Petroleum Service Sector
Ghana is an emerging oil and gas producer with enormous potential and with over 5 years of commercial production since December, 2010.
The first significant deepwater discovery for Ghana’s Oil and Gas sector was in 2007. A consortium of companies comprising Kosmos Energy Ghana (Kosmos), Tullow Ghana Limited (Tullow), Anardarko Petroleum Corporation, Sabre Oil and Gas Limited, E.O. Group in conjunction with the GNPC announced discoveries of significant quantities of oil and gas in the offshore deepwater Tano/Cape Three Points basins located in the southernmost part of Ghana.
Under this circumstance, the Petroleum Law required that the discovered oil and gas resources in the two blocks be produced as one unit to reduce cost and optimize the recovery of oil and gas in the field. The two discovered fields were therefore unitized and designated as the Jubilee Field, in commemoration of Ghana’s Jubilee Year celebration.
There are four (4) major oil and gas fields in the country namely: the producing Jubilee field, the sub-commercial producing Saltpond field, the Tweneboa-Enyenra-Ntomme (TEN) field and Sankofa-Gye-Nyame fields. In addition to this, twenty-three (23) post Jubilee discoveries (between 2008 and 2014) have been made offshore Ghana on six different blocks in the Tano/Cape three points basin which have resulted in over 80% exploration success rate.
The petroleum industry comprises mainly of the upstream and downstream sectors and these encompass the process of exploration, production, refining, transporting and marketing of petroleum products. The upstream sector, regarded as a high risk, high reward and high investment sector, identifies deposits, drills wells and recover raw materials from underground. The sector includes areas such as rig operations, feasibility studies, machinery rental and extraction of chemical supply. Downstream sector, also regarded as a low risk, low reward and low investment sector, comprises of operations such as refineries and marketing. These operations turn crude oil into usable products such as gasoline, fuel oils and petroleum-based products. Marketing services help move the finished products from energy companies to retailer or end users.
There is also the midstream sector which links the upstream and the downstream entities. These mostly include resource transportation and storage, such as pipelines and gathering systems.
The broad objectives of the upstream and downstream sectors for Ghana’s oil and gas industry are:
- Upstream Objectives:To ensure the effective management of the oil and gas resources of Ghana and also accelerate exploitation of the development of new hydrocarbon resources for the overall benefit and welfare of all Ghanaians.
- Downstream objectives: To rehabilitate and expand petroleum refining, storage, distribution and marketing infrastructure, ensure fair distribution of petroleum products to all parts of the country and reduce heavy burden of oil imports on the country’s economy by accelerating the exploitation of indigenous resources.
Figure 1 below gives a pictorial view of the composition of players in Ghana’s Oil and Gas sector and a brief on these entities is explained below.
Figure 1: The Petroleum Industry Structure
- The Ministry of Energy is the entity that provides policy direction for Ghana Petroleum Industry by formulating policies, and monitoring and evaluating.
- The Petroleum Commission (PC), Energy Commission and the National Petroleum Authority (NPA) provide the regulations for the industry.
- Petroleum Commissionis mandated by the Petroleum Commission Act, 2011 (Act 821), to regulate, manage and co-ordinate all activities in the upstream petroleum industry for the benefit and welfare of all Ghanaians.
- National Petroleum Authority (NPA), established by NPA Act 2005, ACT 691, ensures that the downstream sector of the petroleum industry remains efficient, profitable, and fair and at the same time, ensures that consumers receive value for money.
- Energy Commission and Public Utilities Regulatory Commissionregulates the midstream oil and gas sector.
- There are a host of players in the industry and these include the IOCs, GNPC (GNPC Explorco, GNPC Tradco), Ghana National Gas Company, Tema Oil Refinery (TOR), BOST and Licensed Bulk Distribution Companies, a host of licensed oil marketing companies, petroleum entities and bulk distribution firms, Environmental Protection Agency (EPA), Maritime Authority, Ghana Navy and other Security Services.
The main agencies of the Oil and Gas sector in Ghana are:
- The Ghana National Petroleum Corporation (GNPC)is Ghana’s National Oil Company (NOC), established in 1983 by PNDC Law 64 as a commercial strategic vehicle for state participation in the oil and gas industry. It was to support the government’s objective of providing adequate and reliable supply of petroleum products and reducing the country’s dependence on crude oil imports, through the development of the country’s own petroleum resources. The objects of GNPC as enshrined in section 2 (1) of PNDC Law 64 are “to undertake the exploration, development, production and disposal of petroleum”. The Petroleum [Exploration and Production] Law, 1984, PNDC Law 84, was subsequently enacted to provide the regulatory framework for the exploitation of the country’s hydrocarbon resources. PNDC Law 84 establishes the contractual relationship among the state, GNPC and prospective investors in upstream petroleum operations. This law also grants GNPC the right of entry into any open acreage to undertake exploration activities.
- Tema Oil Refinery (TOR) has been refining crude oil into petroleum products for the past 50 years and continues to produce quality petroleum products for the Ghanaian market. TOR Limited refines and distills many forms of petroleum products including Liquefied Petroleum Gas (LPG), Gasoline (Petrol), Kerosene, Aviation Turbine Kerosene (Jet A1), Gas Oil (Diesel), Premix, Naphtha, Fuel Oil and Cracked Fuels. It is the premier and only refinery in Ghana. The refinery was among the first eight refineries in Africa as at 1963. Our refinery is a 45,000 barrel per stream day (bpsd) capacity Crude Distillation Unit and supplies this quantity out of the national demand of 65,000 bpsd.
- Bulk Oil Storage and Transportation (BOST) Company Limited wasincorporated in December 1993 as a private limited liability company with the Government of Ghana as the sole shareholder. Until May 2001, BOST was responsible for the distribution of refined petroleum products from its strategic depots located throughout the country. Additionally, BOST also holds the Natural Gas Transmission Utility License granted to it by the Ghana Energy Commission (EC) on December 19th, 2012. The NGTU as per EC Act 541, 1997, will provide transmission and interconnection services for natural gas without discrimination throughout the country. The transmission license given to BOST as per Natural Gas Licensing manual shall permit BOST:
- To monitor and control the operation of the national interconnected network for the transmission of natural gas in areas within the country , and to ensure the safe, reliable and economic transportation of natural gas facilities connected to the transmission system
- To provide transmission interconnection services without discrimination to other licensees in the natural gas industry; and
- To provide transmission interconnection services to operators of natural gas networks in ECOWAS member states.
- Ghana Oil Company Limited (GOIL): GOIL was incorporated as a private limited liability company on June 14, 1960 as AGIP Ghana Company Limited with the objective of marketing petroleum products and related products particularly fuels, liquefied petroleum gas (LPG), lubricants, bitumen, and specialty products in Ghana. The shareholders were AGIP SPA of Italy and SNAM S.P.A. The Company’s main business is marketing and distribution of petroleum products in Ghana, one of the tenets of the New GOIL is to move beyond the current frontiers to marketing and distribution of energy products in general. Currently, GOIL’s technical partners are ENI SPA (AGIP) of Italy.
- Ghana Gas Company Limited (GNGC): Ghana Gas is mandated to build, own and operate infrastructure required for the gathering, processing, transporting and marketing of natural gas resources in the country.
- Ghana Cylinder Manufacturing Company (GCMC): GCMC was incorporated under the Companies Code 1963 (Act 179) as a private limited liability company on the 14th of May 1998.The major purpose for its establishment was to promote wider usage of LPG as a substitute for charcoal and firewood and thereby curtail some of our environmental challenges of degradation, deforestation and desertification caused by excessive use of firewood which accounted for over 71% of energy consumed in the domestic sector. The company began production in the year 1998. GCMC currently has a valid license from the National Petroleum Authority to retail Liquefied Petroleum Gas at its Premises.
THE OIL AND GAS SECTOR PLAYERS
Upstream industry is made up of a mix of Majors (ENI), Independents (Hess, Anadarko, Tullow, Kosmos etc), NOC (PetroSA) and Local Ghanaian companies: E&P and Service providers. Figure 2 below gives a list of the operators in exploration of Oil and Gas, with their investments made to date.
Figure 2c: List of operators in the exploration of oil and gas with investments made to date
For a list of other players in the upstream sector, kindly see the website of the Petroleum Commission
For a list of players in the downstream sector, kindly see the website of the National Petroleum Authority
The Ministry developed Minerals and Mining Policy of Ghana to promote diversification to lesser known minerals, and linkages between the mining sector and other sectors of the economy. In 2017, the Ministry will facilitate approval and implementation of the policy. This is expected to increase local content participation, among others.
Additionally, the Ghana Geological Survey Authority Act, 2016 (Act 928) was passed by Parliament to enhance new mineral discoveries throughout the country and diversify the country’s mineral resource base from the traditional minerals.
The Ministry is developing a fully-fledged computerized mining cadastral system to ensure accountability and compliance in the management of mineral rights to boost investment. When completed in 2017, investors can apply for mineral rights online, and conduct cartographic searches in District Offices.