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ANALYSIS: Search for Oil Continues in Volta Region

  • SOURCE: | qwesa2big
  • The ancient Egyptians believed that the phoenix bird lived for 500 years, consumed itself in fire, and was renewed from its ashes. More than 30 years ago attempts were made by oil companies to search for oil in the Keta area. This year international oil exploration companies are back again in the same area searching for oil, the liquid fuel that now runs the world economy.

    Can the renewed search for oil in the Keta basin be seen as another good beginning to turn Ghana into an oil economy. Or can it be said that the Ghana National Petroleum Corporation (GNPC), the state institution charged to effect and monitor oil exploration in the country, simply wants to attract international attention and dodge the issue of accountability that has is on the political agenda this election year?

    Two American oil exploration companies have struck a partnership deal to work in collaboration with the GNPC to drill oil in Keta. The Houston based Anadarko Petroleum Corporation, one of the world’s largest independent exploration companies and Devon one of the top five public oil and gas producers based in the United States are ready for business. By the end of the year, they would ship drilling gear to Ghana for oil in the Keta basin that is a key project. The two are engaged in oil drilling in two other African countries, Gabon and the Republic of Congo.

    The GNPC, by state law, has joined in the trinity for the exploration. The agreement stipulates that GNPC would have 10% stake with the option to raise it to 25% if oil and gas is discovered in commercial quantities. Devon’s wholly owned Canadian operating unit trades on the Toronto Stock Exchange under the symbol NSX. It has a good investment record and a 30-year history of making intelligent acquisition of assets. The most significant transactions took place in 1998, 1999 and 2000. That changed the fortunes of the company. The 1999 merger with Penny Energy more than doubled Devon’s proven reserves and enterprise value.

    A proven four-part strategy of exploration, acquisition, development and marketing is the guiding source behind Anadarko’s success in the oil industry. In the past 14 years, Anadarko underwent a dramatic transformation. Crude oil accounts for half of its total reserves. The company’s domestic operations are focused in Kansas, Oklahoma, Texas, the Gulf of Mexico, the Rocky Mountains and Alaska, with its international projects underway in Algeria, Tunisia, Canada, Venezuela and Guatemala.

    The Volta region lacks natural resources as compared to other regions that abound in mineral resources such as gold, diamonds, bauxite, and forestry resources including cocoa and timber. Any discovery of oil in commercial quantities would therefore be a ‘millennium gift’ to the people of the Volta Region and the nation.

    The region experiences poor rainfall and agriculture productivity is very low. The soils are poor and infertile which affects crop yield. It has a high population rate that comprises mainly impoverished people. Poverty drove many energetic young men from the region to the cocoa growing areas in Ashanti where they are employed on cocoa plantations or work in the gold mines at Obuasi. Those left behind are often women, children, the aged, and the sick who could not make any meaningful contribution to the economic development of the region.

    Some religious people and social commentators hold the view that the involvement of the two oil companies in the search for oil in the Volta Region would yield a positive result and effectively break an ancient curse on the land. It is believed that a legendary ancestor, Torgbui Tsali, cursed the land because he was ill-treated by the Ewes when he arrived from Nortsie the ancient home of Ewes in Togo.

    Torgbui Tsali is said to be the last Ewe to have left Nortsie, the administrative town of the kingdom of the notorious king Torgbui Agorkorli. As Tsali trekked across the land to the south, he performed miracles in the settlements along his route but each time he was despised and the authenticity of his supernatural powers (ebo) was doubted. He allegedly turned into a spirit and vanished after the Anlo elders attempted to kill him. It is alleged that before Tsali entered the spirit realm he cursed the land and that curse is believed to be affecting the development of the region to the present day.

    Other sources claim that the Anlo’s at that time believed that the gods must be pacified to prevent a disaster. Hence, in some towns and villages shrines have been built in honour of Torgbui Tsali as a reminder of his exploits and to please the spirits to reverse the curse and to promote business in the region. Another school of thought believes that cross-border criminal activity by some outlawed Anlo people, and bloodletting during wars in the ancient Ewe communities brought a curse to the land.

    However other people who do not share these views say which ever the case, a discovery of oil in commercial quantities in the Keta Basin would put an end to these ancient beliefs and redirect the region on a path of rapid economic development.

    The off-shore Keta basin project now appears to be the only hope for the Anlos and so far the oil prospecting companies have provided $9 million to drill a test well for the next three years.

    Oil seepage was sited in the onshore Keta area as far back as the last decade of the 19th century. In 1965, the Romanian government provided technical assistance for the exploratory drills. Oil wells were drilled at Anloga and Atiavi. In the latter part of the 1960’s the search for oil spread up-country into the mid-part of Ghana that is defined as the Voltaian Basin. At least one deep well was drilled in this huge exploration by Shell in 1978.

    When the news was spread that, there was an evidence of oil in the Volta region, some international companies scrambled for licence to prospect for oil. Notable among them were Amoco, Chevron, Mobil, Occidental, Signal and Union Carbide.

    In the early 1970’s, a consortium of American companies with Mesa Petroleum as the operator moved to the Dzita area in the onshore Keta Basin.

    In 1994, more oil prospecting companies were involved in the search for oil in Ghana. In that year a consortium of four companies including Phillips, Zapata, Oxoco and Agip made the first discovery of natural gas in the Cape Three Points area but the discovery was never appraised because gas was not of interest to the oil companies at that time.

    In 1997 another consortium of American Agricultural Co-operatives, AGRI- PETCO, with refinery interests and a drilling company started drilling oil in Saltpond. Initially, production reached 4,000 barrels of oil per day but output dropped steadily. In 1986, the oil field was shut down as output fell to 600 barrels per day.

    Engineers say Ghana’s modest upstream oil industry is one with an onshore and five offshore sedimentary basins. Officially the country has no crude oil reserves and does not produce crude oil but has an oil refinery. The Tema Oil Refinery has an operating capacity of 45,000 barrels per day and runs on crude oil imported from Nigeria.

    The GNPC is responsible for importing crude and refined petroleum products. It is empowered by the Petroleum Law 1984 to search for oil in all lands within Ghana and the country’s continental shelf, on its own or in association with foreign partners. This gives the GNPC the right to sign contracts with other companies on behalf of the government, a kind of agreement that makes provision for production and sharing. The GNPC also has the responsibility to procure, store and to engage in the bulk distribution of petroleum products.

    The national debt has shot up to some $9 billion and some economists believe that it is only when the country transforms into an oil economy that this debt can be paid without much pain. The country’s current consumption of petroleum products is about 950,000 metric tonnes per year. The increasing demand for energy by industry and domestic consumption is giving rise to intensification for the search for oil and gas, and has set in motion projects relating to the importation of gas via pipelines from Nigeria.

    Smaller companies are finding it easier to prospect for oil in Ghana than in other neighbouring West African countries due to the flexibility of the Petroleum Law of 1984. Besides, the term for oil exploration and prospecting contracts is beneficial to international investors.

    In Ghana, oil-prospecting companies do not make front payments and there is no limit on cost recovery. Royalties are negotiable and income tax for oil companies is 35%, which is relatively better than can be obtained elsewhere in the sub region. Rental payments are low and there are no restrictions on the repatriation of funds and no import duties on exploration equipment.

    Ghanaians are however worried about the high cost involved in the search for oil in the country. The GNPC has spent millions of dollars of the taxpayers’ money without striking oil. Every citizen looks ahead with the hope that Ghana’s day of joy would soon come when oil is discovered but the pain is being felt and the pleasant news that oil has been found is yet to come.

    With its many shortcomings and refusal to make its accounts available for public scrutiny, the GNPC may be giving Ghanaians a lasting legacy of heavy debt if the search for oil proves otherwise and remains a puzzle.

    As long as the oil market remains a seller’s market and cocoa and gold prices continue to tumble, the nation would continue to be on steroids and the government would always draw cash from the World Bank and the IMF to run the economy.

    In the Middle East, tension remains high as Israeli military helicopters bomb targets in Palestinian controlled territory. An international diplomatic effort to calm the crisis prevented the oil market from surging higher. Oil traders drew some confidence from a pledge by Saudi Arabia, the world’s largest oil producer, that it would not cut supplies in protest at Israel.

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