The Public Interest and Accountability Committee (PIAC) has published its latest Issue Paper titled “The Role of The Ghana National Petroleum Corporation (GNPC) in the Upstream Petroleum Industry: Challenges and Prospects.”
This Issue Paper highlights the challenges being faced by the National Oil Company (NOC) and prescribes some potential avenues for growth.
The importance of the role of the GNPC in the upstream petroleum industry cannot be
overemphasised as it plays a crucial role in the maximisation of the country’s oil and gas resources for sustainable development.
The Paper provides an overview of the establishment of the GNPC, discusses the identified challenges being faced by the NOC and what prospects exist to turn around the fortunes of the GNPC to fulfil its mandate as enshrined in its establishing Act.
Some of the challenges highlighted in the document include the revision of PNDC Law 64, funding of GNPC from the Petroleum Holding Fund (PHF), delays in releases to GNPC, time-bound Support from the PHF, indebtedness of State and other Government Agencies.
PIAC’s latest Issue Paper prescribes in detail some prospects including institutional strengthening and stand-alone operatorship.
“NOCs are facing unprecedented pressures from the energy transition, which is the long-term shift away from fossil fuels towards cleaner and more sustainable sources of energy. The energy transition is driven by various factors, such as the growing awareness of climate change and its impacts, the increasing demand for energy access and security, the declining costs and improving performance of renewable technologies, and the changing consumer preferences and social expectations.
“The energy transition poses an existential threat to NOCs, as it could reduce the demand and value of their core products, expose them to environmental, social, and governance (ESG) risks and liabilities, and undermine their competitive advantage and market share. The making of an effective NOC amid the energy transition is a complex and challenging task that requires strategic vision, innovation, and adaptation. To survive and thrive in the transition, NOCs need to rethink their strategies and business models and explore new opportunities and markets.
“It is worthy of note that the Law that established GNPC is almost 40 years old. The law was established at a time when there was no petroleum activity and GNPC was used as a special purpose vehicle (SPV) to begin prospecting for economic activities in the industry. The industry has since that time (40 years ago) evolved into a thriving one with three production fields (Jubilee, TEN, Sankofa), as well as new fields coming on stream (Jubilee South-East) and several other offshore explorations at various stages of development and onshore exploration (Voltaian Basin). After almost 40 years since its enactment, this law must be reviewed and amended to reflect the current role and international best practices of the industry.
“The review is also critical to direct and allow the NOC to be able to operate efficiently and effectively within the sector. GNPC’s role has evolved to become a key commercial player. It is expedient that the Law that established the Corporation be reviewed,” the report said.
The review will seek to strengthen and promote, among others, these critical aspects of the NOC:
• Strengthening the core business: This will help optimise the existing operations, improving efficiency and productivity, reducing costs and emissions, enhancing resilience and reliability, and investing in high-quality and low-carbon assets. It also allows GNPC to maintain their profitability and cash flow, while also contributing to the global climate goals and meeting the social expectations of its stakeholders.
• Diversifying into new energy sectors: Expanding into renewable energy, such as solar, wind, hydro, and biofuels, as well as other low-carbon or carbon-neutral technologies, such as hydrogen, carbon capture and storage, and electric vehicles. This will allow
GNPC to leverage its existing capabilities and resources, such as engineering and project management skills, access to capital, and land and infrastructure assets, while also creating new revenue streams and markets, and enhancing its ESG performance and reputation.
• Transforming into energy providers: The provision of integrated energy solutions to customers, such as electricity generation and distribution, energy efficiency and management, and energy trading and marketing, are some of the ventures an amendment can open the Corporation to.