Ghana: The new oil star of West Africa

By Patrick Smith in Accra

Posted on Thursday, 26 August 2010 13:07

Geology and political pragmatism are boosting Ghana’s regional leadership credentials ?as recent oil and gas discoveries revise calculations about its economic potential.

Half a century after Kwame Nkrumah told fellow leaders “to seek the political kingdom” as he established Ghana’s role in promoting African unity, his country has another chance to push the continent forward with a strong resource base and some political imagination. The discovery of oil and gas in commercial quantities and the rush of companies of the stature of ExxonMobil to negotiate production agreements has changed calculations about Ghana’s economic potential and the role it could play in the West African sub-region.

Industry experts are no longer talking cautiously about the prospects of substantial oil reserves being found both offshore and onshore but are predicting the growth of a new oil and gas production zone stretching along the West ?African seaboard from Ghana to Senegal. Western and Asian companies that want to invest in the zone make it clear their preferred centre of operations would be in Ghana.

That is why over 500 oil men and women from across the hydrocarbon universe packed a conference centre in Accra in March, eager to hear from the politicians and technocrats who are shaping Ghana’s energy industry. The first message from Energy Minister Joseph Oteng-Adjei was a salutary one, immediately addressing the sceptics: “Government is very much aware of the calamities that have befallen some oil-rich countries where the blessings of oil have turned into a bitter curse characterised by corruption, mismanagement, under-development, social conflict and environmental damage,” he said.


Oteng-Adjei navigated a difficult path between brutal frankness about the political crises around the oil business in West and Central Africa and spelling out his government’s determination to manage its energy industry differently. Diplomatic imperatives were foremost as Oteng-Adjei avoided criticising specific regimes. He rejected any suggestion that Ghana could or should supplant Nigeria as the leading oil centre in the hydrocarbon-rich Gulf of Guinea.

Officials in Accra emphasise the complementarity of Ghana and Nigeria in a regional energy strategy. “We’re not just being diplomatic here, we’re looking at our comparative resource bases and realpolitik,” an advisor to the state-owned Ghana National Petroleum Corporation (GNPC) told The Africa Report. “Nigeria is an established oil exporter, is just starting as a gas producer and is already in the world’s top five. Ghana is buying some of that gas through the West ?African pipeline.”?

Ghana has a different strategy, he added, which would prioritise the integration of its oil and gas production with the local economy as well as the building of strategic links with other nascent oil and gas producers in the region such as Côte d’Ivoire, Sierra Leone and Liberia. “The critical point for us is to focus on what value we can add to these resources. That means refining the oil we produce in the region for our own use and using the associated gas to generate electric power. I think there’s a consensus in the region that we have got to use this chance to save on oil imports and to fix the power emergency.”?

Vice-President John ?Mahama is promoting an ambitious improvement of transport links between Ghana and Côte d’Ivoire, which he said would underpin a much more dynamic regional market. “We must be able to remove artificial boundaries now and form a common market,” Mahama told a visiting Ivorian delegation in Accra. That would mean making radical reforms to the trade bureaucracy and breaking down the linguistic barriers between the francophone and anglophone members of the Economic Community of West African States, he said.

Jubilee bonanza

At the heart of this regional integration, officials in Accra see a key role for the GNPC. Its managing director, Nana Boakye ?Asafu-Adjaye, spelled out the GNPC’s development plans: to be “at the forefront of energy research, owning and managing oil exploration and production equipment and infrastructure, and leading in financing the growth of the oil and gas sectors”.

Driving all this are opportunities unleashed by a spate of oil and gas discoveries along the West African seaboard in recent years. Last year the National Oil Company of Liberia opened the bidding for five new oil blocks in its third licensing round since 2004. Mid-sized companies such as Spain’s Repsol and the USA’s Anadarko are already exploring along Liberia’s offshore waters.

Interest in the area is mounting after Anadarko’s success in Sierra Leone, where it made its Venus discovery in September 2009. Anadarko announced that the early data from Venus looked “very encouraging”, but the company has not released any reserve estimates. A host of other companies are exploring in the region, such as India’s Mittal Investments and African Petroleum Corporation owned by Frank Timis, whose mining operations have been subjected to extended legal battles.

Most significant among the leading players in Sierra Leone and Côte d’Ivoire are Tullow and Anadarko, both of which have played a pioneering role in the development of Ghana’s deep offshore oil fields over the past five years. Two other companies – Nigeria’s Afren and the USA’s Vanco, both of which have exploration acreage in Ghana – are working across the border in Côte d’Ivoire.

Unquestionably, Ghana’s Jubilee Field is the biggest success story in the region so far, but the Odum discovery in 2008 and talk of the massive potential in the Keta Basin are drawing more exploration companies into the region.

Another important new development is the involvement of Nigerian exploration and production companies, such as South Atlantic Petroleum and Oranto Petroleum, in the little-surveyed offshore areas of ?Benin and Togo.

Oranto has also launched an exploration programme further up the coast in Senegal, where Tullow also holds acreage. Mineral-rich Guinea has brought exploration company Dana Petroleum into a production-sharing contract with the USA’s Hyperdynamics.

None of this qualifies as an oil rush, but it is beginning to look like more of a determined march into a region that is destined to become more important as a source of new oil and gas finds. It is Ghana’s good fortune to be at the centre of this new development.

This article was first published in the June-July 2010 edition of The Africa Report.

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