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Are Ghana's Oil Deposits Only for the 1 Percent?

The initial euphoria over the discovery of petroleum in Ghana has clearly waned, giving way to widespread skepticism.

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In 2007, substantial oil deposits were  discovered in the Jubilee field off the coast of Ghana’s Western Region, and production began in 2010. As a result, Sekondi-Takoradi, the region’s coastal capital, has gained new prominence in a country whose most high-profile urban center has generally been the national capital of Accra. There is already unmanageable  congestion at Takoradi Harbor.

During my visit to Ghana in March 2012, I was eager to assess the mood of the country in light of its much-touted new oil industry. The initial euphoria over the discovery of petroleum has clearly waned, giving way to widespread skepticism and lowered expectations among both  the press and the public at large.

With a fatalistic shrug, one taxi-driver told me that “it won’t make any difference” to ordinary people. 

Rumors and Innuendo

This cynicism has been abetted by accusations of impropriety, creditable and otherwise, leveled at the multinational petroleum companies operating in Ghana. The challenge is telling which is which.

For example, there are a number of conspiracy theories about why the level of oil production from the Jubilee field, originally projected at 120,000 barrels per day (bpd), reached a peak of only about  70,000 bpd in 2011. One claim I heard is that the oil companies really are producing the target amount, or even more, but are using an “incorrect” manometer that understates the actual amount. The 50,000 bpd difference is “sold on the side” to some secret buyer somewhere and the oil executives pocket the money. However, journalists and oil engineers I spoke to thoroughly discounted this scenario. The logistics alone of getting several partner companies to conspire to carry out such a fraud would be well nigh unworkable.

As a drilling supervisor explained to me, the shortfall doesn’t stem from anything quite that nefarious. Rather, the problem probably has to do with a flaw in the design of the  screen and proppant that goes into a well bore to prevent sand and rock from contaminating the extracted crude oil. The technical glitch is beyond the scope of this article, but some observers believe it might have been avoided if the Jubilee field had been  less fast-tracked than it was. In other words, the rapid development of the Jubilee field may now be showing its downsides.

Rumors and innuendo about Ghana’s oil industry proliferate because the industry lacks transparency, which is at least in part a reflection of the Ghanaian government’s insufficient oversight. For some time, the government-owned oil company, Ghana National Petroleum Corporation (GNPC) — which is a carried interest partner with private multinationals like Tullow, Anadarko, and Kosmos — also acted as a regulator. The Petroleum Commission Act passed in June 2011 was designed to obviate the potential  conflicts of interest that could arise from such an arrangement.    

Where Are the Jobs?

Although the Ghanaian government has  stated that it wants to see 90 percent of all oil jobs going to Ghanaians by 2020, it has fallen short of producing a local content bill in parliament, leaving oil companies with considerable leeway to contract any entity of their choosing. One company was reportedly importing bread, baked beans, carrots, corn, and other items from other countries (including neighboring Côte d’Ivoire) to feed its employees. And according to award-winning Takoradi journalist Kwaku Owusu-Peprah, Ghanaian Airline Antrak Air was passed over in favor of the European company NHV. Ironically, on occasions when NHV has had difficulties filling Tullow’s schedule requirements, it has asked Antrak for assistance.

Clearly, Ghana’s local supply industry cannot be carved out of the deal and excluded. On the other hand, if there are deficient areas, then both government and private enterprise need to step up their efforts to satisfy the consumption requirements of the oil companies.   

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