The wheel tap was turned, the country was elated and the first oil was pumped officially by His Excellency the President Professor John Evans Atta Mills on December 15, 2010.
The turning of the tap on the FPSO was a significant moment because that ushered Ghana into the group of oil-producing countries.
It was on live television. Everyone was excited – politicians, farmers, teachers, traditional authorities and other people from all walks of life. A national durbar took place in the oil-rich Western Region.
So soon a year has come. So soon! The economy has transformed primarily driven by the oil production. This year 2011, Ghana’s economy is estimated to grow by 13.5%, making it one of the fastest growing in the world.
Oil find to production
In June 2007, the Kosmos Energy team discovered the Jubilee Field following the drilling of the Mahogany-1 exploration well in Ghana’s deep waters. This is the largest oil find in the last decade offshore West Africa.
Ghana achieved an industry record when it pumped first oil from the Jubilee fields December 15, 2010, 3.5 years (40 months) after discovery instead of the normal five years.
After the first oil find, several wells containing oil have also been discovered by the Jubilee partners – Kosmos, Tullow, Anadarko, the Ghana National Petroleum Corporation (GNPC), and Sabre Oil as well as the erstwhile EO Group. Vanco Energy, Afren Plc, Hess Corporation and Lukoil are also operating in separate fields offshore Ghana.
So far eight wells have been drilled and these are producing oil.
According to British oil producer, Tullow Oil, the Jubilee field has produced 22 million barrels of oil and 21 oil cargoes have been exported since commercial oil production began in the country on December 15, 2010.
The company says the field is currently producing around 80,000 barrels of oil per day from eight wells with a ninth production well, J-07, currently offline while it is being sidetracked.
The state-owned petroleum company, GNPC and stakeholder in the Jubilee oil field lifted its first crude oil from the field on March 10, 2011.
Mr. Thomas Manu, the Director of Exploration and Production at the GNPC told ghanabusinessnews.com that the corporation lifted over 995,000 barrels of crude oil.
Expenditure on oil find
Tullow Oil on January 27, 2011 said the first commercial oil produced from Ghana’s Jubilee field phase 1 was within budget.
“In 2010 we achieved exceptional exploration success and together with our partners delivered ‘First Oil’ on schedule in Ghana by year-end, and was within its original budget,” said Tullow Oil’s CEO, Aiden Heavey.
According to the UK oil and gas explorer which owns majority share in Ghana’s Jubilee oil field, the final cost of the first oil production is “expected to be within 10% of the original $3.1 billion budget.”
For the Jubilee phase 1A, it is estimated that about $3 billion would be spent to develop the area. Tullow is reportedly planning for a new FPSO but that will come probably late 2012.
The GNPC has lifted 2.9 million barrels of crude oil and has received $337.3 million in revenue since start of oil December 2010, according to the 2012 budget presented by Finance Minister Dr Kwabena Duffuor November 16, 2011.
Dr Duffour said the money has been allocated appropriately according to the Petroleum Management Revenue Act.
“$112 million transferred to the Consolidated Fund; $54.8 million and $14.4 million allocated to the Stabilisation Fund and Heritage Fund respectively with GNPC receiving the remaining as equity funds,” Dr Duffuor told lawmakers.
He indicated that receipts for the fourth lifting will be received by the end of November 2011.
Ghana is targeting a total revenue of GH¢1.23 billion ($768 million) from the sale of crude oil in the 2012 fiscal year based on an estimated average oil price of $90.00 per barrel and production of 90,000 barrels per day, according to government’s 2012 budget presented to Parliament November 16, 2011.
Dr Duffour gave the following breakdown of how the monies would be accrued:
– Corporate income taxes – GH¢384.11 million
– Royalties – GH¢236.87 million
– Carried and Participation Interest – GH¢618.84 million
Texas-based oil explorer, Kosmos Energy, in its financial results for the third quarter 2011 released November 10, 2011 said it has generated $230 million from the sale of approximately two million barrels of crude oil from Ghana’s Jubilee fields in 2011 third quarter.
The Blackstone Group and Warburg Pincus backed-company said it sold each barrel of crude at $115.50 after performing two Jubilee liftings during the quarter.
This is against the second-quarter 2011 oil revenues at $124.1 million on sales of 996,000 barrels of oil, or $124.62 per barrel.
Even though the country has had its share of oil spills, a situation that is familiar in oil producing countries, the spills have not been major and no extensive damage has been recorded yet.
The country has the following laws and agreements governing the oil and gas sector:
But more importantly, one year after oil production and the obvious growth of the economy, not many Ghanaians are seeing the benefits in real terms.