Ghana - Oil & Gas

Summary

The waters off the West Coast of Africa are the fastest growing oil and gas exploration and production area in the world. Companies annually spend USD 10 Billion on exploration and production of oil and gas in the area. This has presented the West African companies with various opportunities in oil and gas services and supplies business.

The US senate committee has recognised this, and about two years ago they took a decision to source 25% of their oil from Africa by 2015. This will create up to 10,000 new jobs over the next 10 to 15 years, and creates a significant demand for technology, equipment and expertise to service offshore industries, and develop. This will develop and position Ghana as one of major oil and gas service and supply areas for West Africa.

The Ghanan government is aware of these opportunities and has launched an initiative aimed at maximising these opportunities for the benefit of the area. The Ghana Summit will help West Africa tap into the lucrative offshore oil and gas opportunities offered on the west coast of Africa from Angola to Nigeria and this initiative, with the backing of the national government, is responsible for implementing programmes that develop and promote Ghana’s capacity to provide the levels of service these new offshore industries will require.

The basic contract between the state, the GNPC and private companies is the Production Sharing Agreement. In servicing and refurbishing oilfield vessels, constructing platforms, supplying equipment, providing training and personnel services, supplying consumable products and may other oil & gas related activities.

Market Profile

Similar to the North Sea in the seventies, Africa’s offshore oil fields are now drawing enormous investment from all major players in the oil game, procuring most of their equipment, services and supplies from historically set supply relationships. This means that most of the investment spend is redirected to these countries of origin and not to African countries.

As in Aberdeen, 30 years ago, Accra offers an area with industrial capabilities in relative proximity to major oil fields. The challenge for local firms is to be globally competitive to the extent that they are able to break into new markets in an industry that is extremely demanding on quality, reliability and speed of supply and quality standards.

The initiative grew into a facilitation process aiming for inter-firm interaction and an institutional arrangement that is government driven and led by the needs of industry. A number of workshops/trade mission opportunities held to the formation of various committees where public sector partners providing the platform for private sector co-operation to identify opportunities and to facilitate intervention in these areas.

For example, UK-listed Tullow Oil announced in July 2010 the discovery of the Owo oil field which is potentially as large as their Jubilee field. The Owo well is one of three deepwater wells offshore. Estimates project as many as 1.4 billion barrels of oil equivalent in order to examine offshore extraction, transmission and processing infrastructure necessary to provide gas from source to the West African coast. These types of projects are providing a number of upstream/downstream requirements for foreign companies.

The equipment market in this sector is dollar based, and international in nature. Exploration and production is led mostly by U.S. and European operators, service companies and manufacturers, although increasing competition is coming from Japan and Latin America.

Opportunities are also available for growth in the refurbishment and maintenance of oil rigs, since local content is relatively low and no export of equipment is conducted. As exploration activity picks up more rigs, will need maintenance. As the "oil hub" for the maintenance and repair of rigs operating in Africa, the city of Accra is the most strategically important venue for overseas looking to enter the West African market place.

Opportunities

The market for Ghanan oil and gas exploration is expected to increase significantly in 2011 and beyond, as activity picks up around the coast of West Africa. Vast natural oil reserves are being found offshore and with the commencement of crude oil production in the last quarter of 2010, Ghana’s oil and gas industry can now be categorized into the upstream and downstream sectors.

The upstream sector covers the exploration, development and production of crude oil and natural gas. Currently, this involves the consortium of Kosmos Energy, Tullow Oil Plc, Ghana National Petroleum Corporation (GNPC), Anadarko Petroleum Corporation, Sabre Oil and Gas and E.O. Group which discovered the vast Jubilee oil fields in July, 2007.

According to GNPC, the Jubilee oil fields straddle two deep water blocks, i.e. the Tano Deep-Water Basin, and the west cape three points Deep-water basin, offshore the Western Region of Ghana. Jubilee is a discovery that is estimated by the Ministry of Energy to hold recoverable reserves of about 800 million barrels of light crude oil, with an upside potential of about 3 billion barrels. The discovery is said to contain significant quantities of associated natural gas.

The downstream sector covers the refining, storage, internal transportation, marketing and sale of petroleum products. This is what Tema Oil Refinery (TOR) Ltd., Ghana National Petroleum Corporation (GNPC), Bulk Oil Storage and Transportation Company Ltd. (BOST), Bulk Transporters and the Oil Marketing Companies (OMCs) have been doing over the past fifty years or more.

Tullow Oil belives that production may double at the Jubilee field by 2015. The field will start production this year and may pump 240,000 barrels of oil equivalent a day in 2014-2015, according to Nana Boakye Asafu-Adjaye, chief executive officer of Ghana National Petroleum Corporation.

Tullow, Anadarko Petroleum Corp., Kosmos Energy LLC and Ghana National, or GNPC, are investing about USD3.35 billion to develop the field. The first phase is expected to pump 120,000 barrels of oil a day in the first half of next year.

The partners are designing Phases 1a and 1b that together with Phase 1 will target 500 million to 700 million barrels in estimated oil reserves and this means that Ghana’s overall output by 2015 may be larger than that as other companies including OAO Lukoil, Russia’s largest non-state oil producer, move through the appraisal phase on exploration drilling.

Key Sectors

The following key product, equipment and service sectors have been identified as being in demand; (This list is not exhaustive);