The Africa Centre for Energy Policy (ACEP) has described the arrival of the FPSO John Agyekum Kufour (JAK) as timely and good news for Ghana.
A statement signed by its Deputy Executive Director, Benjamin Boakye, said the arrival signals timely completion of the Sankofa Gye Nyame (SGN) field Development, estimated to produce 2,633,110 barrels of oil in 2017, when production starts in the last quarter of the year.
According to the energy think tank, a confluence of factors have accounted for the country’s financial difficulties including continuous decline in petroleum revenues as a result of falling crude oil prices and low crude oil production levels resulting from the challenges faced by the Jubilee field in respect of the turret bearing of the FPSO Kwame Nkrumah.
Below are details of the Statement
The arrival of the FPSO John Agyekum Kufour (JAK) is timely and a good news for Ghana. This signals timely completion of the Sankofa Gye Nyame (SGN) field Development, estimated to produce 2,633,110 barrels of oil in 2017 when production starts in the last quarter of the year. Though the projected production for 2017 is not significant compared to existing field, this will contribute to overall fiscal stability in government’s estimates for the year.
Both the state of the Nation Address and the budget presented by the President and the Finance Minister respectively highlighted the dire fiscal position of the country. A confluence of factors have accounted for the country’s financial difficulty including continuous decline in petroleum revenues as a result of falling crude oil prices and low crude oil production levels resulting from the challenges faced by the Jubilee field in respect of the turret bearing of the FPSO Kwame Nkrumah, which is scheduled to undergo permanently moored fix in the second half of the year. This means that further delays in the SGN development will have adverse impact of government revenues.
The contribution of SGN to government revenue will be greater in 2018 with about 50,000 bop/d and 180mmscf/d of gas production. This is in spite of the fact that corporate taxes may not be realized in the first five years of production resulting from the juicy fiscal package granted the project by government.
The SGN as the third oil field since Ghana started commercial production of oil further de- risks Ghana’s hydrocarbon basins, particularly the Tano basin. This signals prospective investors of the oil and gas potential of the country. It is therefore important for government to take advantage of the current upstream environment to attract capable companies to sustain oil production. Further bold step will be required to sanction companies holding on to licenses without meeting their minimum work obligation. We recommend that non- performing contracts should be reviewed and, where necessary, relinquishment decisions be urgently taken on inactive blocks to free up space for more serious investors.
We further recommend that the Government of Ghana should operationalize the Petroleum Act, 2016 (Act 919) to provide the transparentmechanism for the award of Ghana’s upstream oil and gas licenses.
