Ghana’s recently discovered oil and natural gas reserves present a huge opportunity for foreign investors and a reversal of fortune for a country that less than 10 years ago was energy starved. Indeed, according to minister of petroleum Emmanuel Armah-Kofi Buah, “in the next five years, there will be a $2bn investment opportunity in the upstream sector in Ghana”.
Speaking in Atlanta, Georgia in May 2015, Mr Buah said his country’s medium-term outlook is very strong, especially for the upstream sector, which includes exploration and the production of oil and gas from the initial search through to the drilling and operation of viable wells, an area where foreign companies are already active.
The Jubilee field, Ghana’s first major oil find, was discovered in 2007 and came online in 2010. It now produces 105,000 barrels a day. The Tweneboa-Enyenra-Ntomme (TEN) field, discovered two years later, is expected to yield 80,000 barrels a day, with initial production scheduled for 2016. In addition, Ghana recently signed a $7bn development agreement with Italian company Eni for the Sankofa field, with an expected yield of 60,000 barrels a day. In all, 23 discoveries have been made since the UK’s Tullow Oil announced the Jubilee find.
The oil fields also have the potential to produce a bounty of natural gas: 3.4 million cubic metres from Jubilee, 2.3 million from TEN and 5.7 million from Sankofa, when it comes online in 2018. Ghana’s $1bn Atuabo gas-processing facility, financed by the China Development Bank, began production in April though it is not fully operational.
Furthermore, says Mr Buah, Ghana sees itself as the gateway to the landlocked west African countries that surround it and aims to become a net exporter of oil to the region.
Mr Buah notes other sectors ripe for foreign investment, such as transportation, housing, agriculture, ports and railways, as well as the country’s many natural resources. “Gas and oil should be the springboard for other sectors of the economy,” he says.
With regards to other opportunities for investors, Mr Buah cites the 3000 megawatts of new electricity generation that must come onstream in the next three years, the Electricity Company of Ghana’s desire for private partners to upgrade its ageing and inefficient operations, and the need for investment to add value to raw materials, including improved refining capacity. “We have a lot of oil in Ghana, but we are importing the finished product from Amsterdam,” he says. “We want to make Ghana the Amsterdam of west Africa.”
Avoiding the curse
Mr Buah also emphasises his country’s determination that its oil wealth should be “a blessing, not a curse”. For foreign investors, this means that at least 5% of the equity in 'upstream' projects related to the energy sector and 10% of investments in the services sector must be owned by Ghanaian investors.
This requirement is part of ‘local content’ legislation enacted in 2013 that mandates that Ghanaians should receive priority in employment in the petroleum industry and benefit from these resources. The goal is to build local capacity, says Mr Buah, adding that local universities and technical institutes are stepping up training.
Ghana has also taken steps to ensure its oil wealth is not squandered, by creating the Petroleum Holding Fund into which all revenues from the country’s oil resources are paid and managed for the benefit of its citizens, with rules to promote transparency and accountability.
“Be international, but local in your outlook,” Mr Buah advises potential foreign investors. “There is no chance of a higher return on investment than in Africa and Ghana is leading the way.”