Comprehensive  Ghana Oil and Gas news, information, updates, analysis


News in Brief

TOR: 28 months of doing nothing

ghThe Tema Oil Refinery (TOR), Ghana’s only 45,000 barrels of oil per day (bopd) capacity refinery, has appallingly not refined a barrel of oil since July 2012. This is more inexcusably so, viewed against the backdrop that the country now produces an average of more than 100,000bopd of crude oil from its Jubilee field, which pumped out first commercial oil in December 2010.

TOR’s wretchedness, while to some extent is attributable to its own operational inefficiencies, is largely the outcome of government’s lack of appreciation of TOR’s strategic role, or a deliberate lack of political will, or both in fixing the malaise afflicting the obese organisation, which politicians see more as a cash cow that they milk to feed their insatiable hunger for financial liquidity than a strategic beast of burden that is central to the country’s energy security.

While several governments have used the strategic importance of TOR as reason for imposing levies on denizens, with the pretext of clearing up the organisation’s perennial, debilitating indebtedness – and bringing it back to efficiency – accounting for the monies accruing from the levies and its utilisation for the said purpose has always been conveniently murky.

It is no gainsaying that shedding off non-core operations of TOR, such as running a healthcare facility and recreational business units, among other things, will help in slashing operational costs of the organisation, however, fresh investments into upgrading the refinery is imperative if it is to take advantage of new opportunities emerging in the country.

But that seems to be posing an unnecessarily massive headache for the Ministry of Energy and Petroleum, the main government agency for the energy sector, and other regulatory agencies within the sector.

Briefly, tracking the history of TOR to its present state makes a compelling case for a lack of transparency in its management being central to the organisation’s woes.

Inaugurated in 1960, the country’s only refinery was first called GHAIP. The name was subsequently changed to TOR in 1991. It started as a simple hydro skimming plant with an initial production capacity of 6,000bopd.

It was, subsequently, upgraded to the present secondary plant with a residual fuel catalytic cracker (RFCC) and enhanced capacity to 45,000bopd, equivalent to about 6,138 tonnes of crude oil per day.

TOR has, over the years, been bedeviled with crude oil supply challenges in addition to poor financial management that had at different times led to disruptions in refining operations at the plant. And so, although the current non-functioning at the refinery is unfamiliar, it is of the longest duration and strangely so since the country’s indigenous crude could be lifted to TOR easily, cutting out supply risks.

So why is TOR not processing Jubilee field oil?

Ghana’s famous Jubilee oil field, which started commercial production of crude oil almost four years ago, produces the high grade ‘Sweet Light’ oil. To establish its quality, officials claim they had to export substantial quantities to the international market for refiners to evaluate the Ghanaian crude oil and classify it. That currently has been established and the country no longer needs to export all of its crude.

Indeed, GNPC officials attest to the fact that the original arrangement with Jubilee field partners was to supply Ghana all of its domestic requirements at the prevailing international price before exporting the remainder and, with over 100,000 barrels been produced daily, Ghana’s total requirement of 45,000bopd could easily be met.

However, TOR was built to process low grade crudes, in the sense that a lot of other products, apart from the fuels that could be obtained from further processing of residual materials from the high grade crudes would be lost, thus not making economic sense to process Jubilee sweet light at TOR.

This, therefore, calls for significant investments to be made. Data from the Energy Commission shows that the costs of retrofitting required to cope with the higher grade oil is estimated to be almost US$1 billion; a cost not too high to bear compared with the benefits to be derived.

But that obviously would have to be established by a proper cost-benefit analysis on refining Jubilee light sweet at TOR.

Officials at the Ministry of Energy and other regulatory agencies would swear to the knowledge of a cost-benefit analysis being conducted but will not commit to having knowledge of the final outcome, nor which agency has it, neither would they want to be quoted on the matter – obviously revealing their fear of political victimisation, which in turn points to the strong political influence in TOR’s current dilemma.

That being the case, however, strong indications are that the document is at the GNPC, where officials are suspected to be holding it to their chest.

Of course, in recent times, the Ministry of Energy has announced an expected joint venture arrangement with Petro Saudi for investments into TOR with the aim of bringing it to efficient and profitable ways. What is not certain is whether that arrangement involves upgrading TOR to be able to refine Jubilee crude, and whether the arrangement was based on the said cost-benefit analysis purported to be with the GNPC.

Whatever the case may be, it reveals government’s confidence in TOR’s strategic significance to Ghana’s energy security, but that confidence must be matched by more disclosure to the public on the operations of TOR in particular and the energy sector in general.

Promoting transparency is not only vital to helping clear the cloud of secrecy that has covered TOR’s operations and invariably reduced it to a white elephant, but it is critical to eradicating political influence in its running. It invariably calls for the political muscle to unmuzzle the cow while it treads the corn. GB

Source: Daily Graphic

Get the latest news and updates on Ghana’s oil and gas value chain by following us Reporting Oil and Gas on twitter @oilgasghana and like our facebook page and get at us on Google+. Subscribe to our grouhttp://www.reportingoilandgas.org/wp-admin/post-new.phpp to get update

Profile photo of Editor
Follow Us

Editor

Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
Profile photo of Editor
Follow Us

Share this article

Leave a reply

Personality of the Month
  • Prof. Thomas Mba Akabzaa Chief Director of Ministry of Petroleum          …
Follow Us Online
Join the Discussions

Summary: Revenue mobilization from the oil sector for Agricultural production in Ghana, a myth or reality?

Agriculture, once considered the backbone of Ghana’s economy recorded a reduction of its contribution to GDP from 45% in 1992…

Responses Add your response


About Us
Reporting Oil and Gas project was launched on 4th June 2009 at Takoradi, Western Region, Ghana by Penplusbytes (www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector read more
Events Calendar
<< Aug 2017 >>
MTWTFSS
31 1 2 3 4 5 6
7 8 9 10 11 12 13
14 15 16 17 18 19 20
21 22 23 24 25 26 27
28 29 30 31 1 2 3
Twitter Activity Stream
 

Partners We are proud to be associated with:

Skip to toolbar