbon exploration and production activities. A local-content policy framework from 2010 has largely been met in terms of management positions and general staff, but technical positions are where the progress has been slowest.

The upstream oil sector is not a big employer. The industry directly provides an estimated 8,000 jobs for Ghana’s population of 30 million people. Among the government’s other targets are 90 percent local participation in the oil and gas value chain by the end of 2020 a target judged by analysts from the outset as being overly ambitious due to the lack of financial capacity, ability to meet international standards and technical training of many local firms.

The Petroleum Commission has launched a review of Ghana’s local content requirements. Nonetheless, the value of contracts won by local firms has been on the rise. International oil companies are looking for local partners across the entire upstream value chain, from direct participation, storage, transportation and haulage to services and main­tenance.

You may contact us if you have interest in investing in the oil and gas industry in Ghana.