Strategic misstep key factor in Ghana’s dwindling oil fortunes –PIAC
By Daniel NONOR
The Public Interest and Accountability (PIAC) has attributed the recent decline in Ghana’s oil output to operational challenges and insufficient national strategies to boost production.
Isaac Dwamena, Coordinator of PIAC explained for example that at the initial stages of oil production, Ghana presented 2D seismic data to potential investors, requiring them to reprocess the data into more detailed 3D or 4D formats at their own expense.
This approach, coupled with offering smaller exploration block sizes, posed higher risks for investors and limited large-scale investment in the sector.
The 2023 PIAC Annual Report revealed that Ghana’s crude oil production declined for the fourth consecutive year in 2023.
The report revealed further that crude oil production dropped from 71.44 million barrels in 2019 to 48.25 million barrels in 2023, representing an annual average decline of 9.2 percent.
Mr Dwamena highlighted the significant concerns about the country’s future revenue streams and economic stability associated with the fall in production.
He emphasized that over the past decade, oil has been a crucial part of Ghana’s government revenue, averaging around 7% annually from 2011 to 2022. From 2011 to 2023, the oil sector contributed approximately $9.8 billion to the state, underscoring its importance to the nation’s economy.
“We are talking about 7 percent of total government revenue as stated the PIAC report and the “revenue that has accrued to the state over the period of 2011 to 2023 is about $ 9.8 billion .so it is a huge chunk of government revenue and so everything about it should concern the ordinary citizen”
Mr Dwamena explained that initially, the natural pressure of the reservoir enabled robust extraction rates. However, as with all oil fields, the natural pressure has declined over time, impacting production. He added that Tullow Oil and its partners are currently using techniques such as high-pressure gas injection to maintain output levels. Despite these efforts, the operational challenges and inadequate infrastructure have hindered optimal production.
“in our part of the world, a reservoir has a life span of about 25 years so what is happening to the Jubilee fields is that naturally, the reservoir pressure has declined so what the partners led by Tullow are doing is to apply artificial pressure “
He emphasized that while Ghana has local expertise, the lack of in-country specialized knowledge has necessitated reliance on external expertise. This mirrors the successful strategies of countries like the UAE, which initially imported expertise but eventually built local capacity.
He stressed the need for Ghana to capitalize on its resources by expediting the exploration and production processes while seeking to diversify its energy portfolio. He added that ss the global energy landscape shifts towards greener alternatives, Ghana must balance its oil exploitation with investment in renewable energy. This dual approach can ensure long-term energy security and economic stability.
Furthermore, Ghana also needs to explore regional markets within Africa and align its energy policies with continental frameworks to attract investment. He referred to other African countries, including Ghana, which are currently importing refined petroleum products adding that by developing local refining capacities and leveraging regional markets, Ghana can reduce its dependency on imports and enhance its energy sovereignty.
