energy, oil and gas - · pdf filefor growth and dynamism of ... volta river authority (vra)...

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GHANA NATIONAL COMMISSION FOR UNESCO

IntroductionThe energy sector, con-

sisting of electricity, biomassenergy and petroleum prod-ucts is one of the key sectorsof the Ghanaian economy.Energy is useful for domestic,agricultural, mining andindustrial processes. Accessto modern, reliable and costeffective energy is a key toprovision of basic socialservices and a pre-requisitefor growth and dynamism ofthe economy.

Ghana depends on mainlythree sources of energy, namelywood fuel, electricity and petro-leum. The bulk of the country’senergy needs are met by woodfuel which accounts for 65%of the total energy consumed.

Petroleum and electricitycurrently account for only23% and 12% respectively.

Although Ghana is wellendowed with a variety ofenergy resources as hydro-power, biomass, hydro-car-bons and solar, the countryis stretching to meet the grow-ing demand. Furthermore,power supply interruptionsthat occur as a result of inad-equate generation reservemargin, excessive transmis-sion network constraints andpoor voltage support havebecome the order of the day.

With regards to the petro-leum sector, Ghana is anemerging oil giant with sub-stantial discovery off-shore.

Ghana’s oil fields, which isexpected to pour its first oilin the last quarter of 2010, con-tinue to attract a lot of offshoreinvestors and is receiving agreat deal of attention fromthe international community.The discovery in the areacalled the Jubilee Field alsocontains significant quantitiesof natural gas, which canprovide substantial oppor-tunities to address the shortageof power in the country.

Undoubtedly, oil discoverycan become a catalyst tostimulate national economicgrowth and transform Ghanafrom a net oil importer toexporter. It is estimated thatGhana’s oil exports will earnabout US$ 3.5 billion by 2013.

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Powering the Nation

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This will make oil Ghana’sgreatest foreign currencyearner, outpacing exports ofcocoa and gold.

The Energy Sector Visionand Goals

The vision of the energysector is to assure universalaccess and choice of modernenergy forms to all Ghanaianswithout exception by 2020.The Government also envi-sions a sector which willcontribute significantly tonational revenue and eco-nomic growth by becominga net exporter of oil and powerby 2012 and 2013 respectively.

The objective of the Gov-ernment is also to achieve atarget of 5,000 MW of installedpower generation capacity by2015. This level of capacitywill enable Ghana to supplyadequate electric power tomeet the growth in nationalelectricity demand and alsofor export to the neighbour-ing countries.

However, this raises anumber of challenges:• Development of infrastruc-ture for the production andsupply of adequate petroleumproducts and energy servicesto meet national requirementand for export;• Development of the requisiteinfrastructure to ensure uni-versal access to electricityas well as the efficient andreliable supply of energyservices;• Ensuring that energy isproduced and supplied in aform that has no adversehealth and environmentalimpact;• Ensuring efficient use ofenergy; and• Ensuring that oil revenueis managed in a mannerthat will benefit current andfuture generations.

ElectricityVolta River Authority

(VRA) dominates the energysector. VRA is responsible forthe generation, transmissionand distribution throughoutthe Northern part of Ghanaof electricity and supplieselectricity in bulk to Elec-tricity Company of Ghana(ECG), which is responsiblefor distribution of electricitythroughout the southernpart of the country.

Currently, the total installedpower generation capacityof the country is said to bearound 1,920 MW. Out of thetotal, 1,020 MW is generatedfrom the Akosombo Hydro-electric Power Plant, whichrecently underwent retro-fitting involving the replace-ment of some of its old turbinerunners with new ones aswell as mechanical works toimprove its power output.The Kpong hydroelectricPower Plant has a capacityof 160 MW. The rest comesfrom the Takoradi ThermalPower Complex, 550 MW;The Mines Reserve Plant,80 MW; and 110 MW fromthe Tema Diesel Power Plant.

Ghana has also a 125MWpower barge called Osagyefo

Power Barge (OPB) to gener-ate power from natural gas.The barge has been leasedto Balkan Energy under anagreement signed betweenthe Government and BalkanEnergy.

However, the current aver-age annual increase of 7%in electricity demand withouta corresponding addition ofpower generation has resultedin a tight demand-supply bal-ance with no reserve margin,leading to periodic blackoutsthroughout the country.

Furthermore, the heavyreliance on hydro power,which represents 69% of thegeneration mix, creates untoldhardship to consumers whendroughts lead to dangerouslylow levels in the Volta Lake.The first such pronounceddifficulty was experienced in1983 with the latest in 2007.

Beyond the existing plants,a total of 1,611.5 MW ofcapacity is currently underconstruction by the Govern-ment and Independent PowerProducers while other planshave been initiated to increasepower generation capacityin the country.

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Latest Developments• The Asogli Power Plant, afull private sector financedpower plant of 200MW capac-ity, has been completed andawaiting the availability ofnatural gas from Nigeria underthe West Africa Gas Projectto commence operation.• A Memorandum of Under-standing has been concludedwith TAQA of Abu Dhabi tocarry out the expansion ofthe Takoradi InternationalCompany (TICO) power plantfrom 220 MW single-cycleplant to a combined-cycleplant of 330 MW.• Financing of the KponeThermal Power Plant of 220MW, which is under con-struction, will be restructuredto allow for the participationof strategic private investorsin order to secure adequatefunding for the speedy com-pletion of the project.

• VRA has concluded an agree-ment with Tema Osonor PowerCompany, an IndependentPower Producer (IPP), toexpand the Tema ThermalPower Plant by 126 MW andultimately into a combined-cycle facility with a totalcapacity of about 330 MW.• The construction of the 400MW Bui Hydropower plantis in progress. The first unitof 133MW is scheduled forcommissioning by the endof 2011. The total installedcapacity of 400MW will becommissioned by 2012.• There are a number of majorhydro-power sites withinGhana that have not yetbeen developed. The totalpotential of these sites is inthe order of 1,240 MW, witha corresponding averageannual energy generationpotential exceeding 4,500GWh/year.

Rural ElectrificationThe energy policy focus

is to ensure universal accessto electricity particularly forthe rural communities by2020. Universal access to elec-tricity will enhance growthand prosperity as well as spurdevelopment and povertyreduction in the rural areas.

Government has securedover US$169 million under theGhana Energy Developmentand Access Project (GEDAP)to improve distribution infra-structure and increase accessof electricity to selected com-munities. In addition, the USExim Bank has granted Gov-ernment a US$350 millionloan facility to extend elec-tricity to rural communitiesthroughout the country. Otherelectrification projects aretargeted at extending elec-tricity to over 1,000 commu-nities throughout the country.

PetroleumManagement

The overall responsibilityfor the control of Ghana’soil industry is vested in theMinistry of Energy. The GhanaNational Petroleum Corpo-ration (GNPC) oversees theupstream petroleum industry(exploration, development,production and disposal ofpetroleum) while the NationalPetroleum Authority (NPA)oversees the downstreampetroleum industry (refining/processing, storage and distri-bution of petroleum products).

UpstreamGhana’s oil and gas re-

sources stretch across the shore-line from the west (Cape ThreePoints) to the east (Keta).Similarly, the Voltain Basininland, which covers over40% of the country’s landmass, is believed to have oiland gas reserves.


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Recent discoveries andappraisals in the Jubileefield, which is made up oftwo blocs, show that the fieldcontains recoverable reservesof about 800 million barrelsof light crude oil, with anupside potential of about 3billion barrels.

The extraction of oil isexpected to commence late2010. During the first phasewhich is to be completed by2010, the daily productionwould be about 120,000 bar-rels of oil and about 120 mil-lion cubic feet of gas. Thesecond phase will be carriedout between 2010 and 2012and will lead to a daily pro-duction of 250,000 barrels and250 million cubic feet of gas.

Oil experts also have con-firmed that, recent discov-eries and appraisals in theJubilee field, which is madeup of two blocs, show thatthe field contains recoverablereserves of about 800 millionbarrels of light crude oil, withan upside potential of about3 billion barrels.

As part of the moves tomake the country a majoroil player, the governmentdecided to extend its conti-nental shelf. Accordingly,Ghana made its submissionsto seek approval to extendthe continental shelf underthe United Nation’s Conven-tion on the Law of the Sea(UNCLOS). Furthermore,the Government intends toaccelerate the process ofacquisition of blocks in theGhana sedimentary basinsin order to fully and speedilydelineate the country’s oiland gas potential.

There are currently 11Petroleum Agreements oper-ating in the country at dif-

ferent stages of explorationor development, accordingto the Ministry of Energy.

The major actors in Ghana’soil sector are Tullow Oil,Kosmos Energy, AnardarkoPetroleum, Sabre Oil & Gas,EO Group and GNPC.

There are several othercompanies active in theJubilee Field. These includeVanco Energy (US) and LukOil(Russia) in the Deep WaterCape Three Points Block;Sfren (UK) in the Keta Blockin the east, Amerrada Hess(US) in the Deep water WestCape Three Points Block;Vitol/Meliconia in the CapeThree Points Shallow/DeepBlock; Gasop, a subsidiary ofNigerian OMEL in the Salt-pond basin; and the SaltpondOffshore Producing Com-pany, a partnership betweenGNPC and the Houston-based Lushann Eternit in theSaltpond Field.

MidstreamIn order to secure a sus-

tainable and cost-competitivefuel source, Ghana is involved

in the West African Gas Pipe-line (WAGP) project for powergeneration. The WAGP project

is a natural gas pipeline of678 km to supply gas fromNigeria to Benin, Togo andGhana. The U$1 billion WAGP,which was completed inJanuary 2010, is expected tosupply gas to the TakoradiThermal Power Complex byMarch 2010.

The Government alsoplans to reduce the cost ofpower generation by buildingtwo natural gas pipelinesfrom the Jubilee Field to theOsagyefo Power Barge andthe Takoradi Thermal PowerComplex. The cost of infra-structure to commercialisethe natural gas from theJubilee Filed is estimated atover US$ 1 billion.

The speedy developmentof the infrastructure is criticalfor the reliable supply ofnatural gas to operate someof the thermal power plants.

DownstreamIt is Government’s inten-

tion to ensure increased localrefining capacity to meetboth domestic demand andexports. Currently, about 60%

of domestic demand can bemet by the sole oil refinery,the state-owned Tema Oil


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Refinery (TOR). To bring refin-ing capacity to acceptablelevels, there is the need toexpand the capacity of TORand also improve its opera-tions. About US$300 millionis going to be invested in TORto increase its capacity byabout 100,000 barrels perstream day from its currentlevel of 45,000 barrels perstream day.

About US$683.5 millionis to be injected into theoperations of the Bulk OilStorage and TransportationCompany Limited (BOST),in the medium term periodup to 2015, to improve bulktransportation of petroleumproducts especially to thenorthern parts of the country.

Challenges• In a country of almost 23million people, barely 15 %of the population is connectedto the national power grid,and in rural areas only 5%of the population has accessto grid electricity.• Less than 35 % of the totalenergy consumption in Ghanais today from commercialenergy sources.• Raising investment capitalto develop the energy sectoris a major challenge. It is esti-mated that, about US$ 9 bil-lion is required in the next fiveyears to finance the numer-ous initiatives in the energysector, including oil and gasactivities which alone requireover US$ 5.5 billion.• A major cost of being aplayer in the crude oil indus-try is the high safety stan-dards that require vigilancein monitoring operators inorder to protect the environ-ment and the people whoselives can be affected directly.• The local capacity, special-ized knowledge and humanresource skills needed to take

advantage of the oil boomare lacking.• No petrochemical industryexists yet to create value-added products from crudeoil to avoid the practice ofexporting raw materials likecocoa, timber and gold.• The high cost of the tech-nology to generate renewableenergy sources (e.g. wind,solar and waste energy) posesa major challenge.• Deforestation rates in Ghanaare amongst the highest inAfrica, with current levels ofwood-fuel consumption farexceeding forest growth. Thechallenges are therefore toreverse the decline of thewood-fuel resource base ofthe country by encouragingwood-fuel forestry and pro-moting the use of alternativefuels such as LPG as substi-tute for wood-fuel.

ConclusionAfter decades of casting

jealous looks at its oil richneighbours, the taps of Gha-na’s very own oil boom areabout to open. If carefullymanaged, the prospectiveoil revenue will bring signif-icant transformation to thenational economy in termsof growth, job creation andliving standards.

While the doubts andworries persist, both insideand outside the country, theGovernment is determinednot to make the oil discoverya curse but a blessing.

However, Ghanaiansshould draw lessons from theexperience of other countriesthat have had bitter experi-ences from oil production.

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