2014 outlook for the Ghanaian oil and gas sector

The year 2013 was very eventful for the Oil and Gas sector in Ghana with the passage of the Legislative Instrument (L.I.) on local content and local participation in petroleum activities being one of the headline occurrences.

The establishment of the Enterprise Development Corporation in Takoradi, the re-submission of the draft Petroleum Exploration and Production Bill to Cabinet for approval, and the progress made on the construction of the gas plant were also notable events of 2013.

In paragraph 535 of the 2014 Budget and Fiscal Policy Statement presented to Parliament on 19th November, 2013, Finance Minister Seth Tekper also indicated that in line with government’s commitments to developing the petroleum sector, the Plan of Development for upcoming fields, Tweneboa, Enyera and Ntomme (TEN) with estimated recoverable reserves of 245mmbls of oil and 365 bcf of gas, was reviewed and approved. Also, appraisal activities for the Sankofa East and Gye Nayme were completed and commerciality declared for both oil and non-associated gas resources.

Looking beyond 2013, Mr Tekper said: “In 2014, the main focus under the upstream petroleum subsector will be to attain peak oil production of 120,000 barrels of oil per day in the jubilee field.”

Now, that is not the only landmark occurrence expected for 2014 if you speak with various non-governmental institutions about their expectations for 2014. The following four key events or items are ranked high by a number of organisations as the main targets they will be keeping their eyes on, as well as, seek to influence.

First gas
Much of the growth that government expects for the Industry Sector in the medium term stems from the anticipated debut production of gas in 2014. It follows therefore that, one of the issues that will be followed keenly this year is the eventual completion of the gas infrastructure project.

At the time Mr Tekper presented the budget, the first 2 components of the Gas Infrastructure project, consisting of offshore and onshore pipelines were 95 and 90 percent complete respectively, whiles the third component which is gas processing plant was 55 percent complete.

When a team from PenPlusBytes and Journalists visited the Gas Infrastructure project site in the last week of November, 2013, it learned that entire project was 75 percent complete with 25 percent of the actual construction work outstanding.
With the Jubilee Partners now unavoidably given the green light to flare gas despite a “zero gas flaring” policy being in place, stakeholders are expected to keenly follow the construction process, demonstrating particular interest in the April 2014 plant completion deadline.

Review of PRMA
The review of the Petroleum Revenue Management Act, 2011 (Act 815) is expected to generate a host of interest. In November 2013, government announced through the Budget Statement that “after two-and-a-half years of implementation of the PRMA, stakeholders have identified some inconsistencies, as well as operational and administrative challenges in the Act. The Ministry of Finance has, therefore, commenced the process of reviewing some Sections in the Act to ensure its smooth implementation.”
It then invited all stakeholders to submit proposals to inform the review which Cabinet will submit to Parliament for consideration and passage during the first quarter of 2014.

The African Centre for Energy Policy, for instance, has stated that over the 2011-2012 period, there was widespread breaches of the Petroleum Revenue Management Act, 2011 (Act 815) and application of oil funds to projects which do not deliver value for money. This was contained in its report released in July 2013 and titled “The two sides of Ghana – How a good oil revenue law does not stop oil revenues from going down the drain.”

Provisions on the discretionary powers of the Finance Minister, and financing for the Public Interest and Accountability Committee were among those frowned upon by many stakeholders in civil society. It remains to be seen, therefore, how actively civil society will participate in the review process.

Passage of Petroleum E&P Bill
The return of the Petroleum (Exploration and Production) Bill to Parliament has been long awaited since the previous version of the bill was withdrawn from parliament in November 2010 for repackaging.

Last August, the Ministry of Energy and Petroleum (MoEP) hinted that a revised Bill was to be submitted to Cabinet in October 2013.

Later in November, Mr. Speaker to Parliament that the revised draft Petroleum Exploration and Production Bill had been submitted to Cabinet for approval.

Now stakeholders are on the lookout for the return of the Bill to Parliament particularly as the Bill is the last of trio – including Petroleum Revenue Management and Petroleum Commission – of draft legislations submitted in 2010.

The enthusiasm is underlined by the fact that the Petroleum (Exploration and Production) Bill will substitute the arguably outdated Provisional National Defence Council (PNDC) Law 84 in the regulation of development, production and utilization of the country’s hydrocarbon resources.

Implementation of Local Content regulations
Undoubtedly, local content and local participation in petroleum activities has become a vexatious issue and many craved for an enforcement regime.

The passage of the L.I. on local content and local participation in petroleum activities was therefore a welcome development for many people in the business community and civil society.
Ghana’s notoriety in poor implementation of laws and regulations is expected to drive active following for the implementation of this L.I.

Conclusion
So there you have it. Journalists, civil society and even governmental agencies will all be active participants in these events which could fundamentally impact progress in the oil and gas sector this year.