Giving the amount of recent activity in Ghana’s upstream oil and gas industry, BFT spoke to David Ampofo, CEO of the Ghana Upstream Petroleum Chamber to hear his views on developments.
Question:
How is the oil and gas industry doing at the moment?
Answer:
Industry is bouncing back gradually. COVID 19 continues to hold us back but with new investments, the industry is looking up. During the early days of the pandemic, the price for a barrel of oil fell below $20. It sent the demand for energy crashing. But today things are rebounding and we are beginning to see an increase in consumption. Tullow and partners are busy again with a good injection of capital into the Jubilee and TEN operations. ENI and partners are also very active with a recent discovery and we expect to see many such more discoveries. It would be great to see this increase in activity translate into more jobs and more projects along the value chain. I believe demand for energy post COVID 19 will not only recover but increase.
Question:
- What do you think of GNPCs decision to take a major stake in Aker and AGM?
Answer:
GNPC is Ghana’s national oil company. It holds the oil in trust for all citizens. It is a partner to all the foreign oil companies working offshore including Aker and AGM. That it has decided to increase its stake in the game could be very important. There are enormous resources offshore Ghana that need harnessing for the good of the country and GNPC should be in a good position to do this. The stakes are high. Taking sizable stakes in business through mergers or acquisitions represent significant milestone transactions. However success depends on a high degree of transparency, the strengthening of governance systems and enhanced technical capacity. Also important is the need to obtain long term financial sustainability and improve operational efficiency.
There are the additional challenges that come with being a state-owned entity. While National Oil Companies are generally a substantial source of government revenue, especially in boom times, many also end up taking on large debts and can be a major drain on the system. I guess what I’m saying, is that with all this in mind, it cannot be business as usual. GNPC, and for that matter Ghana, cannot afford to fail.
In all of this, our partnership with the international oil companies is crucial as they provide the investment and expertise required to develop the industry. Essentially, our ability to bring about a win-win situation would make all the difference.
Question:
- Are there any risks associated with it?
Answer:
Risks come with all business. The more accurately those risks are calculated, the better. It would be an important step for the country to understand what the risks are and develop mitigation measures.
Question:
- What would you say was the reason behind Exxons departure?
Answer:
I think people have read too much into it. Remember, they prioritized capital spend across their portfolio and decided not to go forward with this project. These are purely commercial decisions.
Question:
- What is your view on the dispute between ENI and Springfield?
Answer:
This is a business dispute that has ended up in court. This too happens in business. ENI and Vitol have called for more work to be done to determine the commerciality of Springfields Afina oilfield as well as to determine the connection between it and their Sankofa field while Springfield argues that adequate work has been done to make the case for the unitization of both fields. The courts will settle the matter as is their role. It is important for both companies to reach a common understanding if there must be an agreement. ENI is an important partner, as is Springfield
Question:
- What is your view on the energy transition?
Answer:
I think it’s one of those expressions that mean different things to different people. The global net zero emissions by 2050 effort may be in full swing but how does that translate for poorer countries? The question is, how will African nations meet the energy needs of their people while keeping carbon emissions to a minimum?
Besides, across Africa, various countries are at different stages of electrification and each country will have its own specific pathway towards power generation. Interestingly, Africa is home to about 40% of global gas discoveries this decade so it would be unreasonable to expect countries to forgo fossil fuels entirely. At the same time, one cannot ignore the momentum behind the transition.
Where do we sit in the scheme of things and where are the policies and resources that will make possible Africa’s energy transition? Africa countries ought to come together to plan the use of their available oil and gas resources while investing in renewable energy projects. There are many good ideas floating around that we must synthesize for our common good.
