To refine local crude oil in substantial volumes, the Tema Oil Refinery (TOR) requires significant refurbishment and retooling but with capital from private investors not government, Patrick Akorli, outgoing Group Chief Executive Officer of GOIL Company, has said.
“The refinery must be efficient and it can only be efficient if it is retooled, but I do not think government will divert money that it would rather use for social interventions and recapitalise TOR. It is time for private investors to see that there is something in there and take part,” he said.
Speaking to the B&FT as GOIL took its turn at the Ghana Stock Exchange’s Facts Behind the Figures, Mr. Akorli said it is in the country’s best interest if the oil and gas industry is fully vertically integrated from exploration to retailing of petroleum products at the downstream sector.
“Ideally, our oil and gas sector should be vertically integrated but we need to put certain infrastructure on the ground and those things are being done. If you say a refinery, the one we have, the Tema Oil Refinery (TOR), needs refurbishment. If it is refurbished and we produce oil, and it gets refined here, we create more jobs.
“When TOR was functioning efficiently, we had some of the best chemical and petrochemical engineers in this country but some of them are now exported into the Arab region. As a Ghanaian, I would want a vibrant TOR but it needs refurbishment.
“I will prefer a private investor coming in to partner the government so that good structures are put in place. The profit margins on refineries are very thin all over the world and TOR is competing with others. If it is not done well, there are people bringing in the refined product and it could be cheaper than yours,” he said.
There is growing calls for the refinement of Ghana’s crude locally with industry players noting that refining crude from Jubilee, Sankofa and TEN fields will not just create jobs but boost the cedi’s position and stimulate economic growth.
Recently at the annual Offshore Technology Conference in Houston, Texas, USA, the Managing Director of TOR, Isaac Osei, made a strong case for refining part of the crude oil produced in the country as the first step in building synergy between the upstream and downstream sectors of the oil and gas industry.
“We can’t continue to treat both upstream and downstream as separate entities in our energy sector development. We must create a healthy synergy between the two,” he said.
He stressed that the people of Ghana will better appreciate the real benefits of the recent discoveries of crude oil in Ghana when a percentage of the locally discovered crude oil is refined by the state-owned TOR.
Despite calls for refining crude locally, Mr. Osei noted that he is not oblivious of the financial implications of such decisions and went ahead to recommend that a well-structured financial model should be put in place by government and its strategic partners to support such a move.
Touching on the important roles played by both the upstream and downstream sectors, the former High Commissioner to the UK and ex-Ambassador to Ireland laid emphasis on how synergies should be created in both the upstream and downstream sections of the Energy sector to ensure product security and value addition.
Using the cases of Tema Oil Refinery and GNPC as instances, Mr. Osei noted that the present situation of Ghana selling all its oil on the international market while the state refiner shops around for crude oil to refine into finished products does not necessarily give Ghanaians the confidence and excitement they’re supposed to have in the fact that Ghana has discovered crude oil.
“For many Ghanaians, this is a paradox that government has to resolve. Ghana has discovered crude oil in commercial quantities – and this should translate into the state refiner being provided a portion of such crude as its feedstock.
The people of Ghana and government as a whole would benefit a great deal, and the government’s agenda of ‘Ghana Beyond Aid’ would be given additional boost if the right structures are put in place and TOR is made to refine local crude oil from TEN, Jubilee and/or Sankofa Fields as feedstock.
“We have refined TEN crude in the past, which gave us good yields in terms of finished products; so, refining crude oil from Jubilee and Sankofa should not be a problem for TOR. The TOR plants are designed to process light sweet crude oil, and the oil from all these fields are light sweet,” Mr. Osei added.