Ghana’s oil decline: ACEP calls for urgent investment incentives

Source The Ghana Report

Executive Director of the Africa Center for Energy Policy (ACEP), Ben Boakye, has expressed concern over Ghana’s falling oil production.

The 2023 Public Interest and Accountability Committee (PIAC) Annual Report disclosed a worrying trend: Ghana’s crude oil production has decreased for the fourth consecutive year in 2023.

The report highlighted a significant drop in crude oil production, from a peak of 71.44 million barrels in 2019 to 48.25 million barrels in 2023. This represents an average annual decline of 9.2 per cent.

An alarming discovery was also made that the total proceeds from the Jubilee Oil Holdings Limited (JOHL) liftings received in 2023, amounting to US$70,456,718.93, were not deposited into the Petroleum Holding Fund (PHF) for the second year running.

In an interview on Citi TV, Ben Boakye attributed the decline in oil production to Ghana’s lack of appeal to global investors. He also highlighted the lack of government incentives for investors and local companies already producing.

He emphasized that incentivizing existing investors is crucial to attracting more investors.

“When those in your country already producing are not incentivised to put in more money, you are only joking to think you can bring in more investors… Once you are roaming around looking for investors, the narrative globally is that Ghana is not attractive. And that is known to the industry.”

“You have Wood Mackenzie, you have all the energy journals saying that Ghana is not attractive, you are only wasting money showing up at events to list what you have or showcase what you have,” he said.

Mr Boakye noted that despite the global constraint on investments, neighbouring Cote D’Ivoire is successfully attracting substantial investments.

“I don’t think it’s a general problem, there’s a general constraint on investments, but again, oil is being consumed, the demand is growing, and therefore, we need to produce it. Countries that are strategising around broad problems globally are still attracting investments.”

“One example you can always reference is our next-door neighbour Cote D’Ivoire, which was not producing significant oil, they have the same investments, we have here,” he said.

The Executive Director of ACEP urged the government to strategize and be proactive by optimizing investments, to reap the benefits if it lacks the resources for production. He cited countries that have greatly benefited from flexible terms for investments.

“We have proven reserves, but there’s room for more exploration and that costs a lot of money. So, you need to attract investments into those fields. If you have money to do it yourself, it’s always an option. But if you don’t have money, you always want to attract investments, discount the investments and be able to share the profits or the benefits,” he mentioned to host Bernard Avle.

Wood Mackenzie is the leading global provider of data and analytics solutions for the renewables, energy, and natural resources sectors.

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