During the first three quarters of 2023, the nation experienced a 9.54 percent decline in crude oil production. Total crude oil produced amounted to a total of 35.42 million barrels, according to Finance Minister Ken Ofori-Atta. This decrease is linked to the natural decline in the Tweneboa, Enyenra, and Ntomme (TEN) field, leading to an escalation in the gas-to-oil ratio and water production in the Jubilee and Sankofa fields.
Addressing Parliament while presenting the 2024 budget and economic policy, the finance minister detailed that the Greater Jubilee field contributed 21.94 million barrels, the TEN field produced 5.02 million barrels, and the Sankofa-Gye Nyame field yielded 8.46 million barrels. However, this marked a 9.54 percent reduction from the 39.15 million barrels produced in the same period in 2022.
Simultaneously, the minister revealed that partners lifted 34.29 million barrels, with the Ghana National Petroleum Corporation (GNPC) lifting 6.65 million barrels on behalf of the state. This development significantly impacted Ghana’s earnings from the oil and gas sector for the Jan. to Sept. 2023 period, resulting in a substantial drop of 35.72 percent compared to the same period in 2022.
The decline has repercussions on the overall funds entering the Petroleum Holding Fund (PHF), according to the finance minister, Ken Ofori-Atta. Crude oil liftings during this period yielded receipts amounting to US$509.68 million. As for other petroleum receipts, the total funds deposited into the PHF reached US$751.32 million, representing a noteworthy decrease from the US$1,168.99 million received in the corresponding period of 2022.
The finance minister underscored that the report incorporates data from the 69th – 72nd Jubilee liftings, 22nd TEN liftings, and the 12th and 13th liftings from the Sankofa Gye-Nyame field, indicating a shift in the petroleum landscape.
Out of the total distribution amounting to US$750.69 million, the National Oil Company (NOC), specifically the Ghana National Petroleum Corporation (GNPC), received US$184.45 million. This allocation to GNPC includes an Equity Financing Cost of US$117.63 million and GNPC’s share of the net Carried and Participating Interest (CAPI), totaling US$66.82 million.
The decrease in petroleum receipts for the first nine months of 2023 raises concerns about the financial well-being of the National Oil Company. Reducing funds allocated to GNPC could potentially impact ongoing projects and strategic initiatives within the oil and gas sector.
The executive director at the Africa Centre for Energy Policy (ACEP), Benjamin Boakye, recently emphasized the need to ‘sanitize’ the regulatory environment to attract new investments. Ghana has experienced a year-to-year loss of about 20 million barrels of oil, prompting Mr. Boakye to call for a reevaluation of the country’s strategy to maximize its oil resources.
In an interview in Accra, Mr. Boakye acknowledged that Ghana had made some gains in petroleum revenue despite declining production but cautioned that prevailing conditions might not allow a repeat of such fortune. With oil prices averaging US$75 per barrel this year and the potential for further production dips, he expressed concerns about the implications for the country’s budget and highlighted the impact of declining oil production on job losses in the extractive sector.
The 2024 Budget revealed that out of the total gas production of 188,956 thousand standard cubic feet (Mscf), 77,876 Mscf was used for power generation and non-power purposes. Notably, the SGN Field, Greater Jubilee Field, and TEN Field played specific roles in transporting gas for power generation, with the average daily gas export slightly below the target.
Economist and Executive Director of ACT AFRICA, Abdul-Karim Mohammed, commented on the situation, stating that the decline in gas output is partly due to insufficient investment in processing capacity, leading to the reinjection or flaring of gas and subsequently increasing CO2 emissions.
As the decline in petroleum receipts poses challenges to national revenue, industry watchers anticipate government officials, particularly from the Ministry of Energy and Finance, to address the issue and devise strategies to mitigate its effects. The sustainability of the oil and gas sector is crucial, and concerted efforts are needed to ensure its stability in the face of production challenges.