According to him, already 50 percent of the total Greater Jubilee reserves, 33 percent of Tweneboa Enyenra Ntomme (TEN) Field, and 25 percent of Sankofa have been produced.
The Pecan and AGM fields operated by Aker were supposed to have made substantial progress towards production by now, but last year, Aker served notice that it was suspending its Final Investment Decision (FID) on grounds of market slump, and project viability concerns, he added.
In statement, the former Chair of the Public Interest and Accountability (PIAC) said “Even if new discoveries were to be made, the country will still be confronted with the spectre of stranded oil, as fossil fuel will no more be attractive in the medium to long term. Demand will fall, together with price, taking away the incentive for crude oil exports.”
Below is his full statement…
CSPOG CALLS FOR URGENT STEPS TO CONTAIN THE RISK OF STRANDED OIL IN GHANA
Ghana’s oil and gas industry faces grim prospects, as the world turns its attention from fossil fuels to renewables, the Civil Society Platform on Oil and Gas (CSPOG) has observed.
According to the group, investments in exploration and new development projects in Ghana have declined sharply; and with the reserves of existing producing fields fast depleting, the country risks an imminent downturn in the medium term, and a stranded asset in the long term.
The Economist Intelligence Unit (EIU) has predicted that, in 2021, energy investment will shift from oil and gas to renewables. Solar and wind combined have been projected to record the strongest growth among all sources of energy in 2021. Though the crude oil market seems to be on a rebound from the 2020 collapse, consumption is not expected to hit 2019 levels, providing even greater incentive for investors to turn to renewables. Cost of capital has also not helped matters. From 2-3 percent in 2010, it went up to 5 percent in 2015, and currently between 9 and 10 percent.
Last year, BP announced that, it was poised to build 50GW of renewable power by 2030, and to cut fossil fuel production by 40 percent. ENI has also announced that it intends to dispose of all non-core upstream assets and will no more undertake mega projects for oil and gas. The other super majors, Shell, Total, ExxonMobil, and Chevron have made similar commitments, with Shell bent on leading the investment race in carbon-neutral energy production.
The situation, in the view of CSPOG, is further compounded by the EU Taxonomy agenda, a classification system, establishing a list of environmentally sustainable economic activities EU registered companies are encouraged to invest in. The EU taxonomy is an important enabler to scale up sustainable investment, discouraging investments in hydrocarbons. Already, the daily production of Oil and Gas Majors in Africa is on the decline, and projected to settle at 34 percent by 2025, as they sell off assets in upstream oil and gas sector to invest in renewables.
An analysis of the country’s oil production data since 2010 indicates that, unless new discoveries are made, Ghana’s oil industry will soon become moribund.
Already 50 percent of the total Greater Jubilee reserves, 33 percent of TEN Field, and 25 percent of Sankofa have been produced. The Pecan and AGM fields operated by Aker were supposed to have made substantial progress towards production by now, but last year, Aker served notice that it was suspending its Final Investment Decision (FID) on grounds of market slump, and project viability concerns. Even if new discoveries were to be made, the country will still be confronted with the spectre of stranded oil, as fossil fuel will no more be attractive in the medium to long term. Demand will fall, together with price, taking away the incentive for crude oil exports.
The time to act is now
The situation calls for urgent steps to secure the future of the industry. CSPOG believes that, when oil become a stranded asset, it will still have relevance for those countries that have the
technical capability to exploit the resource for domestic use, just as in spite of coal being a dirty fuel, has remained relevant to the economies of countries that have huge reserves of the resource, such as Brazil, South Africa, China, Australia, and New Zealand.
In this regard, CSPOG urges the Ghana National Oil Corporation (GNPC) to take its drive towards operatorship seriously, and to begin negotiations with potential partners towards arrangements that will help to fast track the achievement of this ambition. Since Aker has still
not come on stream, it affords an opportunity to re-open discussion to see if the NOC could reach an accommodation with Aker on the matter of a partnership that revolves on mentoring GNPC into operatorship in the shortest possible time. GNPC also needs to be resourced financially or redirect some of its non-core expenditure to commence exploration on Block 1, which was reserved for the Corporation during the first Bid Round and Licensing process. The Corporation should also fast-track data acquisition and eventual operatorship of the onshore Voltaian Basin to build capacity for operatorship of other fields.
The government, through the Ministry of Energy and the Petroleum Commission should ensure strict and effective implementation of the country’s local content regulations to build the needed capacity for Ghanaian businesses to be able to provide support services to the National Oil Company when it becomes necessary for the country to exploit its own hydrocarbon resources, just as is the case of coal in the Powder River Basin in the USA. It is also imperative that we begin to think through our own local beneficiation capability strategy, because a global carbonneutral economy will de-emphasize crude oil refining as they become commercially unviable, and pose a challenge for the country’s need to make use of its otherwise stranded crude oil reserves.
It’s important to act now to avoid the imminent apocalypse that confronts our petroleum industry.
By Laud Nartey|3news.com|Ghana]]>