Commercial oil production in Ghana is unlikely to fuel inflation, heighten corruption or wreck democratic progress in the short-term, the World Bank said as the West African state prepared to turn on the spigot next week.
Unlike many other oil-producing African nations whose oil sectors dominate the economy making them central to conflict and corruption, Ghana’s oil, due to start December 15, will be dwarfed by established cocoa and mining industries and be managed by one of the region’s most stable governments.
"It’s a bit of oil, not a whole lot, so it’s not enough to give you the Dutch disease and a curse," World Bank country director Ishac Diwan told Reuters in an interview late on Thursday, referring to a Dutch discovery of gas in the 1960s that boosted the currency, undermining other exports.
"Oil is not so big that it could just shift this country into a different political path. It’s not a tsunami," he said.
Ghana expects to produce an average 120,000 barrels per day from its off-shore Jubilee field with reserves estimated at 1.5 billion barrels. Production is expected to increase to 250,000 bpd after three years — about an eighth of what nearby Nigeria produces now — operators of the field led by UK-listed Tullow Oil have said.
Ghana is keen to avoid the problems oil has brought to Nigeria, where rebels in motorboats have repeatedly attacked pipelines and platforms in the Niger Delta over the years, saying they are fighting against the theft of the country’s oil wealth.
In November traditional chiefs of towns in Ghana’s western region demanded a 10 percent share of oil revenues when crude starts flowing just offshore from their homeland — a demand that was rejected by parliament.
Diwan said a militant insurgency was unlikely given Ghana’s record for negotiation to reduce tensions.
"If a warrior emerges I don’t think this person would have a following because there are reasonable chiefs that have managed to voice reasonable demands," he said.
"Institutions (in Ghana) are quite evolved and civil society is very vibrant and aware of the dangers," Diwan said.
"I just can’t see big corruption happening. Hidden bank accounts in Switzerland and lots of money disappearing — this is not Ghana. I’m broadly optimistic."
Parliament is considering a Petroleum Revenue Management Bill aimed at ensuring the sector benefits ordinary Ghanaians over the long-term and at providing a strong regulatory framework as firms explore other blocks off Ghana’s coast.
In its 2011 budget, Ghana forecast the estimated $400 million of oil proceeds next year would account for only six percent of all domestic government revenues.
Diwan said government had a good system of checks and balances and that the private sector had reached an important critical mass.
However, the need to shift from subsistence to commercial agriculture in Ghana is acute as the oil industry has the potential to trigger inflation, making local products uncompetitive with imports.
"There is a lot of potential in agriculture with future prices expecting to rise and a lot of land here and the fear that agriculture can be hurt by the exchange rate appreciation due to oil," he said.
The government is investing heavily in cocoa, aiming to produce over a million tons per year by 2012 up from 632,000 tons in 2009, a level that would allow it to challenge neighbouring Ivory Coast for the title of the world’s top grower.