Adnan Adams Mohammed
As Ghanaians yearn for more stake and benefits in revenue from its oil and gas, an energy expert is calling for a broad stakeholder consensus to give authority to the national oil company, Ghana National Petroleum Corporation (GNPC), to be a catalyst for deepening local content in the upstream and midstream oil and gas production.
Catalyzing local content development is one of the key pillars of GNPC’s strategy. But as it is now, GNPC is only a non-operating partner in all the oil gas and fields in Ghana, Mr Alexander Mensah Mould, former CEO of GNPC has said.
According to industry experts, participation in oil and gas requires large and long-term capital and technical knowledge. None of these is easily available to Ghanaian entrepreneurs. Besides its rich technical expertise, GNPC has the balance sheet to raise the needed capital for long term exploration and development.
“As the NOC, Government and the public should support GNPC to take increasing stake in oil blocks. This must be done strategically. GNPC must not take higher stake just for the sake of it.” MrMould stressed when speaking at the Oil and Gas Conference held at the University of East London in the United Kingdom, last week.
He added that “The Corporation has a unique reservoir of knowledge on all the basins; more than any other entity in Ghana. What the Corporation needs is clear support to enable it grow and develop in the manner some of the most successful ones did it, like Petronas of Malaysia.”
Currently, GNPC is the anchor, but non-operating partner in all the oil gas and fields in Ghana. Not being the field operator limits GNPC’s ability to drive the local participation agenda.
However, many experts like Dr Steve Manteaw, Chairman of Public Interest and Accountability Committee (PIAC) wants GNPC to use its leverage in the governing structure under the various Petroleum Agreements to ensure that contracts that local companies can execute are given to local companies.
More important is how GNPC uses its local dominance in the industry. GNPC’s strategy must be to pave the way for increased local private participation. This could be achieved through listing of subsidiaries on the Ghana stock exchange, so that ordinary Ghanaians can buy the shares.
In the Voltaian basin where GNPC is the sole operator, the Corporation must build an eco-system of local companies to support its activities from these early stages, and grow with them. This will require a number of things: developing a pool of potential local partners, being fair and transparent in the selection of local contractors for any specific contracts, and nurturing them for the long haul.
MrMould while speaking on the theme: “Ghana’s Oil and Gas Resources For Socio-Economic Development” noted that, GNPC has been playing an enabling role in the energy sector as well as the wider economy.
“Like any state enterprise, it has a dual mandate: to pursue commercial as well as developmental objectives. During my time as CEO of GNPC, we provided the financial guarantees that enabled the deployment of the Karpowership barge from Turkey to provide electricity. The rationale for GNPC’s support in this transaction was two-fold: the power barge was necessary to mitigate an urgent power generation deficit in the country. But more importantly, the barge was meant to convert from using Heavy Fuel Oil (HFO) to natural gas. This was meant to avert incurring take or pay liabilities on the Sankofa gas.
“In this transaction also, we did something quite smart: we took up the role to supply the HFO to the barge, at a margin. We also negotiated to use mainly existing placements with banks as the guarantee. GNPC was therefore earning interest income on the guarantee.
“GNPC similarly intervened in other areas, including pre-financing the construction of access roads to enable the evacuation of Liquefied Petroleum Gas (LPG). Not doing this would have created a bottleneck in gas processing and gas offtake.”
Also, GNPC can play a significant role in attracting and adapting the right technology to further indigenize the development of the oil and gas sector in Ghana. The sector is technology-driven. Through its partnerships, GNPC must be conscious to partner with companies that are willing to share their technology, including proprietary ones. Then GNPC must invest in its people and processes in order to be able to adapt those technologies to suit the Ghanaian environment.
In addition to that, GNPC must invest in research and technology to solve the peculiar problems of the oil and gas sector, within the Ghanaian context. A good example is Petrobras of Brazil, which invested heavily in understanding its oil-rich offshore reserves trapped below a 2,000m-thick layer of salt, which itself is located below 2,000m-thick post-salt sediments. Now, Petrobras has become a world leader in pre-salt and deepwater exploration and development.