Ghana Oil & Gas 2012
Economy • Exploration • Oil • Natural Gas • Challenges • Services Global Business Reports Industry Explorations CREDITS
EDITORIAL AND MANAGEMENT TEAM
Senior Journalist: Angela Harmantas [email protected] Journalist: Tom Hurst [email protected] Project Coordinator: Pavlina Pavlova [email protected]
General Manager: Agostina Da Cunha [email protected] Regional Manager: Sharon Saylor [email protected] Graphic Designer: Gonzalo Da Cunha [email protected] Editor: Barnaby Fletcher
For more information about GBR, please email [email protected]. For updated industry news from our on-the-ground teams around the world, please follow us on Twitter: @GBReports.
THANK YOU
GBR would like to thank the following associations for their help in the research of this project:
Ministry of Energy www.energymin.gov.gh
Ghana Energy Commission www.energycom.gov.gh
Ghanaian National Chamber of Commerce & Industry www.ghanachamber.org
Ghana Investment Promotion Centre (GIPC) www.gipcghana.com
Petroleum Commission
We would also like to sincerely thank all the companies that took the time to give their insights on the market, with a special mention to George Aboagye, CEO, Ghana Investment Promotion Centre (GIPC), for his written contribution to this book, as well as to Leslie Asamoa, Consultant to the Finland-Ghana Chamber of Commerce (FINGHCC) for his assistant.
Industry Explorations Global Business Reports // BRAZIL CHEMICALS 2012 72 Global Business Reports Industry Explorations INTRODUCTION LETTER
Dear readers, Simply put, Ghanaians truly value their reputation as one of the African con- Akwaaba. tinent’s most stable, investor-friendly countries, and take great pride in main- A simple word, meaning “welcome” in taining it as such. Twi, the most widely spoken language in Ghana; a word that epitomizes the Now more than ever, this philosophy culture and people of this West African must be put into practice in order to en- nation. In Ghana, it is more than simply sure the sustainable development of the a word, however – one could say it is a country’s oil reserves. Too often oil leads lifestyle. Throughout our three months to sharp societal contrasts: of wealth in the country, we were greeted with and poverty, regional divisions, and war warmth, hospitality and genuine con- and peace. cern for our welfare, for which we are forever grateful. Key governmental initiatives, from lo- Angela Harmantas, cal content laws to anti-corruption bills, Senior Journalist We begin with this because it may help demonstrate the seriousness of policy- to offer insight into what has made makers to combat these potential mine- Ghana an economic success story over fields. An overarching theme amongst recent years, with a skyrocketing rate our interviewees was how these oil of growth that outpaces most countries revenues will translate into the better- in the developed world. Ghanaians love ment of each and every Ghanaian, re- their country fervently; the most com- gardless of social status. In a country mon question we received was, “How where 28.5% of the population lives at do you like Ghana?” said with sincerity or below the poverty line, this is vitally and passion. important to put into practice.
To the uninitiated, Ghana is a country The years ahead hold great promise for that challenges the paradigm of the Ghana, both economically and socially. West African region. The buzzing capi- Oil production is scheduled to begin tal of Accra is home to a Western-style again in earnest, after a period of stag- shopping mall, modern cinemas, and nation. Elections will bring a new presi- numerous cuisine options of varying dent, and perhaps a new government. prices. Multiple cultures and ethnicities Pavlina Pavlova, gather in the city and beyond. Away from This book is a microcosm of the bur- Project Coordinator the country’s white-sand beaches, the geoning oil industry in Ghana. Our inter- interior boasts green hills and botanical viewees vary from government figures gardens that would not look out of place to multinational companies to domestic in Asia or South America. The northern- service companies; all of them have most areas, on the edges of the Sahara, unique insights into what shapes (and contain wildlife that attracts international will continue to shape) the Ghanaian oil tourists hoping to catch a glimpse of the industry. We would not have been so elusive elephants of Mole National Park. successful without the help of numer- ous people who shared our commit- Emerging from a colonial past, Ghana ment to portray an accurate assessment has grown into a strong nation in her of the market in Ghana, and we thank own right, and touted as an example of you here. good governance for its neighbors. Elec- tions are largely free and fair, with 73% With fond regards, of the eligible population casting their vote in the 2008 presidential election. Angela Harmantas, Even after the sad death of the current Pavlina Pavlova president, John Evans Atta Mills, ana- Global Business Reports lysts are predicting a smooth transition come this year’s presidential vote.
Industry Explorations Global Business Reports // GHANA OIL & GAS 3 Global Business Reports CONTENTS Industry Explorations
18 22 35 27 59 45 68 54 69 CHALLENGES
EXPERT OPINIONS EXPERT Industry leaders give their Hydrocarbon development An exploration of the various
opinions on Ghana’s geological FUELLING GROWTH promises to be an “enabling challenges facing the Ghanaian potential, the countries electric- industry”, providing the en- hydrocarbon sector, including ity issues, and the future of oil ergy support further economic finding experienced employees, and gas in the country growth and encouraging the the logistical hurdles, and the financial sector’s development. business environment.
Overview Running Towards Prosperity
8. Ghanaian Hydrocarbons INTRODUCTION AND OVERVIEW 10. Interview with the Ghanaian Ministry of Energy DR. JOE ADJEI, MINISTER OF ENERGY
Upstream Oil Undeniable Potential
14. The Jubilee Fields INTRODUCTION AND OVERVIEW 16. Interview with Tullow Oil GAYHEART MENSAH, HEAD, INVESTOR RELATIONS AND CORPORATE COMMUNICATIONS 17. Exploration Potential THE POSSIBILITY OF UNDISCOVERED RESERVES 19. Interview with Ghana Oil Company Ltd CHRIS ACKUMMEY, DIRECTOR
Upstream Gas Providing for Ghana’s Energy Needs
22. Powering Prosperity PROVIDING ENERGY FOR GHANA’S GROWING ECONOMY 24. Interview with Volta River Authority KWEKU A AWOTWI, CHIEF EXECUTIVE 25. Gas Production THE DEVELOPMENT OF GHANA’S ASSOCIATED GAS 26. Interview with AA Horizon TOUFIC HAROUN, DIRECTOR
Services Engineering Progress
30. The Service Industry INTRODUCTION AND OVERVIEW 31. Interview with Global Energy Ventures DARREN LAST, OPERATIONS MANAGER, GHANA 33. Interview with Expro ALLAN SUTHERLAND, GHANA COUNTRY MANAGER 34. Interview with SGS MICHAEL SAVAGE, MANAGER 35. Local Content DEVELOPING THE GHANAIAN SKILLSET 37. Interview with Takoradi Gas Ltd ANURA KALUARACHI, GENERAL MANAGER 38. Interview with Technip Ghana JOHN OSEI WUSU, COO
4 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations CONTENTS EXPERT OPINION SPECIAL REPORT FINAL THOUGHTS 58 48 68 69
George Aboagye, CEO of the The so-called “Dutch Disease” Thoughts on the future Ghana Investment Promotion has proven to be a common potential of Ghana’s oil and gas Centre (GIPC), explains the sup- affliction in resource-based industry, its role in the country’s port provided by his organisation African economies. With the economy, and the challenges it to foreign investors right guidance, however, Ghana must overcome to achieve this, can avoid this danger. from leading businessmen.
39. Interview with Menergy ROY ABOKU, BUSINESS DEVELOPMENT 41. Logistic Solutions IMPORTS, EXPORTS, AND DISTRIBUTION 43. Interview with ASO Orwell ERNEST POKU, COUNTRY GENERAL MANAGER 44. Interview with Damco FRANK TONY ESHUN, MANAGING DIRECTOR 45. Interview with Greenline Logistics SORAYA ANGLOW, CEO
Special Report The Dangers of Dutch Disease
48. Growth Brings Challenges GHANA’S SUSCEPTIBILITY TO “DUTCH DSIEASE”
Challenges and Opportunities The Business Environment
54. Doing Business INTRODUCTION AND OVERVIEW 56. Interview with Matthews Consult ANTHONY MATTHEWS, MANAGING PARTNER 57. Interview with Shawbell Consulting PHYLLIS CHRISTIAN, CEO 58. Ghanaian Support for Foreign Investors GEORGE ABOAGYE, CEO, GHANA INVESTMENT PROMOTION CENTRE 59. Paying for Progress THE GHANAIAN FINANCIAL INDUSTRY 61. Interview with Edward Mensah, Wood & Associates Ltd JAMES WOOD, MANAGING DIRECTOR 63. Interview with Fidelity Bank NANA YAW KORANTENG, HEAD ENERGY/MINING, OIL AND GAS CORPORATE BANKING DEPARTMENT 64. Interview with the Ghana Stock Exchange EKOW AFEDZIE, DEPUTY MANAGING DIRECTOR 65. Interview with Barclays BENJAMIN DABRAH, MANAGING DIRECTOR
Appendix Into the Future
68. Final Thoughts 70. Index 71. Credits
This research has been conducted by Angela Harmantas, Pavlina Pavlova, and Tom Hurst | Edited by Barnaby Fletcher | A Global Business Reports Publication | For more information, contact [email protected] or follow us on Twitter @GBReports.com
Industry Explorations Global Business Reports // GHANA OIL & GAS 5
Running Towards Prosperity
An Introduction to Ghana’s Economy and Hydrocarbon Industry
“Ghana is very important to Engen as a company. In the past we used to call Ghana the gateway to West Africa. It is still the gateway to West Africa, and even more so now, with the discovery of oil. There are a lot more economic activities taking place now and it is a country you can use to launch into the sub-region. Therefore, it remains very important to the overall strategy of Engen.” - Henry O. Akwaboah, Managing Director, Engen Ghana Limited Global Business Reports ARTICLE Industry Explorations Ghanaian Hydrocarbons A brief overview of the oil and gas industry
Ghana’s prosperity has always been tied name “Ghana” (meaning “warrior king”) of the slave trade. to the extractive industries. The Waga- is derived, controlled the gold trade of Ghana won independence from Britain dogu Empire of the 7th to 13th century, western Africa. Muslim writers, brought in March 1957: the first sub-Saharan Afri- the capital of which lay around 500 miles to the empire through trade, spoke of can nation to achieve freedom from Euro- to the north of the country’s modern the wealth contained in the southern pean colonization. While the immediate capital, Accra, and from whose rulers the gold mines; it was reputed that even post-independence history was one of the court dogs wore golden collars. The political strife and economic uncertainty, Population: 25,241,998 (July 2012 estimate) Ashanti Empire recent decades have seen Ghana striv- Capital: Accra Yet resources have not always brought ing to reclaim its ancient prosperity. The Head of Government: President John Dramani benefits to the African continent. Euro- country has experienced uninterrupted Mahama pean’s, initially Portuguese, first arrived GDP growth since 1985; 2012 will see Currency: Cedi (GHS) on the shores of modern Ghana in the this growth enter its 28th consecutive GDP: $38.6 billion (2011 estimate) 15th century searching for the source of year. In 2011 the country posted an im- Growth Rate: 14.4% (2011 estimate) GDP per Capita: $3,100 (2011 estimate) African gold. The Dutch, the British, the pressive growth rate of 14.4%, making Economic sector breakdown: agriculture: Spanish, and other Europeans all fol- it the second fastest growing economy 28.3%, industry: 21%, services: 50.7% (2011 lowed and soon turned the country into in the world behind Qatar. Indeed, in estimate) a hub from which they could control the many ways Ghana is the poster child of a Exports: $13.13 billion (2011): gold, cocoa, extraction and exportation of gold and continent that in recent years has found timber, tuna, bauxite, aluminum, manganese ore, other minerals. This stretch of coastline its economic confidence; until 2015 it is diamonds, horticultural products consequently became known as the estimated to grow at an average of over Imports: $14.03 billion (2011): capital equipment, petroleum, foodstuffs “Gold Coast”: a littoral that gained in- 7% per annum, the eight-highest growth Major Trade Partners: China, Netherlands, UK, famy as one of the primary points of de- rate in the world. Nigeria, US parture for slaving vessels at the height Strong macroeconomic policies, a stable
Domestic Market: BURUKINA FASO Population and Poverty Source: CIA World Factbook Upper East
Upper West BENIN 25,241,998 Population 2011
Northern 11.44 M Labor Force 2011 TOGO IVORY COAST GHANA
Brong - Ahafo 51.7% Poverty Line 1992 39.5% Ashanti Poverty Line 1998
Volta 28.5% Eastern Poverty Line 2006 Greater Accra Western Accra Central 11 % Unemployment Rate 2000 50km
8 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations ARTICLE
government and the exploitation of the Yet the excitement should be tempered list measure driven by the upcoming country’s plentiful natural resources have by caution. This is the region, after all, for elections in December this year. This been the foundations for a growth that which the phrase “the curse of the black election may make a continuing reduc- is apparent wherever you look: vehicle gold” was created. Admittedly, Ghana tion of the fiscal deficit politically unten- purchase grew by a record 88% in 2011; seems less likely than its regional peers able, especially in a country where GDP- energy consumption is rising by an annu- to succumb to the problems stereotypi- per-capita is still only $3,100, threatening al average of 10%; 2011 saw production cally associated with resource-based the sensible macroeconomic policies the of cocoa, of which Ghana is the world’s African economies: resource national- government has previously adhered to. second-largest producer, rise to a record ism, corruption, and “Dutch Disease”. In Ghana’s track record is good. Sensible 1 million tons; and a rebasing of national terms of GDP-per-capita it outperforms policies have led the country ever closer accounts in 2011 has propelled Ghana’s its neighbours and even regional giant to prosperity (ranked seventh in Africa global position to among the lower mid- Nigeria. The proportion of its population in the Ibrahim Index of African Govern- dle income group of countries. living below the national poverty line has ance 2010). A free press (one of only five In this context, the addition of an oil and fallen from 51.7% in 1992 to 39.5% in Sub-Saharan African nations ranked as gas industry promises to bring grand re- 1998 and 28.5% in 2006, and has un- “free” by Freedom House’s Freedom of wards. In 2007, commercial quantities of doubtedly fallen further since then. In the Press 2012 report) plays an important oil were discovered off Ghana’s coast in Transparency International’s Corruption role in holding politicians accountable. two sites that would come to be known Perceptions Index 2011 it ranked 69th, The December 2012 election is expected as the Jubilee fields. The effect that this tied with the European nations of Italy to maintain Ghana’s tradition of peaceful will have on Ghana’s rise is promising; and Slovakia, and above Latin American democracy. All of this points to the coun- the “black gold” could form a basis of powerhouse Brazil. try’s ability to successfully integrate the wealth just like ordinary-coloured gold Nonetheless, however, there are risks. oil and gas industry into their growth. did in the past. The African Economic Ghana’s decision late last year to re- Today West Africa’s warrior king faces Outlook predicts the oil industry to add examine the fiscal arrangements of the a new battle; to ensure that the discov- 0.7% to GDP growth in 2012 (7.6% non- mining sector could well be a sensible ery of petroleum sustains the promising oil growth, and 8.3% with oil) and 1.4% decision in line with the International growth of its economy rather than con- to GDP growth in 2013 (6.3% non-oil Monetary Fund’s (IMF) advice to raise demning it to the mistakes of past oil growth, and 7.7% with oil). taxes. Yet some are seeing it as a popu- exploitation in the region. • 14.4% 8.8% 39.4 GDP Growth Rate Inflation Rate Gini Index 2011 Average Consumer Prices 2011 2005-06
Source: World Bank Source: International Monetary Foundation, CIA World Factbook Source: CIA World Factbook
GDP (current US dollars) World’s Fastest-Growing Source: World Bank, CIA World Factbook 39.19 Economies (20011-2015) 40 Source: The Economist, IMF (billion) China 9.5%
30 India 8.2%
Ethiopia 8.1%
20 Mozambique 7.7%
Tanzania 7.2%
Vietnam 10 7.2% Congo 7.0%
GHANA 7.0% 2003 2005 2007 2009 2011 Annual average GDP growth
Industry Explorations Global Business Reports // GHANA OIL & GAS 9 Global Business Reports INTERVIEW MINISTRY OF ENERGY Industry Explorations
Interview with which will benefit local people. How can the Ministry of Energy work Dr. Joe Adjei with other key stakeholders to empower local Ghanaians to participate in Gha- na’s oil and power development? MINISTRY OF ENERGY Ghana has been successful within the power sector. There are three different lo- What measures have been taken to en- The government has two different mod- cal companies that manufacture cables and sure that Ghana will become a major els for investment into power generation, conductors and the government has taken exporter of oil and power by 2012 and supporting independent power producers an $80 million local facility to produce all 2015? What action still needs to be taken by providing easy access to land and ba- of the required conductors for 2012. Inter- to achieve this target? sic infrastructure. Companies who choose national contractors use their own experi- Energy is critical for the development of to work with the government through the enced supervisors to ensure that projects the Ghanaian economy, although a recent PPP Model with the Ministry of Finance meet specific requirements, although local study that was carried out by the govern- can agree on what percentage of equity construction contractors are used to com- ment highlighted that access to credit and the government will take and receive help plete projects. energy are two key constraints to future if debt components are necessary. Ghana was not prepared in advance for the economic growth. Ghana experienced a The FDI for the whole of Africa decreased discovery of oil, so the country is still try- major power crisis in 2006-2007, which ul- by 12% in 2011, although Ghana’s FDI dou- ing to develop its resources to meet the timately reduced Ghana’s GDP by 1%. It bled from $650 million in 2010 to $1.2 bil- demand. Legal framework is being estab- is vital for Ghana to have an internally ro- lion in 2011. The counter-risk in Ghana has lished and the Ministry is working with bust system. The Ministry of Energy will decreased significantly because of political the private sector to train local Ghanaians, introduce a business-focused policy for stability, which has increased the amount although it will be difficult for Ghana to the export of electricity to neighboring Af- of investment into the country. Ghana will maximize the local content benefits of the rican countries. The Ministry of Energy has be able to raise the necessary investment Jubilee Fields. Twenty-four students were created structured IPP and PPP models that the country requires if it continues to accepted into the Tullow scholarship pro- to encourage the private sector to invest maintain an attractive investment climate gram in 2011, which increased to 50 stu- in Ghana. The government has created an with clear regulations for investors. dents in 2012. The students were given the attractive investment environment for in- The government has been encouraging opportunity to complete their Masters De- dependent power producers, and provides transmission companies to take loans gree in different areas and these students assistance to companies by taking an equi- within Ghana. The cost of transmission will return to Ghana to work in the industry. ty stake, which enables the private sector should not be a significant component in The Ministry of Energy has finished the to remain the operator. the tariff; investments have been created Local Content Policy and the Implementa- There have been more than 40 discoveries to make the pass through tariff as low as tion Structure and Guidelines and we are in Ghana since the discovery of the Jubilee possible, which ultimately makes the tariff working with the Norwegian government Fields. The Ministry of Energy is working affordable for the end user. The Ministry of to develop legal framework for accidental with IOCs to develop discoveries that are Energy will be able to recoup the invest- work with local people. proven to be of commercial value. Tullow ment that we have made in the future, is working with the Ministry of Energy although there is a lot of additional invest- Do you have a final message for our on the TED project, which is three differ- ment needed. The Ministry of Energy is readers about Ghana’s future develop- ent discoveries that have been combined also working with private financers who ment in the energy and petroleum sec- together to produce 120,000 boe/day. The are willing to invest into facilities. tors? Ministry of Energy will have 180 days to ap- The biggest challenge that the Ministry of The Government of Ghana is committed to prove Tullow’s Plan of Development. In ad- Energy will face is within the distribution working with investors to establish agree- dition, Kosmos has made four different dis- sector because of the lack of technology ments that benefit both parties. The Minis- coveries, which is estimated to produce an in the equipment. The distribution system try of Energy can assure all investors that additional 120,000 boe/day. These discov- in Ghana needs to be re-designed and old Ghana will uphold its integrity and it is our eries will ensure that future oil production transformers need upgrading to enable mission to banish the conception that Afri- in Ghana will be sustained. In addition, Eni them to meet current demand. As the ser- ca is a corrupt continent. Ghana welcomes and Vitol have made a discovery of 1.6 tril- vice and manufacturing sectors in Ghana all investors into our country, providing that lion cubic feet of recoverable gas reserves, continue to grow and use energy produc- they respect our laws and our people. It is which will be fast tracked to enhance the tively, investors will see that projects in vital to create employment for the growth export of power. Ghana can provide a return on investment. of Ghana’s economy and it is important for If Ghana plans and executes the Chinese investors coming into Ghana to use the What initiatives are the government gas project successfully, it will receive same environmental standards and regula- creating in order support investment $15 billion of revenue over the next five tions as they would in their own countries. throughout the value chain from up- years, which will ensure that the country Ghana is prepared to set the pace for the stream, downstream and generation? improves in terms of education and health, whole of Africa. •
10 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations FACTSHEET
Foreign Direct Investment, Balance of Payments (current US dollars) GDP Source: World Bank (purchasing power parity)
3000 2011 (million) 2,527
2500
2000 75.9 billion dollars 1500 Country comparison
1000 to the world
500
2003 2005 2007 2009 81 Source: CIA World Factbook
Budget Revenues Budget Expenditures GDP (per capita) 2011 2011 2011 8.76 10.38 3,100 billion dollars billion dollars dollars Source: CIA World Factbook Source: CIA World Factbook Source: CIA World Factbook
Exchange rates Budget Deficit cedis (GHC) per USD dollar 2011 Source: CIA World Factbook 1.5
1.4 -4.3% of GDP 1.3 Source: CIA World Factbook
1.2 Investment (gross fixed) 2011
1.1
1.0 19.9% of GDP 0.9 2007 2008 2009 2010 2011 Source: CIA World Factbook
Industry Explorations Global Business Reports // GHANA OIL & GAS 11 Courtesy of Technip Undeniable Potential: Ghana’s Upstream Oil Industry
“We prefer not to comment on the negativity that can surround analysis of the growth of the petrole- um sector in other countries, but here in Ghana the company and the country are tied together in this pioneering effort to demonstrate to the world that African countries can get it right and that oil and gas can be the catalyst for development, growth and pro- gress.” - Gayheart Mensah, Communications Manager, Tullow Oil Global Business Reports ARTICLE Industry Explorations The Jubilee Oilfields An introduction to Ghana’s upstream oil production
While oil exploration has been carried fineries using shuttle tankers. Oil traders age between 70,000 and 90,000 bopd out in Ghana since 1896, success was Vitol and Trafigura are regular buyers of by the end of the year. often hard to come by. Between 1898 Ghanaian oil, which is then marketed to Additionally, in August 2011 at the West and the late 1990s, an estimated 100 ex- refiners internationally. Cape Three Points block, light oil was ploration wells resulted in just one sig- Initial production ranged from 66,000 discovered at the Akasa-1 well. The res- nificant discovery; that of the Saltpond bopd to 88,000 bopd, before levelling off ervoirs encountered are similar in age oil field, which remains in production to at 70,000 bopd by the end of 2011. These to those discovered at the Jubilee field this day. targets did fall short of expected targets and the oil samples recovered indicate It was arguably not until the passing of of 120,000, but according to Gayheart 38 degrees API gravity. The West Cape the Ghana National Petroleum Corpora- Mensah, communications manager at Three Points operator, Kosmos, remains tion Law in 1983, and the subsequent Tullow Oil, the primary reason relates to in discussions with the Government of establishment of the Ghana National a technical difficulty with the oil well de- Ghana in relation to further appraisal and Petroleum Corporation (GNPC) in 1985, sign completion. “The consequence of development plans for the Mahogany, that serious emphasis was placed on oil this was a situation in which we were Teak, Banda and Akasa discoveries. • exploration in a country that had previ- experiencing less than expected flow ously been seen as risky and unfriendly from several of the wells. Redesigns to oil investment. have been successfully carried out and Ghana’s Oil Production In 2004 the GNPC signed a Petroleum we are currently monitoring the affected Source: CIA World Factbook, GBR, Various
Agreement to explore the West Cape wells to ensure the positive impact of (thousand bpd) Three Points block with a consortium of these changes,” he says. 120 Kosmos Energy acting as operator, with With Phase 1 now complete, and all 17 Tullow, Anadarko, Sabre Oil and the E.O. wells brought onstream, the attention is Group; in 2006, another agreement was now focused on what sort of exploration 100 signed with Tullow as operator of Deep- potential still exists in the region. Based water Tano. On June 7, 2007, Tullow an- on current proven reserves, production 80 nounced a discovery at the Mahogany-1 from the Jubilee field is expected to well, just southwest of Takoradi in Gha- peak from 2013-2015 at 120,000 barrels na’s Western Region. The well, drilled to of oil per day, and last for 20 years. 60 an overall depth of 3,826m, penetrated The next phase of development, Phase gross reservoir sands of 271m and net 1A, consists of eight new wells; five 40 hydrocarbon pay of 96m, with a gravity producers, three additional water injec- of 37 degrees API. A further discovery tors and the expansion of the subsea was made via the Hyedua-1 well, yield- network. The first of the Phase 1A wells 20 ing similar results. is expected to come on stream by mid- Following a series of similar discoveries 2012, with production expected to aver- 2009 2010 2011 2012 2013 within the Deepwater Tano and West Cape Three Points blocks, the consorti- Ghana’s Oil Reserves (billion barrels) African Oil Producers ums embarked on an ambitious plan to Source: Various CIA World Factobook (2011) bring the wells into production as quickly 0.66 (thousand bpd) as possible; by December 2010 first oil Nana Boakye Adjaye, 1.25 was achieved at Jubilee, becoming the Chief Executive, GNPC (2011) 1. Nigeria 2,211 fastest comprehensive full-scale devel- opment. Revenue Watch 0.8-1.8 2. Algeria 2,125 The initial project, known as Phase 1, Extractive Industries 1-1.5 3. Angola 1,948 used the FPSO Kwame Nkrumah, an- Transparency Initiative (2012) chored off the shores of Takoradi. The Tullow Oil (2010) 4. Libya 1,790 vessel, named after Ghana’s first Presi- 0.78-4 dent, is a 60m- by 330m-long tanker Moses Asaga, Chairman, 5 5. Egypt 680 with the capacity to process 120,000 Parlimentary Sub-Comitee 14. GHANA 66 barrels per day before exporting to re- on Energy
14 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations FACTSHEET
Oil Fields Sources: Ghana National Petroleum Commission TOGO
GHANA IVORY COAST Accra
AFREN TAP & OTHERS ORANTO
200m TULLOW 1000m KOSMOS WCTP 2000m YOUNG ENERGY VITOLUPS GASOP GULF OF GUINEA 50km HESS 3000m
VANCO DZATA PROSPECT
oil concession ODUM FIELD TWENEBOA DISCOVERY JUBILEE FIELD
ATLANTIC OCEAN
Discovery Timeline Source: Ghana National Petroleum Commission
Field: South Tano Basin: Tano Year: 1978 Fluid type: Oil & Gas
Field: Saltpond Field: North Tano Field: West Tano - 1 Basin: Saltpond Basin: Tano Basin: Tano Year: 1970 Year: 1980 Year: 2000 Fluid type: Oil & Gas Fluid type: Gas Fluid type: Oil
Field: 3-AX block Field: Jubilee Basin: Tano Basin: Tano Year: 1979 Year: 2007 Fluid type: Gas Fluid type: Oil & Gas Field: Cape Three Points Basin: Cape Three Points Year: 1973 Fluid type: Oil
Industry Explorations Global Business Reports // GHANA OIL & GAS 15 Global Business Reports INTERVIEW TULLOW OIL Industry Explorations
‘Tullow Group Scholarship scheme’. Interview with Under this scheme, every year we will sponsor 50 students to study abroad, completing Masters Degrees in various Gayheart Mensah disciplines related to oil and gas. We have stated that by 2015 at least Communications Manager, Tullow Oil 95% of our employees in Ghana should be Ghanaians. Currently more than 85% In December 2010, Tullow Oil began tries in Africa to ensure the sustain- of employees are Ghanaians, not merely to produce oil from its Jubilee Fields ability of oil and gas production in working at low levels but throughout the site. At only 40 months after the first Ghana and to ensure benefits to the organisation; as heads of departments discovery, this made it the fastest ever local community? and in positions of authority and impor- full-scale deep-water development. Tullow firmly believes that the oil and gas tance. What was the background to this fields in Ghana represent a very good op- achievement? portunity for not only the growth of the What is the current rate of production The Jubilee Fields discovery was made economy in this country but also for de- from the Jubilee Fields site and does in 2007 by a partnership of six oil compa- velopment that will benefit Ghanaians. this meet with expectations for the nies: Tullow, Kosmos, GNPC, Sabre Oil, We prefer not to comment on the nega- current phase of the project? Anadarko and the EO group. After the tivity that can surround analysis of the The rate of production has varied from discovery there was a widespread agree- growth of the petroleum sector in other a low of 70,000 to a peak of 88,000 ment between these oil and gas compa- countries, but here in Ghana the com- barrels of oil produced per day. Tullow nies and their development partners to pany and the country are tied together in had projected last year that production begin production as soon as possible. this pioneering effort to demonstrate to would reach 120,000 barrels per day. The The Government of Ghana was also in- the world that African countries can get primary reason that we are yet to reach terested in a swift transition from discov- it right and that oil and gas can be the this target relates to a technical difficulty ery to production, seeing it as a catalyst catalyst for development, growth and with the oil well design completion. The for development. The very nature of this progress. consequence of this was a situation in agreement between the government The one thing we would emphasize is which we were experiencing less than and the oil and gas companies provided that partnership, collaboration and con- expected flow from several of the wells. a platform for rapid development. tinued engagement with local stakehold- Redesigns have been successfully car- Another important factor is that infra- ers are critical factors to the success of ried out and we are currently monitoring structure, facilities and equipment were a project on this scale. Ghana has dem- the affected wells to ensure the positive ordered ahead of schedule. Normally onstrated this quality, a commitment to impact of these changes. This was a spe- when you discover an oil field you would working together, we believe this has cific technical issue that has no relation want to understand the characteristics been crucial and is a valuable lesson that to the remaining capacity of the site; in and the nature of the find. This requires should be shared. this respect our projections for produc- the collection of large amounts of data, tion have not changed. which is a time-consuming process. In Tullow has made a long-term com- this instance the partners decided to mitment to its involvement in Ghana, What are Tullow’s prospects for place orders while they were still col- how important is developing local ca- growth in West Africa and what is the lecting data on the fields. As a result the pabilities and employing local people likelihood of significant discoveries production operation had the resources to that commitment? being made in the near future? to be flexible and to react as new infor- Tullow do not employ local people be- Tullow has a track record in not just fol- mation on the characteristics of the site cause it is demanded; we employ them lowing what others do; we have our own were received. because we see it as a rational way of philosophy when it comes to explora- Finally, Tullow’s involvement as the oper- doing business. It makes commercial tion. The Jubilee site has unique geologi- ator of the site influenced the speed of sense, because if you develop capacity cal characteristics, and we are convinced development. Our internal structure and and capabilities in a country, using local that equivalent geological plains can be approach encourages the dynamic pro- raw materials and local service providers found in other parts of the world and can gression of projects. We were, and still represents a significant saving. reap similar rewards. We are using data are today, a very small company, with a The transfer of skills and technology to analysis to pursue exploration in areas flat hierarchy. This allows decisions to be local populations is important socially. with similar geological conditions in Li- made quickly and for us to operate in a We strongly believe that it is our respon- beria, Cote d’Ivoire and outside of Africa, reactive, fleet-footed manner. sibility to focus on local content. To this in French Guyana. We are very confident end we have put in place a number of that we will come up with significant and Are there lessons that can be learnt initiatives; for example in January of exciting sites in West Africa in the near from the experiences of other coun- this year we launched what we call the future. •
16 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations ARTICLE
Exploration Potential West Africa Oil Regions The possibility of Source: USGS undiscovered reserves Assesed geologic province
It may be argued that the 120-plus years Ghana of exploration activity in Ghana miti- gates any excitement over the potential for further discoveries; after all, many claim that the country’s four offshore basins (Accra-Keta, Saltpond, Tano, and Cape Three Points) are already relatively SENEGAL well-explored. The geology of these ba- sins has undergone detailed analysis. However, the length of exploration his- tory is not an accurate indication of the amount of exploration carried out. Ac- cording to the GNPC, a mere 110 wells have been drilled in the country to date. GULF OF NIGER Offshore exploration did not start until GUINEA DELTA 1968. Exploration focus only turned to deepwater after 2001. While we may predominantly associate the Jubilee Fields with Ghanaian hydro- Ghana’s Sedimentary Basins carbons, there have in fact been a num- Source: GNPC ber of significant discoveries since 2007. CONGO BASIN While precise numbers vary according to the definition of “significant”, it is safe to say that five of these discoveries are WEST CENTRAL COASTAL potentially commercially viable: Jubilee, Odum, Sankofa, Tweneboa, and Dzata. All four of the country’s offshore sedi- mentary basins have confirmed petro- VOLTAIAN BASIN leum systems. The Accra-Keta basin, the only offshore basin to not to have hosted a major dis- covery, bears resemblance to known offshore systems in Cote d’Ivoire (with both Teriary and Cretaceous prospectivi- ty), is claimed to be similar to geography in Nigeria, and has attracted the interest of such multinationals as Eni and Mitsui. Accra What is more, the onshore potential of KETA BASIN
Ghana is virtually untouched. As of April 200m
1000m this year, not a single license had been SALTPOND 2000m BASIN granted for the 107,100 square kilom- TANO BASIN CAPE THREE eters of onshore basins (the onshore 3000m POINTS BASIN extensions of the Accra-Keta and Tano GULF OF GUINEA basins plus the Voltaian basin). The Vol- 50km taian basin covers 40% of the nation’s
Industry Explorations Global Business Reports // GHANA OIL & GAS 17 Global Business Reports ARTICLE Industry Explorations
“Ghana is interesting for the future of Expro’s business growth because the country is beginning landmass, has a thick sedimentary cov- to get involved in deep water exploration. Deepwater exploration has certain technical chal- er and, from what is known of its geol- lenges that need to be overcome, which is where Expro is the market leader. There are certain ogy, is analogous to petroleum-hosting basins in North Africa, Brazil, and else- restrictions that come with deepwater technology, so Ghana is pushing the boundaries of the where. well testing industry.” On a technical side, the Ghanaian gov- ernment has facilitated exploration to an extent that surpasses many of its regional peers. The GNPC has 12,227.78 Allan Sutherland, Ghana Country Manager, Expro square kilometers of 3D seismic data and 33,126.00 square kilometers of 2D seismic data available for review or licensing. The Voltaian basin, the least explored of Ghana’s prospects, has for quite a while been the subject of “The Jubilee site has unique geological characteristics, and we are convinced that equivalent a planned exploration program by the geological plains can be found in other parts of the world and can reap similar rewards. We are GNPC. Late last year it was revealed using data analysis to pursue exploration in areas with similar geological conditions in Liberia, that they plan to spend $40 million to begin onshore exploration in this basin. Cote d’Ivoire and outside of Africa, in French Guyana. We are very confident that we will come The regulatory framework, discussed up with significant and exciting sites in West Africa in the near future.” in more detail in the section “The Busi- ness Environment”, is also investor friendly. In short, undeniable potential remains. • Gayheart Mensah, Communications Manager, Tullow Oil
“The oil and gas industry in Ghana will grow significantly over the next several years, which will provide more employment for Ghanaian people. Over the next year, the current number of rigs will double as eight to 13 new rigs are built in the country, which will encourage new players to enter the Ghanaian market. The Government needs to invest heavily in sufficient infrastructure in order to allow the industry to develop to its full potential.” GNPC Wells Source: GNPC (as of 2009)
Darren Last, Operations Manager Ghana, Global Energy Ventures
TOTAL WELLS “Menergy and other local companies can see the potential but do not necessarily have the ca- pacity to capitalize. This is why we believe that collaboration is so important; sharing expertise 79 creates new opportunities and expands companies’ capabilities. Partnerships can also be a way around the financial demands that large-scale projects in the sector implicate. Currently in Ghana there simply is not the financial capacity to finance exploration and production projects so assistance is needed from further afield.”
Onshore 18 Roy Aboku, Business Development Manager, Shallow water 55 Menergy International Deep water 6
18 Global Business Reports // GHANA OIL & GAS Industry Explorations Courtesy of Technip
Providing for Ghana’s Energy Needs: Ghana’s Natural Gas Industry
“There is a great opportunity for using gas as a power source. It is a cleaner fuel and does less harm to the environment than the burning of fuel or coal. The pricing of gas is advantageous; it costs less than any liquid fuel and is less susceptible to price fluctuations. Long term contracts with pipelines ensure that prices remain stable and avoid the volatility of crude oil’s value.” - Kweku Awotwi, CEO, Volta River Authority Global Business Reports ARTICLE Industry Explorations
to reach the full amount later this year; the pipeline that acts as the conduit for Powering Prosperity this gas was designed to carry up to 474 million cfd. There is gas in Ghana and the Providing energy for Ghana’s growing economy government has assured the VRA that we will be the first customers to which they turn. The expansion of the thermal Typical of many rapidly growing econo- payments early this year); erratic sup- portfolio comes with the expectation mies, Ghana’s power generation has plies of gas from neighbouring Nigeria that gas will be a significant source of struggled to keep up with increased have affected the operations of the coun- fuel.” demand. The result has been spates of try’s six thermal generation facilities; and The potential for this is obvious. “The blackouts that started with regularity in the current infrastructure is inefficient VRA will add 450 MW of capacity to 2007 and have continued to the current and underdeveloped. Ghana’s national grid over the next three day, combined with electricity prices Ghana’s electricity distribution infra- to four years, and is expected to reach that, already high, have increased with structure is extensive providing access a total capacity of 3000 MW by 2019. depressing frequency. to about 66% of the population. Trans- To finance this growth we hope to raise The power sub-sector involves the gen- mission infrastructure has, however, around US$250 million from commercial eration, transmission and distribution deteriorated over the years, resulting in buyers by the end of this year. Ghana’s of electrical energy for industrial, com- transmission bottlenecks, overloaded energy consumption will continue to mercial and domestic use in Ghana. The transformer sub stations and high sys- grow and gas will become an important Power System of Ghana is run by three tem This leads to frequent interruptions source of power. This presents chal- utility companies; the Volta River Author- in power supply and relatively high sys- lenges but also represents an excellent ity (VRA), Ghana Grid Company Limited tem losses. While national access is opportunity for investors to come in and (GRIDCO) and Electricity Company of about 66%, access in the three northern monetize gas power generation in Gha- Ghana (ECG). regions is about 30%. na,” says Awotwi. • The Volta River Authority has the primary In terms of infrastructure, positive signs function to supply electrical energy and can be taken from Ghana’s 2012 Budget, therefore the Authority is responsible for which allows for the rehabilitation, up- Planned Expansions the generation of electricity and GRIDCO grade and construction of various ECG Source: Ministry of Energy is responsible for the transmission of primary substations. On the supply side, electricity in Ghana. VRA supplies elec- gas is the answer. TOTAL CAPACITY INCREASE: Today = 2,169.5 MW tricity in bulk to Electricity Company of Gas production from the Jubilee and oth- 2015 = 5,000 MW Ghana and Northern Electricity Depart- er fields is currently nonexistent, yet the Takoradi Power Plant (T2): ment for distribution to consumers. The infrastructure is being put in place to ex- Today = 220 MW total installed generating capacity of ploit this gas. With the existing thermal Expected = 330 MW electric power in Ghana is about 2,000 power plants unable to attain full genera- Kpone Thermal Power Plant: MW, comprising of 1,100 MW of hydro tion capacity as a result of limitations in Today = 0 MW generation (Akosombo and Kpong sta- fuel supply Expected = 220 MW tions) and the remainder from thermal owing to rising fuel prices, this should Tema Thermal Power Plant 1: generation. play a vital role in ensuring that Ghana’s Today = 110 MW Expected = 330 MW The annual growth rate in electricity de- generation capacity is a help rather than mand over the past three years has ex- a hindrance to continued economic Tema Thermal Power Plant 2: Today = 49.5 MW ceeded 10%, with peak power increasing growth. Expected = 180 MW by 100 MW between first quarter 2011 Ghana’s generation company, the Volta Takoradi Thermal Power Plant: and first quarter 2012. It is estimated River Authority (VRA), is aware of this Today = 0 MW that Ghana requires capacity additions of and increasingly expanding their portfolio Expected = 132 MW about 200MW to catch up with increas- to include thermal generation. The VRA Bui Hydropower Plant: ing demand in the medium to long term. currently has a contract to procure 123 Today = 0 MW The problems in meeting this rising de- million cubic feet of gas per day from Ni- Expected = 400 MW mand are numerous: 69% of Ghanaian geria, via the West African Gas Pipeline, Juale Hydropower Plant: electricity is generated by hydropower, however this supply has not been as Today = 0 MW Expected = 90 MW making it vulnerable to climatic varia- stable required. This contract came into tions; corruption creates an unequal effect in November 2011 and the country Pwalugu Hydropower Plant: Today = 0 MW burden of electricity payments (Ghana- currently receives around 60 to 80 mil- Expected = 48 MW ian newspaper The Mirror published in- lion cubic feet per day (cfd). Kweku An- vestigations showing that 354 state and doh Awotwi, chief executive of the VRA, Hemang Hydropower Plant: Today = 0 MW private enterprises evaded electricity bill explains: “we are expecting supply levels Expected = 93 MW
22 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations FACTSHEET
Ghanaian Power Generation GDP Growth Rate Access to Electricity Source: CIA World Factbook Source: World Bank Source: Ministry of Energy billion kWH % 9 15 14.39
9 13 72% 2010 8 11
54% 2008 7 9 43% 6.75 2000 6 7
5 5 15% 1985
2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Transmission System Average Annual Rate of Source: Global Energy Institute Economic Growth since 1985 3.5% to 6.5% Source: Ministry of Energy
Average Annual Rate of Electricity Demand since 1985 10% to POWER PLANTS - TYPES AND CAPACITY (MW) HYDRO THERMAL OTHER <10 10-100 >100
POWER LINES (KV) 14% Source: Ministry of Energy MEDIUM HIGH
Industry Explorations Global Business Reports // GHANA OIL & GAS 23
POWER PLANTS - TYPES AND CAPACITY (MW)
HYDRO THERMAL OTHER <10 10-100 >100
POWER LINES (KV)
MEDIUM HIGH Global Business Reports INTERVIEW VOLTA RIVER AUTHORITY Industry Explorations
ria which does not increase or decrease in Interview with price dramatically. How will the expansion of infrastructure to cope with increased demand be fi- Kweku Awotwi nanced? Ghana’s use of electricity is increasing rap- CEO, Volta River Authority idly and the current infrastructure does not have the capacity to sustain this growth Could you provide us with an overview growing Ghana’s power generation facili- too far into the future. On a country level, of the power generation facilities and ties to meet with the growing demand of efforts have been made for several years to pipelines that the VRA is responsible the Ghanaian population. de-regulate the system to allow for greater for? private sector involvement. For example in In Ghana we have an electricity capacity The VRA has announced plans to use 2005 a new law was passed that separated of 2,000 MW, of that 1,200 MW are gen- natural gas as a major source of electric- power transmission and generation. The erated through the use of hydropower. In ity. Does this mark a strategic shift and idea was to create a level playing field for addition to this the VRA operates four gas what are some of the reasons behind any other independent producer to come turbines and one steam turbine in Takoradi this decision? in and invest. So far the only major arrival and three sets of single-cycle machines It is more a development than a strategic has been that of the Chinese but the hope in Tema. Finally we have what we call shift. The VRA recognizes that Ghana’s ca- is that as the rules become better articu- ‘emergency sets’: a series of one to two pacity for hydro-electric power generation lated and established other private play- megawatt units that give us an extra 75 has effectively been reached. However ers will be involved. As far as the VRA is MW of emergency capacity. The VRA is in the country and its demand for electricity concerned our duty is to supply Ghanaians the middle of a phase of expansion; in the continue to grow so alternative sources of with the electricity they demand. Our ex- first half of this year we gained parliamen- power must be found. The most realistic pansion plans will add 450 MW of capac- tary approval for the construction of a new solution is to generate power thermally ity to Ghana’s national grid over the next power plant in Takoradi. This project will be using coal, liquid fuel or gas. In Ghana we three to four years. Projecting further for- executed in partnership with Abu Dhabi do not have coal so until recently we have ward, we expect to reach a total capacity of National Energy Company (TAQA) and used crude oil and sometimes diesel as fu- 3,000 MW by 2019. To finance this growth will extend capacity by 110 MW. Another els for our generators. There is a great op- we hope to raise around $250 million from project that will come online over the next portunity for using gas as a power source. commercial buyers by the end of this year. three to four months is a joint venture with It is a cleaner fuel and does less harm to Next year if growth continues as we have Canadian investors to build a 132 mega- the environment than the burning of fuel projected we will issue a long term bond watt green fuel construction. Beyond these or coal. The pricing of gas is advantageous; to raise further funds. Ghana’s energy con- two projects we are carrying out feasibility it costs less than any liquid fuel and is less sumption will continue to grow and gas will surveys for the proposed construction of susceptible to price fluctuations. Long become an important source of power. This a 300 megawatt dam in the north, a 100 term contracts with pipelines ensure that presents challenges but also represents an megawatt wind turbine on the coast and prices remain stable and avoid the volatility excellent opportunity for investors to come we have tendered for our first solar power of crude oil’s value. This is evidenced by the in and monetize gas power generation in generation facility. We are committed to current gas supply we receive from Nige- Ghana. • Global Business Reports Industry Explorations ARTICLE Gas production
The development of Ghana’s associated gas
The 2007 Jubilee oil discoveries, and been re-injected into the field, however Code, rather than by specific statue like indeed the discoveries since, hold Joe Asamoah, technical director of the the GNPC. This raises questions about large quantities of associated natural Ghana Chamber of Oil and Gas, has said the nature of its relationship with the gas. Indeed, as of last year Ghana’s to- that this is affecting oil production. GNPC and with the government; includ- tal reserves of natural gas lay at 22.65 The delay in developing Ghana’s gas pro- ing the difference between the GNGC’s billion cubic metres; a not insignificant duction can be attributed partly to a lack mandate and the GNPC’s Natural Gas volume. of clear mandate. With both the Ghana Transportation and Processing Project. Yet exploitation of these reserves has National Gas Company (GNGC) and the These questions have yet to be fully an- been delayed. While the rapid progres- Ghana National Petroleum Company swered. sion from discovery to oil production (GNPC) developing their own master Despite this confusion, projects are at the Jubilee fields was impressive, plans for gas production, causing a bit moving forward. GNGC announced Ghana has not yet becoming a producer of confusion over who is responsible for their plan for a $700 million onshore gas of natural gas. In the first five months of overall management of gas reserves. processing plant in November 2011. This 2012, for example, Ghana still imported The GNGC was established in 2011 plant would have a 120,000 square foot $73.5 million of natural gas from Nige- with the aim of implementing the gas a day processing capacity. GNPC award- IVORY ria. Due to these delays, the associated infrastructure plan. However, GNGC ed contracts for offshoreTOGO pipelines in COASTgas from the Jubilee fields has so far was incorporated under the Companies October 2010. • GHANA
Gas Infrastructure Source: Global Energy Institute
Lome
Tema Accra
AGP) ABOADZE THERMAL POWER STATION PLANNED BONYERE GAS S PIPELINE (W PROCESSING PLANT AFRICAfrom GA Lagos Takoradi WEST
JUBILEE PARTNERS PLANNED GAS PIPELINE
50km Floating Production, Storage & Of oading KWAME NKRUMAH GULF OF GUINEA
Industry Explorations Global Business Reports // GHANA OIL & GAS 25 Global Business Reports INTERVIEW AA HORIZON LTD. Industry Explorations Interview with Toufic Haroun & Director Erik Holst-Roness Marketing Manager- AA Horizon Ltd.
Could you provide us with a brief intro- like Iraq. file for the service and maintenance of oil duction to the company? EHR: The company has a retail base in and gas equipment. In addition, we have TH: AA Horizon is the leading provider of addition to a workshop and a network started to design our own generators for high quality power generation equipment of transportation to get products to cus- the oil and gas industry and re-design ex- to industry in Ghana. tomers. Our customers receive a better isting machines by improving them. In Ghana we have worked for GNPC, service from Horizon than from other Apollo and Halliburton and we are current- companies. How do you recruit your employees? ly working for other drilling companies. TH: We have a very strong training pro- We are working in the oil and gas indus- What are the company’s competitive gram as we are prepared to bring in expe- try, although it has not been a major focus advantages? rience from anywhere and have a mixture for the company up until now. We have TH: Our attention to detail and our level of South African, Lebanese, Filipino and supplied eight power generators for oil of service are our main competitive ad- Indian employees. The oil and gas indus- rigs. Over the last three years we have vantages. try is a highly skilled industry and we are been focused on the telecommunications We take into consideration the needs and raising our standards up to ISO 2001 to industry. Our office in Ghana has been es- requirements of each of our individual become a certified organization. We have tablished for 18 months and we will be customers and provide solutions to spe- a Center of Excellence in our workshop increasing our human resources to meet cific problems or issues. We are able to where we will train 300 employees in growing demand. The company’s reputa- enhance existing products by the service 2012 and we have a staff recruitment pro- tion is positive from service providers that we provide. Aftersales only accounts gram where we have seven trainees that who supply us with a commercially viable for 20% of our total sales but our clients have been with us for four years. In addi- volume of work. are willing to pay a higher price for our tion we have sponsorship programs from products because of the high level of junior level through to university. What services do you provide to oil service that we offer. Our service levels and gas companies? include a three-year warranty on genera- What is your final message for our TH: AA Horizon Limited is service based tors; moreover, replacement machines readers? and we have done a lot of maintenance, are always available when a fault is not TH: Ghana has had a 20% growth rate design and refurbishment work on power immediately repairable. without oil and gas, but this will increase systems. We are associated with power TH: There is no competition for the servic- tremendously over the next 2-3 years systems, engines or generators and and es that we provide as no other companies with oil and gas investment. Ghana has a we have the capability to supply seven are able to compete with Horizon. lot of potential and the longer companies different sizes of generators to our cus- wait to invest, the harder it will be. AA tomers. What is your growth strategy for Gha- Horizon is currently working in other sec- The company has remote monitoring sys- na? tors in Sierra Leone, Liberia and Uganda tems that enable management to control TH: In 2010 our revenue was US$4 mil- and we are looking at work in Nigeria. In generators, monitor fuel consumption lion, in 2011 we generated US$12 mil- addition to service, we have found a big and to identify any problems. A challenge lion and by the end of 2012 we hope to requirement for inventories of equipment of operating in Africa is that the environ- generate US$20 million, US$5 million of and we are quickly becoming the largest ment is more difficult so there is a natural which has been achieved in Q1 2012. We holder of standardized equipment in Gha- acceptance of lower quality services. AA see the market potential potential in our na. Drilling service providers want a reli- Horizon Ltd. offers our customers three- sector in oil and gas in Ghana of US$10 able supply of stock and we are currently year warranties on power generation million annually; the total market of the oil in talks with companies who require our products compared to only one-year war- and gas industry in Ghana is hundreds of services so another area of future growth ranties on the same products in countries millions. We have plans to raise our pro- is the supply of specialist equipment. •
26 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations FACTSHEET
Natural Gas Imports “Ghana’s use of electricity is increasing rapidly and the current infrastructure does not have the capacity to sustain this growth too far into the future. On a country level, efforts have been 2009: made for several years to de-regulate the system to allow for greater private sector involve- ment.” 197,977 2010: Kweku Awotwi, CEO, Volta River Authority 15,616,648 2011: “The GIPC is looking to attract independent power producers to ensure that Ghana will be able 30,524,558 to export cheaper gas power as a commodity to neighboring countries like Nigeria that will have an increased demand for power in the near future. The West African Pipeline currently imports cubic meters gas from Nigeria to Ghana, although we believe that this will reverse and Ghana will be the net Source: Ghana Energy Commission exporter of power to Nigeria by 2020.” Natural Gas Proven Reserves (2011) George Aboagye, CEO, Ghana Investment Promotion Centre (GIPC) 22.65 billion cubic meters Source: CIA World Factbook “The company has remote monitoring systems that enable management to control generators, monitor fuel consumption and to identify any problems. A challenge of operating in Africa is Natural Gas Proven Reserves that the environment is more difficult so there is a natural acceptance of lower quality services.” by African Nation Source: Ministry of Energy
trillion cubic meters Nigeria 5.292
Toufic Haroun, Director, AA Horizon Limited Algeria 4.502
Egypt 2.186
Libya 1.548
“The government has two different models for investment into power generation, supporting Angola 0.309 independent power producers by providing easy access to land and basic infrastructure. Com- Cameroon 0.135 panies who choose to work with the government through the PPP Model with the Ministry of Finance can agree on what percentage of equity the government will take and receive help if Mozambique 0.127 debt components are necessary.” Ethiopia 0.113
Republic of Congo 0.090
Dr. Joe Adjei, Minister of Energy, Ghana Ministry of Energy Sudan 0.084
18. GHANA 0.022
Industry Explorations Global Business Reports // GHANA OIL & GAS 27 Courtesy of Technip Engineering Progress: Services Available to the Ghanaian Chemical Industry
“Managing a business in Ghana is quite straightfor- ward; it presents no more problems than running a business anywhere else in the world; but the issue at the moment is getting product into the country. The infrastructure is good and the systems and procedures are good, but nonetheless they are inadequate to cope with the sheer volume of product that is entering the country. Oil and gas has obviously made a noticea- ble difference, but it is also from mining and general growth in the economy.” - Phil Upton, Co-Founder, ITSC Global Business Reports ARTICLE Industry Explorations The Service Industry The support available “The Ghanaian petroleum sector has panies will make large investments or di- experienced dynamic growth but is still versify their services anticipating growth to Ghana’s upstream at an early stage of evolution,” says Roy that may or may not come,” she said. pioneers Aboku, Business Development Manager There is no clear-cut plan for the future of of Menergy International, an oilfield ser- oil production in Ghana; new sites may be vices company established in Gabon in discovered tomorrow that could shift the 1989 that was one of the first movers in focus of the industry. For service com- Ghana, entering the country in 1994. panies, managing growth in order to de- What is true of the sector as a whole is velop sustainably yet remain responsive certainly true of its surrounding service to the fluctuations of the oil industry is a industry. Equipment suppliers, logistics major challenge. providers, inspection and fabrication com- Some service companies have chosen to panies, financial services, and the rest of limit their growth in order to avoid a future support network one would expect to be situation where their capacity outstrips accompanying a petroleum industry have demand. Others, however, have used the all sprung up with remarkable speed to somewhat erratic nature of current pro- cater for the needs of the explorers and duction demand to expand their portfolio. producers. “The unreliable nature of oil production is Global Energy Ventures, for example, another primary obstacle as this is an in- were the first fabrication and inspection dustry in which downtime costs millions company in the field when they entered of dollars. To combat this issue Menergy the country in 2008, yet Darren Last, has emphasized broadening the range of country manager for Ghana, now de- services we offer and growing the com- scribes the market as “extremely com- pany in a sustainable manner,” explains petitive”. Aboku of Menergy International. Despite this growth, it must be remem- Whatever their strategy, or the services bered that the industry is very new; the they provide, all companies servicing the increased focus on deepwater production oil and gas industry should be aware of presents technically demanding projects the need for a long-term strategy; a re- for service companies that are only just quirement arguably more important in beginning to establish their presence. Ghana, where short-term demand may Oil production is also not yet at a level fluctuate substantially, than in other mar- at which its demand for services is con- kets. “The new players that are entering stant. into Ghana should have a long-term strat- Now that Phase One of production has egy to grow their operations in Ghana,” come to a close, the industry as a whole says James Wood, managing director at has entered a quiet period as companies Edward Mensah, Wood & Associates, a wait until Phase Two begins later this large insurance brokerage in Accra. “We year. “The rate of production from oil want to work together with new players fields is not reliable and the surges and to grow and develop the insurance indus- downturns have an instant impact on our try in Ghana to the same high standards business,” says Soraya Anglow, executive that are expected overseas. Local brokers director at Greenline Logistics, a 100% currently have limited knowledge about Ghanaian-owned company offering lo- oil and gas insurance, which needs to be gistics management, warehousing and developed to enable the industry to have haulage across the country. “Many com- a better future.” continued on page 32
30 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations INTERVIEW GLOBAL ENERGY VENTURES Interview with Darren Last Country Manager, Global Energy Ventures
How significant is Ghana to Global En- Imported equipment can cause logistical 120% in the last eighteen months. Global ergy Ventures’ overall strategy? challenges because of the lack of knowl- Energy Ventures has plans to acquire Global Energy Ventures was the first fab- edge in Ghana about oil and gas equip- Sling Press, which will enable us to man- rication and inspection company in Ghana ment, so it is important for Global Energy ufacture our own slings. Projections for when it established a presence in 2008. Ventures to forward plan and invest more Q1 2013 are to increase the company’s The company currently has 60 employees resources into spare equipment and revenue to $750,000 per month. in Ghana and an additional 60 employees tools. As the Ghanaian oil and gas sector in Abidjan. Ghana is becoming increasing- develops, knowledge will improve and lo- How competitive is the Ghanaian mar- ly important for West Africa as a whole, cal vendors will establish that will manu- ket for the services that Global Energy so it has been an important focus for facture equipment locally. Ventures provides? How does Global Global Energy Ventures to develop local Energy Ventures remain competitive? content and establish a structure within Has Global Energy Ventures’ earning The two major competitors of Global En- the country from the very beginning. reports been affected by the gap be- ergy Ventures are Tuboscope who are the Global Energy Ventures support Transo- tween exploration and Phase Two of largest in the world and APAVE who are cean and ENI rigs all over the world. production? a non-profitable firm that are owned by In 2008 Global Energy Ventures was It is hard to measure to what extent the French Government. Global Energy awarded a three-year contract with Global Energy Ventures has been af- Ventures strives to be the best and our Tullow that, along with other international fected as different clients require surveys success is demonstrated through our companies have ensured that the stand- and inspections at different times, which extensive client list. The company trans- ards in Ghana match worldwide require- means that the company has not experi- fers British expatriates to Ghana to man- ments. Ghana accounts for 40% of the enced a downturn in business. age departments whilst transferring their company’s revenue; 60% of revenue is knowledge to local employees. Global generated in Abidjan where operations How has the rapid development of the Energy Ventures has the expertise to are more fabrication oriented and there is oil and gas industry affected Global succeed, although the size of the com- less competition because of the prema- Energy Ventures’ business? pany works as a disadvantage as many turity of the market. We are striving to in- It has not been an issue to source the larger players are obliged to work with crease our fabrication capacity in Ghana, necessary equipment, although it is diffi- our larger competitors because of global although the market is extremely com- cult to source the suitable skills and labor contracts. petitive. Global Energy Ventures is cur- that the company requires. Individuals rently evaluating potential opportunities require a minimum of seven years train- How do you foresee the petroleum in- in Togo, Tanzania and Namibia to enable ing to qualify to become an inspector be- dustry evolving in Ghana? us to increase our presence in Africa. cause of the lack of resources and train- The oil and gas industry in Ghana will ing capabilities in Ghana. Global Energy grow significantly over the next several Can you provide us with a deeper in- Ventures is investing in the training of years, which will provide more employ- sight into your working relationship Ghanaian employees and selects six uni- ment for Ghanaian people. Over the next with Transocean? versity students every twelve months to year, the current number of rigs will dou- The work that Global Energy Ventures embark on our Graduate Program where ble as 8-13 new rigs are built in the coun- does for Transocean includes NVT, in- there is an opportunity for a position with- try, which will encourage new players to spection, fabrication and full lifting sur- in the company. enter the Ghanaian market. The Govern- veys, which can take three employees up It is important to empower local commu- ment needs to invest heavily in sufficient to four weeks. In addition, Global Energy nities to participate in the development infrastructure in order to allow the indus- Ventures employees carry out OCTG in- of the oil industry and Global Energy Ven- try to develop to its full potential. The oil spections, thread inspections and Bot- tures has a target to employ 90% local and gas sector is a unique industry that tom Hole Assembly, which involves drill- content within the next two years. is potentially dangerous; employees need ing tools. to be trained correctly, which ultimately What business growth has Global En- takes time. Global Energy Ventures will What unique challenges have Global ergy Ventures experienced over the have expanded operations in Africa and Energy Ventures had to overcome last few years in Ghana? into the Middle East or potentially set up whilst operating in Ghana? The company’s revenue has increased by more operations in the UK. •
Industry Explorations Global Business Reports // GHANA OIL & GAS 31 Global Business Reports ARTICLE Industry Explorations
continued from page 30 Nevertheless, the booming industry of- fers potential for growth, provided that service companies heed this advice. The oil and gas sector has enabled our com- pany to grow every year, and Wood and Associates is able to choose clients care- fully,” says James Wood, managing direc- tor at Edward Mensah, Wood and Associ- ates, an insurance brokerage. Other companies are looking to expand beyond the borders of Ghana. “In 2012 we are expanding our operations by opening offices in Liberia and Sierra Leo- ne where there is active oil and gas explo- ration,” says Frank Tony Eshun, managing director at Damco, a worldwide provider of freight forwarding and supply chain management services. Darren Last of Global Energy Ventures, a fabrication and inspection company spe- cialized in West Africa, sees significant potential for taking the expertise devel- oped in the country to other parts of the continent. “Global Energy Ventures is cur- rently evaluating potential opportunities in Togo, Tanzania and Namibia to enable us to increase our presence in Africa,” he says. Ghana is not just one country among many for regional-focused companies however. Due to a combination of rea- sons (including political stability, a rela- tively clear regulatory framework, and an infrastructure that, while not perfect, is nonetheless more comprehensive than that of many of the country’s neighbours) many companies view Ghana as a center from which to expand. “Ghana is very important to the oil industry as a whole, and as a hub for Sub-Saharan Africa, and Expro intends to use it as a logistical and operational base,” says Allan Sutherland, Ghana country manager for Expro, a glob- al leader in subsea safety systems. Ghana’s service industry is not yet as ma- ture as it could be, but neither is a lack of necessary support a challenge for explor- ers and producers to the same extent as it is in other relatively new jurisdictions. International service providers have had their entry into the country, following in the footsteps of international oil compa- nies, facilitated by the nation’s stability and business environment. Local compa- nies have also sprung up, showing admi- rable entrepreneurial spirit. • Courtesy of Technip 32 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations INTERVIEW EXPRO
we can deliver quality service in a safe Interview with and sustainable manner, we are not tak- ing tenders. Expro is concentrating on Allan Sutherland steady, managed growth. How do initiatives such as the Gradu- Country Manager, Expro ate Development Program help to em- power Ghanaians? How significant is Ghana to Expro’s control of these wells in a safe manner. The important question for Ghanaians overall strategy? If anything goes wrong, we can isolate is how the oil industry will benefit local Ghana is interesting for the future of Ex- and disconnect the well within a manner communities. Many countries have expe- pro’s business growth because the coun- of seconds. Our people are exceptional, rienced significant social challenges with try is beginning to get involved in deep the tools are excellent and the support an influx of ‘fast money’. Expro invests water exploration. Deepwater explora- that we offer is top notch; the excellence heavily in initiatives such as the Gradu- tion has certain technical challenges that comes from the engineering team that ate Development Program; the company need to be overcome, which is where designed these tools. also tries to make partnerships with lo- Expro is the market leader. There are cer- cal vendors. Expro developed our Gradu- tain restrictions that come with deepwa- How did Expro’s relationship with ate Development Program because ter technology, so Ghana is pushing the Tullow come about? we needed to get our local content up boundaries of the well testing industry. There are only three companies in the to a point where they would be able to Ghana is very important to the oil indus- world that can viably tender for the Ju- become senior operators within two try as a whole, and as a hub for Sub-Sa- bilee project, and we won the contract years. In many West African countries, haran Africa, and Expro intends to use it with Tullow for exploration and appraisal particularly Ghana, the educational sys- as a logistical and operational base. at Jubilee in 2007. At that time, Expro tem is very strong, and Expro can afford The third quarter of 2011 was a very busy did not have an office in Ghana, but we top-quality graduates with a few years of time for the Jubilee field’s production; ex- decided to build a bespoke facility in Gha- experience. The Program is divided into 4 ploration and tunnel developments were na rather than wait for the completion years of 6-month stages; the training be- also occurring. After this exploration fin- phase, as our competitors did. Expro has gins locally and moves to Expro’s offices ishes, it is about another year before you a very practical relationship with Tullow. in South Africa, as well as international move to complete wells for long-term They have had a very aggressive comple- training in London, Calgary and Houston. development. Exploration is tailing off tion schedule, and we have had to keep Trainees get assessed after every stage, and Jubilee is in full production. Expro up with these demands. The main chal- and gradually the assessment becomes will soon start to complete more wells lenges have been sourcing equipment more challenging. At the end, there is a for Jubilee and production will increase and, more significantly, personnel. We commitment on the part of our Sub-Saha- significantly, with improved completion are now getting ready for the next phase ran country managers that they will give designs. Expro will use Ghana as an op- of Tullow’s production schedule, and to preferential positioning to these gradu- erational base for other countries, such prepare, we have extended our opera- ates. Globally there are 32 participants, as Eni Togo, Tullow Kenya, and Mitsubishi tional capabilities and trained many local and the two Ghanaians in the program Gabon, which are not reflected on the engineers, in order to jump ahead of the are currently entering the second stage. Ghana books. Expro recently moved their competition. regional Sub-Saharan Africa headquarters Where would you like to see Expro’s from Cape Town to Accra, which shows As the oil industry in Ghana heats up, Ghanaian business in the near term? how serious the company is about the what added pressures are put on Ex- Expro will continue to deliver excellent country’s prospects. pro’s shoulders? service to our clients over the coming The market has opened in Ghana and years. Eventually, we would like to see What are the core services that Expro there are more contracts to be won. Ex- every oil rig in Ghana staffed with Ex- offers in Ghana? pro is currently focused on consolidation; pro personnel, and delivering safely and Expro’s core service is the subsea safety we have concentrated on the quality of sustainably. Another goal is to increase systems, an area in which we are recog- equipment that is available in Ghana. Expro’s local content; we are already at nized as the best in the world. We also Again, the challenge is finding skilled 95% on the operations support side, and offer well testing, where we test the pro- personnel; we are investing heavily in lo- are increasing the ratio on the opera- duction well’s viability. When we exam- cal recruitment by building the company tions side through initiatives such as the ine the exploration and appraisal wells, with local Ghanaians, but the transition Graduate Development Program. Expro’s we test whether the tools are working, if to senior management takes time. We long-term vision is to have a 100% Gha- the reservoir is flowing, and if we expect have had to refuse new work because naian operation; we are committed to the to get good results to relay to the FPSO. we will not compromise our safety stand- country and will be here for many years The deepwater challenge is maintaining ards. Until Expro reaches the point were to come. •
Industry Explorations Global Business Reports // GHANA OIL & GAS 33 Global Business Reports INTERVIEW SGS Industry Explorations
Interview with Michael Savage Manager, SGS
Could you provide us with a brief in- regular petrol to enhance the perfor- expand our market share. troduction to SGS? mance of the fuel in the vehicle, which SGS has a presence in over 140 coun- results in better mileage, decreased Where do you expect to see SGS tries and employees 80,000 staff world- emissions and more environmentally Ghana in five years time? wide. The structure of SGS Ghana is friendly fuel. SGS will be a diverse company that will divided into four business lines; oil and Currently, SGS’s biggest business is the employ up to three hundred people. We gas, logistics, agriculture and an envi- collaborations and inspection of vessels will be able to offer oil and gas compa- ronmental department equipped with that bring fuel into the country. nies a complete package of services. a laboratory. SGS Oil and Gas is a rela- tively small division within the company Is SGS involved in any training pro- What is your final message for our in Ghana. We currently employ sixteen grams in Ghana? readership? staff that are involved in the initial and SGS is focused to set up a training pro- SGS Ghana is able to draw on global discharge inspection of ships and tank gram where experienced expatriates expertise to provide investors in Ghana collaboration. from global offices will embark on a with any service that they require. • The Ghanaian office deals with Bulk 3-6 month training period to share and Road Vehicles that transport products transfer knowledge to local employees to refineries and require collaboration to who have the capabilities and qualifica- ensure that the right amount of fuel is tions to work in the industry. carried. We are in currently in talks with the Can you provide us with an example NPA to renew the same license that we of an innovative technological solu- had 10 years ago, which will enable us tion that has been applied success- to work on the collaboration of under- fully in Ghana? ground plants and filling stations. In ad- Oil exploration uses PVT Analysis dition, meter collaboration and tank leak equipment that is not easily available, protection, which is an environmental although SGS is one of the only com- hazard, are other business areas that panies worldwide that has ownership of we are interested in working in. the Pressure-Volume-Temperature (PVT) Originally we had hoped to open an oil technology. Oil and gas companies that analysis laboratory by Q4 2011 and are do not have the technology are required currently in talks with our Head Office to send PVT samples to Orlando or Bel- in Geneva to obtain final approval by Q4 gium for analysis, which is inefficient in 2012. The laboratory instruments meas- terms of both time and money. Howev- ure pressure and temperature and re- er, if technology is available onsite, the quire collaboration for accuracy. A cycle process is extremely efficient. Hess is a has been set up for the re-collaboration company that we will be marketing the of equipment. PVT technology to.
How important is the oil and gas in- What is your strategy to expand dustry to SGS in Ghana? SGS’s market share in Ghana? Oil and gas is important business for Our strategy is to employ the best peo- SGS in Ghana today. As a global com- ple. SGS is interested in a whole range pany we are able to draw on our exper- of services, instead of focusing on one tise and knowledge to grow in a range specific area. This will enable SGS to of sectors in Ghana. offer a whole spectrum of integrated We have been involved in a fuel program services to our clients. We are using our for Shell where additives are added to resources from Europe and America to
34 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations ARTICLE
Education Expenditure School Life Expectancy Local Source: CIA World Factbook Total Population 10 years Content Male 11 years Developing the Ghanaian 5.4% Female 10 years skillset of GDP 45th in the world Labor force by occupation While the industry may not be providing Source: CIA World Factbook Source: CIA World Factbook employment at quite the rate that some hoped, local content laws have been a key agenda for the Ghanaian govern- ment since the very beginning. The gov- ernment seeks to achieve a minimum of 90% local content and local participa- tion in all aspects of oil and gas industry value chain within a decade. The policy framework has proposed specific tar- gets for direct employment in the explo- ration and production of the oil and gas. On the management level, 50% of the management staff must be Ghanaians from the start of petroleum activities of the licensee, with the percentage in- creasing to 80% within five years, after Agriculture 56% the start of the activities. The policy framework has proposed Industry 29% specific targets for direct employment Literacy Rates Services 15% in the exploration and production of oil and gas. On the management level, 50% of the management staff must be Employment in the Oil Ghanaians from the start of petroleum and Gas sector activities of the licensee, with the per- Source: Ministry of Energy centage increasing to 80% within five 67.3% years after the start of the activities. of total population Adequate training in the area of health and safety must continue to be a prior- ity for companies operating in the oil and gas space. “The oil industry has European and UN standards to adhere TOTAL to as well as new safety standards in EMPLOYEES the country,” says Anura Kaluarachi, 1500 general manager of Takoradi Gas, a lead- ing industrial gas manufacturer located in Ghana’s oil city. “This helped us to raise our standards, as we had to com- ply with their regulations in order to do business with multinationals.” Individuals require a minimum of seven Ghanaian Employees 840 years training to qualify to become an in- 61.2% 73.2% spector because of the lack of resources Source: CIA World Factbook Expatriate Employees 660
Industry Explorations Global Business Reports // GHANA OIL & GAS 35 Global Business Reports ARTICLE Industry Explorations
and training capabilities in Ghana, says entire industry. International companies locally and moves to Expro’s offices in Darren Last, country manager of Global especially have shown a willingness to South Africa, as well as international Energy Ventures, a UK-based well ser- capitalize on their global network when training in London, Calgary and Hou- vicing company in Takoradi. “The oil and training Ghanaian employees. SGS, for ston. Trainees get assessed after every gas sector is a unique industry that is example, brings in their experts from stage, and gradually the assessment potentially dangerous; employees need around the world. becomes more challenging. At the end, to be trained correctly, which ultimately “SGS is focused to set up a training there is a commitment on the part of takes time.” program where experienced expatri- our Sub-Saharan country managers that Despite these challenges, success sto- ates from global offices will embark on they will give preferential positioning to ries abound. “The Jubilee Fields project a three to six month training period to these graduates. Globally there are 32 was completed with 45,000 Ghanaian share and transfer knowledge to local participants, and the two Ghanaians in man-hours without one incident onsite employees who have the capabilities the program are currently entering the or one injury,” says Stephane Sole, and qualifications to work in the indus- second stage.” country manager at Technip, a French try,” says Michael Savage, manager of “Foreign companies that come to company that provided engineering and SGS in Ghana. Ghana must demonstrate that they are construction services at Jubliee. “We Expro has invested heavily in their Grad- making a long-term commitment to op- have developed an in-house HSC pro- uate Development Program in Ghana. erations in the country and are not here gram, and created a partnership with “Expro developed our Graduate Devel- just to make short-term gains,” says Kumasi University that offers scholar- opment Program because we needed Phyllis Christian, CEO and managing ship programs and specific oil and gas to get our local content up to a point consultant of ShawbellConsulting, who training for Ghanaians. In addition, we where they would be able to become provide legal and business advisory ser- place emphasis on employing Ghanaian senior operators within two years. In vices to companies in Ghana. “This is employees to work on our projects and many West African countries, particu- particularly relevant to the oil and gas we are creating an engineering com- larly Ghana, the educational system is sector as we have seen many countries pany that will transfer more technology very strong, and Expro can afford top- that have discovered oil and been ex- and increase man-hours for local peo- quality graduates with a few years of ploited by multinational companies who ple.” experience,” explains Alan Sutherland, have at best limited interest in benefit- Different companies have taken differ- country manager of Expro in Ghana. ing the local population. A company that ent approaches; the linking theme is an “The program is divided into four years becomes a trusted brand will be more encouragingly proactive effort from the of six-month stages; the training begins successful than one that is not.” • Global Business Reports Industry Explorations INTERVIEW TAKORADI GAS LIMITED
Interview with Anura Kaluarachi General Manager, Takoradi Gas Limited
Could you give a brief overview of Ta- in the oil fields. For example we supply that as a local player we can operate to koradi Gas? acetylene gases to almost all the con- international standards as we have for- Takoradi Gas was incorporated in 1995 tractors and subcontractors. eign experts within the company. and began operations in the same year. We started with small machines produc- How much of an emphasis does Tako- Does Takoradi Gas intend to diversify ing oxygen and acetylene gases for in- radi Gas put on health and safety and into different lines of business in the dustries and then over a period of time, how do you transfer that knowledge future? we expanded our production to almost to your clients? The company will continue to look for all industrial gases. We both produce Health and safety is our prime concern expansion into related products. We and import industrial gases to cater to because we are working in a dangerous have built up our facilities, such as re- the demand here. We manufacture in- environment. The mining industry intro- cently a new warehouse. Takoradi Gas dustrial gases and also sell welding con- duced health and safety in to the coun- hopes to do more business and bring sumables such as electrodes. Takoradi try, bringing a lot of standards, which more new products. We would also like Gas also carry a lot of specialty prod- their suppliers had to comply with. to see what the oil and gas industry ucts for the oil and gas industry such as Takoradi Gas is very strict; we have a need and meet their demand for new pipe welding and some welding gases. Health and Safety Officer who makes products. We also supply to the refrigerant gas sure all the products leaving the country market that used to be known as Freon complies with regulations, codes and Where would you like to see Takoradi gases, through imports from Spain, Italy practices. The oil industry has Europe- Gas in the next five years? and China. We have also diversified in to an and UN standards to adhere to and Takoradi Gas would like to be number other areas; we want to create a one- also introduced new safety standards in one, as opposed to sharing the market. stop-shop for the whole building indus- the country. This helped us to raise our At the same time, our vision is to main- try. We have depots around the country, standards, as we had to comply with tain first choice of customers, improve especially mining areas to do this. Over their regulations in order to do business our services and bring more industrial a period of time we have come to share with them. standards. We would also like to look in the market in Ghana with Air Liquide. to locally producing some products in- There are more players but on a smaller Does the boom in the market make stead of importing them, such as oven scale. Right now the mining industry is the supply industry more competi- gases like carbon dioxide. the biggest segment for Takoradi Gas. It tive? has been forecast that in time there will There has been increased competition Do you have a final message about be huge investments into the oil and in both Takoradi and throughout Ghana. Takoradi Gas? gas industries however. At present the Air Liquide was all over the country Takoradi Gas can be relied upon to pro- country is getting a lot of revenue from and then Dominion came in; however, vide industrial gases; we capitalize on the gold industry. We are based right in with their entry, the oil and gas indus- our service and we are available 24/7. the heart of ‘Oil City’ so we expect our try came in to Ghana and we have been We would like to offer a one-stop shop relationship to evolve here. able to take a share of the market. Now to all building or gas needs. Though we other companies are setting up their are a local company, we are a local-inter- What is your current relationship to operations, which creates more oppor- national company so we make ourselves the oil and gas industry? Which cli- tunities and space to help our business. available for anything at anytime. • ents do you work with? Also, we are meeting new suppliers We work with almost all the players in from overseas and other African coun- Ghana right now such as Tullow, who tries. When Takoradi Gas set up our op- contracts out to us. Takoradi Gas also erations we began aggressively market- works with all the drilling and rigging ing on our services. We provide a 24/7 companies who also have subcontrac- operation and never close this factory tors; it is not just upstream, but also the so we can always deliver to our custom- services sector. We work closely with ers. Takoradi Gas started gaining more Dominion Oil and Gas who work mainly market share and we were able to prove
Industry Explorations Global Business Reports // GHANA OIL & GAS 37 Global Business Reports INTERVIEW TECHNIP GHANA Industry Explorations Interview with Stephane Sole Country Manager, Technip Ghana
Could you provide us with a brief in- naian workforce? What is your final message for our troduction to Technip Ghana? Technip is proud of the training that has readers? Technip first established a presence been completed in Ghana and we have There is a lot of potential in Africa and in Africa in 2009 and today has offices successfully trained 15 local engineers we are interested in opening offices in based in Egypt, Ghana, Algeria, Nigeria out of our engineering centers. The other countries. • and Angola. In 2010 Technip completed Jubilee Fields project was completed projects for LPC, Kosmos and Anadarko with 45,000 Ghanaian man hours with- and we are currently working on four out one incident onsite or one lost time projects. injury. We have developed an in-house In February 2011, Technip was awarded HSC program called Perls. a contract from GNPC for a gas export We have created a partnership with Ku- plant and the engineering and design of masi University that offers scholarship an oil and gas processing plant that is programs and specific oil and gas train- near completion. In addition, we have ing for Ghanaians. In addition, we place been awarded a contract from Tullow for emphasis on employing Ghanaian em- the Jubilee Fields. ployees to work on our projects and we are creating an engineering company What suite of services does Technip that will transfer more technology and provide to its clients in the oil and gas increase man hours for local people. industry? Technip provides standard EPC con- How is Technip involved in the GNPC tracts, using our construction expertise. project? Technip has been successful in the Technip was awarded a contract by the sub-sea sector where we are currently Ghana National Petroleum Corporation, are involved in three EPC projects. Our which was successfully installed and strategy is to capitalize on the business completed on time. Technip is particu- activity within the subsea sector. In ad- larly proud of the successful integration dition, Technip provides engineering and of GNPC engineers within the Technip design services for onshore processing team. The GNPC project advanced the plants. further development of Technip’s local capacity. Can you provide us with an overview of your deal with Tullow? What inno- What are Technip’s competitive ad- vative solutions did you use on the vantages? project? Technip is a leader and has a strong po- Technip was awarded the contract for sition in the deep-water market and we Phase One of the Jubilee Field project focus on projects that maximize local by Tullow. An IPC project team was cre- content. Furthermore, Technip has the ated which gave Tullow responsibility of expertise to plan and execute efficiently, the operation and Kosmos was respon- whilst being able to create and maintain sible for the CAPEX, which meant that strong relationships with our clients. all of our technical exchanges were with Kosmos. Where do you expect to see Technip We experienced some technical chal- in Ghana in five years time? lenges whilst working on the project, The new engineering company that we and needed to find innovative solutions. will have established will be in a strong position and Technip will have complet- Is Technip focused on training a Gha- ed all projects on time and on budget.
38 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations INTERVIEW MENERGY Interview with Roy Aboku Business Development Manager, Menergy International
Could you provide us with a brief as this is an industry in which downtime of the petroleum industry and has seen overview of the services that Menergy costs millions of dollars. To combat this an influx of companies arriving to the International offers to the oil and gas issue Menergy has emphasized broaden- market that require the expertise and sector? ing the range of services we offer and local knowledge that we offer. We have Menergy International is a proudly African growing the company in a sustainable set ourselves the target of repeating this oilfield services company that was es- manner. growth and doubling our business again tablished in 1989. We started our opera- by the end of 2012. tions in Gabon and initially were a staffing How important is the Ghanaian market Our strategy to continue growing is to agency; providing oil and gas companies to Menergy International’s business? diversify our services so that we can with the personnel they required. We Ghana is of great importance to our busi- maximize the opportunities available to expanded into Cameroon and Equatorial ness; the corporate headquarters are now us. We are focusing on collaborating with Guinea before establishing Menergy Gha- located in Accra and we see the country strategic partners to strengthen our capa- na in 1994. As the company has grown as a hub from which we can serve the bilities; working with a Dutch company in so has the portfolio of services that we African continent. Our goal is to become the provision of equipment rental, acting offer. Today we provide travel support; ar- one of the largest logistics companies in as the distributor for a Chinese company ranging accommodation, transportation Africa and Ghana is the fulcrum of our that supplies off-shore containers and and catering for companies that choose strategy for expansion and growth. We considering partnerships with several UK to locate in Ghana. We act as a logistics view the country as an attractive place to firms as we move into the off-shore se- support company for several of our cli- do business; economically and politically curity business. The oil and gas industry ents and are looking to expand our equip- it is a stable location and is ideally placed is a highly technical one and our clients ment rental capabilities in the future. geographically for our operations. Addi- expect the highest standards of services. Human resourcing remains at the core tionally many of our clients have estab- Menergy believes that by collaborating of our business but we are responsive to lished their regional headquarters in Gha- with a breadth of international partners the direction of the market’s growth and na so it makes sense for us to be close we can meet with their demands. are always interested in diversifying the to them. The Ghanaian petroleum sector range of services that we offer. has great potential and has experienced Looking beyond the accomplishment exponential growth in recent years. Men- of the immediate goals Menergy has What are the major challenges that the ergy is an ambitious company and being set itself, are there any other areas that Ghanaian oil and gas sector presents located in Ghana gives us access not only it is looking to expand into? and what strategies do Menergy Inter- to an exciting national market but also We are a dynamic company and constant- national employ to cope with them? positions us to take advantage of wider ly analyze the market for fresh growth The Ghanaian petroleum sector has ex- regional opportunities. areas. Oil exploration and upstream pro- perienced dynamic growth but is still at duction are the areas in which ultimately an early stage of evolution. Menergy and What have growth figures been in 2011 the biggest profits are made. To this end other local companies can see the poten- and what projections do you have for we have entered into discussions with tial but do not necessarily have the capac- 2012? several Chinese companies with a view ity to capitalize. This is why we believe The year-end review for 2011 demonstrat- to establishing drilling operations. Do not that collaboration is so important; sharing ed that our growth had doubled between be surprised if you hear that Menergy has expertise creates new opportunities and 2010 and 2011. This represents the most acquired an offshore block for production. expands companies’ capabilities. Partner- phenomenal growth in Menergy’s his- This is not one of our specific strategic ships can also be a way around the finan- tory and sees us occupying a position of objectives but is something that we cial demands that large-scale projects in strength as the Ghanaian economy con- would never rule out. Oil production is the sector implicate. Currently in Ghana tinues to expand. The key to our growth high-risk but also highly rewarded. Once there simply is not the financial capac- over this period was the increase in oil we have established ourselves as one of ity to finance exploration and production production caused by the rapid develop- the leading logistics providers in Africa projects so assistance is needed from ment of the Jubilee Fields site. Becoming we so no reason to restrict our ambitions further afield. The unreliable nature of oil a nation that produces commercial quan- and so upstream production would be a production is another primary obstacle tities of oil has put Ghana in the spotlight possibility in the future. •
Industry Explorations Global Business Reports // GHANA OIL & GAS 39 Global Business Reports FACTSHEET Industry Explorations
Infrastructure Map Source: World Bank Bawku 2011 GDP Growth Main roads Bolgatanga Airport Actual GDP Growth:
Port
50km Wa 14.4% Without current infrastructure:
Tamale
Damongo 13.4% With reliable
Salaga power supplies: 14.9% With middle-income infrastructure: Sunyani
Kumasi 17.1% Source: World Bank Bibiani Infrastructure Spending Source: World Bank
Accra Tema Current $1.2 Spending billion Required Spending $2.3 Cape Coast over the Next Decade billion Sekondi-Takoradi Axim Current Loss due to $1.1 Inefficiencies billion Hidden Costs in Hidden Costs of Power Utilities Ghana’s Power Sector in Selected Countries Source: World Bank Source: World Bank
% of GDP 7 Nigeria
6 Ghana
5 Cameroon
Senegal 4 Ivory Coast 3 Cape Verde 2 Burkina Faso
1 Benin % of revenues 2004 2005 2006 2007 2008 2009 0 50 100 150 200 250 losses underpricing VRA underpricing ECG collection inefficiences unaccounted losses underpricing collection inefficiences
40 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations ARTICLE
Logistic Solutions Imports, exports, and When Ghana remained a low-income one of the major hurdles the country country, its infrastructure network was must overcome. “The obstacles Ghana distribution impressive. Its paved road density, at faces are in developing its infrastructure 158.1 km per 1,000 square km of arable at a much faster pace, establishing relia- land, is almost double that of the low-in- ble power generation and in selling itself come average. Its unpaved road density as a proposition to the investment com- is also significantly higher and it spends munity,” says Nana Koranteng, head of enough on maintenance and rehabilita- energy at Fidelity Bank, one of Ghana’s tion to sustain this position, unlike its fastest growing financial institutions. regional peers such as Nigeria, Senegal, “The challenge is in bridging the gap be- or Cote d’Ivoire. tween the potential and the actual and Its railway, although not extensive, has this is where the opportunities for inves- tariffs equal to those of the region and tors lie.” significantly lower than the average of Nonetheless, it is the oil and gas indus- Central and Southern Africa. Its two try for which this lack of adequate infra- ports, Takoradi and Tema, have a general structure causes the most concern. This cargo handling capacity of 5.5 million is, essentially down to three factors: the tonnes per year and 8.5 million tonnes size and complexity of the equipment per year respectively; higher than re- needed for this industry; the lack of gional peers such as Nigeria’s Apapa knowledge still surrounding many of the port, at 5.0 million tonnes per year. more technical aspects of the industry; Yet these congratulatory figures hide and the lack of domestic manufacturers. two distinct problems. Firstly, Ghana is “Imported equipment can cause logis- no longer a low-income country. As of tical challenges because of the lack of 2011, Ghana is officially classified as a knowledge in Ghana about oil and gas lower-middle income country, and in that equipment, so it is important for Global group Ghana falls distinctly behind. The Energy Ventures to forward plan and country’s paved roads, unpaved roads, invest more resources into spare equip- port capacity, and most other indicators ment and tools. As the Ghanaian oil and of solid infrastructure all fall behind the gas sector develops, knowledge will average for middle-income economies. improve and local vendors will establish Raising the infrastructure to the level that will manufacture equipment locally,” of the region’s middle-income countries says Darren Last, country manager of would boost annual GDP growth from Global Energy Ventures, a fabrication the 1% it has contributed throughout and inspection company. the past decade to 2.7%. To solve this problem will require sub- Secondly, logistics involved in the oil in- stantial finance and effort. The govern- dustry are more complex and involve an ment already spends roughly $1.2 bil- increase in transportation volumes that lion a year on infrastructure, equating to the country was unprepared for. The around 7.5% of GDP. Yet it is estimated sheer amount of imports and exports that a further $0.4 billion to $1.1 billion a created since the oil boom has played year would be required to fully address a major role in the congestion currently the issues that currently exist. While afflicting Ghana’s ports, which, in terms the benefits of this may be obvious (the of efficiency and despite their relatively same amount is lost to inefficiencies in large size, rarely rise above mediocre in the infrastructure and utilities system, comparison with regional competitors. and opportunity exists for Ghana’s ports Companies from every field see this as to take on the role of a regional hub),
Industry Explorations Global Business Reports // GHANA OIL & GAS 41 Global Business Reports ARTICLE Industry Explorations
this is nonetheless a substantial sum of Maintenance and Rehabilitation Needs money. Source: World Bank Fortunately, the Ghanaian government spending as % of requirements has shown signs of commitment to the 60 country’s infrastructure. Both the Petro- leum Revenue Management Act and the 2012 Budget place a large emphasis on 40 investing in both oil and gas infrastruc- ture and general infrastructure for the country as a whole. Indeed, the theme 20 of the 2012 Budget was “Infrastructure Development for Accelerated Growth and Job Creation”. Specific provisions in the budget ac- count for more detailed aspects. For example, there are plans to introduce a -20 Ghana Integrated Cargo Clearance Sys- tem in the country’s ports and broaden the coverage of the database of goods -40 imported into the country. Inland, six major highways currently being con- structed are due to be completed this -60 year and the Kotoka International airport is being rehabilitated and expanded. Ghana’s infrastructure cannot rely solely -80 Nigeria Niger Senegal Ivory Coast Ghana Benin
on investment. Issues such as a weight- maintenance rehabilitation ed tariff rate of 8.6%, which is fairly high, and numerous non-tariff barriers Fuel Levy and Maintenance Needs to trade, must be dealt with by policy Source: World Bank rather than money. Yet for the most part, US cents per liter the key aims of Ghana with regards its 20 infrastructure should be more and more modern. The oil and gas industry, as a catalyst of 15 growth, an importer of equipment, and an exporter of crude product, has played a significant role in hastening the inade- 10 quacy of the country’s current infrastruc- ture network. This is not a bad thing. Rather, the industry is playing a classic 5 role as an enabling industry; not only highlighting the need for increased infra- structure investment, but providing the Lesotho Madagascar Rwanda Zambia Ghana Malawi money and motivation to carry it out. • existing fuel levy optimal fuel levy to cover maintenance costs
Economic Cost of Power Outages in Selected Countries Source: World Bank
Sierra Leone
Uganda
Madagascar
Ghana
Rwanda
0% of GDP 1 2 3 4 5
42 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations INTERVIEW AOS ORWELL Interview with Ernest Poku Country General Manager, AOS Orwell
How has last year’s merger between a similar license with a company called and time. African Oilfield Services and Orwell Grant Pryco. Building from there, we International aided your development set up a remedial drilling service. This What pressure is placed on service in West Africa? basically means the ability to fish for companies to keep up with the pace The merger brought two different sets tools – we have one of the largest fish- of the Jubilee oilfields? of skills together. Orwell was a Nige- ing inventories outside of Nigeria. We It was great that Tullow found them be- rian company; African Oilfields Services, are now bringing additional rental and cause, without a rulebook, they were while operating in Nigeria, had a lot of manufacturing services, expanding our able to break the world record. This re- exposure to Europe through its staff and machine shop, and offering a pressure quires us to tear up our own rulebook investor base. The combination of highly testing facility. and invest more and faster than we experienced indigenous Nigerian staff would normally. It can be a challenge to and access to international financing en- You are looking at putting around $5 convince investors because, sitting in an- abled the company to move more inter- million into the company here. What other part of the world, they do not view nationally. In Ghana, we have some Ni- is the specific nature of those invest- Ghana as the special place it is. gerians bringing local staff up to speed; ments? and we hope to bring that model into a Firstly, we had to purchase a lot of ma- What are your strategic goals for the number of other countries. Having ac- chine shop, fishing and rental equipment next year? quired Emerson late last year, we are no overseas. That made up the majority of Over time, we expect to bring into Gha- longer just an upstream company. More our cap-ex; our op-ex consists of train- na all the major services that are run in than 90% of our staff, including the ing, staff, the scope to manufacture and Nigeria, based on market need. We have head, are Ghanaian; one of the things import, and potentially the acquisition of started as a third tier supplier, supplying that differentiates us in Nigeria is our more assets in the country. As we ex- a lot of services into the main service strong focus on local content, and we pand our service line, the need to bring companies, but where we have suc- believe in the importance here of reduc- in additional equipment will drive our ceeded in Nigeria is as an indigenous ing the number of ex-pats on our books. investment. It is worth bearing in mind company operating at that same level: Because of our size, we have been able that Ghana is becoming the regional with training, we aim to get there in to enjoy relationships with major service hub, and we might be able to serve the Ghana over the next 18 to 24 months. providers, some of them the best in the whole coast. Anyone will tell you that AOS Orwell world, and bring more services to the The industry, and its good opportunities, is different from the other companies. industry. We offer around 15, now. We will determine exactly how we invest. Rather than just aiming for one five year also acquired ANC last September. $20 million contract with, say, Shell, we How much of a cost advantage will want to be spread amongst all the op- What are your core capabilities in Ac- manufacturing in the country bring erators. cra? you? So far, we have brought what we con- The key cost advantage is not actually for Will the company continue making ac- sider the most desperately required ser- us, but the operator. If something hap- quisitions? vices from Nigeria into Ghana, allowing pens on a million-dollar-a-day rig, they In Nigeria, we want to acquire every six companies to do as much as possible could be looking at four days to bring months. The companies we buy often without having to get things in from replacements from Aberdeen, even in have a footprint overseas. AOS now outside. We started with a machine airfreight; with in-country manufactur- have a base in Uganda; our ambition is shop, for oilfield equipment repairs and ing, it will take a maximum of 48 hours. to an indigenous pan-African operator. manufacture of small pieces. The most That two-day saving could be, literally, a important asset now is the license to million dollars. It is also very close to my Do you have a final message? manufacture Vam, a type of oilfield cas- personal heart to increase the amount of We do not mind how much the govern- ing made by Vala in France and very indigenous manufacturing we do here. ment ratchets up local content laws. We commonly used in-country by people The skills are here to make a lot of the will comply with them, and pull more like Tullow; we are the only company things used in oilfields, so it is more Ghanaians in to do the work that they west of Nigeria with this ability, and have about making investments in technology can do. •
Industry Explorations Global Business Reports // GHANA OIL & GAS 43 Global Business Reports INTERVIEW DAMCO Industry Explorations
cess to as much information as possible. Interview with Damco has introduced a new application that is available on Blackberry and Android to allow our customers to track and trace Frank Tony Eshun their cargo, which enables companies to plan and prepare in advance. This is a Managing Director, Damco unique service that Damco offers and it is one of our competitive advantages. Could you provide us with a brief intro- provide for the oil and gas industry? duction to Damco in Ghana and West Damco is required to co-ordinate and How does Damco insure cargo? What Africa? manage offshore crew members, provide challenges do you experience whilst Damco first established in Ghana in 1997 housing facilities in addition to solving any transporting inland in Ghana? and has developed local offices in many immigration issues and obtaining clear- Freight forwarding cargo is insured before West African countries. Damco is one of ance of cargo for rigs. Damco provides it arrives in Ghana, in addition to local in- the leading global players in the freight open and closed spaced warehouse fa- surance. forwarding industry and does not oper- cilities and agency services to oil and gas Traffic is an issue in Ghana and roads are ate through agencies. Damco is involved companies who require additional staff. narrow, which is a challenge when trans- in supply chain management and is able A vital service that Damco provides is reli- porting cargo in trucks. However, our facili- to provide key turn solutions for clients. able transportation to oil and gas compa- ties are located close to the Takoradi port, Other services that we provide include nies through chartering by plane or ship or which is where large oil companies like trucking and warehouse management, through our partner, who is a leading crane Kosmos are based. housing and accommodation services and provider in the industry. crew changes for the oil and gas industry How competitive is the logistics market in Ghana. How reliable is Damco in terms of trans- in Ghana? What is the main challenge portation and delivery time? that Damco faces in the oil and gas in- How important is the oil and gas indus- All of our customers expect good service, dustry? try for Damco in Ghana? although the logistics involved in the oil in- The market is competitive and our main Oil and gas has become a critical part of dustry are more complex and delays can competitor is Savannah Logistics in addi- our business, although oil and gas clients have huge financial impacts on compa- tion to Ghanaian owned players in the mar- require more specific and complex ser- nies. It is vital that Damco selects reliable ket like (17.05). However, Damco has com- vices than traditional logistics customers. partners to collaborate with and chooses petitive advantages because of our global As more oil is found in Liberia and Sierra partners using our global standards. Dam- network, the reliability of our services and Leone it is becoming increasingly impor- co has a strong reputation within the oil our ability to transfer experienced staff tant to co-ordinate our logistic activities and gas industry as a reliable company from other countries to different projects. within Ghana and West Africa. A major fo- that is able to delivery on schedule. The industry is still evolving in Ghana, cus for our Head Office in Denmark is to which means that processes are constant- grow our logistical capabilities for the oil What innovative solutions does Damco ly changing and still have to improve which and gas sector. use in Ghana in order to remain com- is an overall challenge for the industry. petitive? What are the main services that you It is important that our customers have ac- What is your future growth strategy in Ghana and West Africa? Our growth strategy is to utilize the trained employees that we have to enable Damco to obtain more tenders. In addition, we want to increase the number of partners that we have to enable us to meet our growth goals. Damco will expand into mining logistics and freight forwarding by using our oil and gas logistical expertise. The western African region is managed from Senegal but Ghana is the largest Afri- can office and plays a key role in Damco’s operations. In 2012 we are expanding our operations by opening offices in Liberia and Sierra Leone where there is active oil and gas exploration. Damco has a 10% market share in freight forwarding in Gha- na. •
44 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations INTERVIEW GREENLINE LOGISTICS Interview with Soraya Anglow Executive Director, Greenline Logistics
Could you provide us with a brief part of our business. We are building a for regional expansion? history of Greenline Logistics’ opera- concrete factory that will give us a sup- Ghana will continue to be our core tions in Ghana, highlighting any ma- ply of 80,000 blocks per day; these will market; however we are interested jor milestones? largely be sold to developers but will in expanding our operations into Cóte Greenline Logistics is a 100% Ghanaian. also enhance our ability to rapidly de- d’Ivoire and also considering other mar- We were established in 1994 to provide velop new sites. Equipment rental is an- kets. There is not a strong tradition of transport services of explosive goods to other focus for growth and we are look- Ghanaian companies expanding outside the mining sector. Since then our busi- ing to expand our fleet to better provide of the national borders when compared ness has diversified; we now offer logis- for the needs of oil and gas companies. with for example Nigerian companies. tics management, clearing, forwarding, However at Greenline Logistics we are equipment rental, warehousing, and What are the major challenges to op- keen to go against this trend and see the haulage. The Jubilee Fields discovery in erating in Ghana? possibilities that Ghana has for becom- 2007 brought new companies to Ghana The level of infrastructure in Ghana is ing a regional hub for our operations. and created a need for the accommo- the key challenge for logistics compa- The country is ideally placed geographi- dation of their employees. In response nies, in fact for any companies with cally and has the advantage of political to this we launched Westport Realty serious operations in the country. For and economic stability. We would like to & Management; a sister company to Greenline Logistics it is important that bring the Ghanaian angle of business to Greenline Logistics that is responsible we can guarantee the timely arrival of other countries in the West African re- for constructing and developing real es- our equipment to our clients and this is gion; beyond Cóte d’Ivoire, Liberia and tate. We began operations in Takoradi difficult with the current state of roads Sierra Leone also present interesting and in 2011 established a second office and other communications links in Gha- opportunities. in Tema, counting on a workforce of na. Delays are not the only problem that 90 employees. This gives us the capa- the country’s road network can cause; In a competitive market what are bilities to service both ports and to have the uneven surfaces heighten wear and Greenline Logistics’ strengths? convenient access to Accra. tear on our machines and can lead to ex- On-time delivery is the most important penses further down the line. criteria for our clients. We have worked How important is the oil and gas sec- The other issue when considering oil extensively in the provision of explo- tor to your business? and gas is that it is an industry in which sives to the mining industry and this We do not currently work directly with services companies have to rely to is a service in which delays are not ac- any clients from the oil and gas sector some extent on speculation. The rate of cepted; we have applied this attitude to but it is an area we are committed to production from oil fields is not reliable all of our operations. This can be difficult expanding into. Ghana is now produc- and the surges and downturns have an working in a country with developing ing commercial quantities of oil and this instant impact on our business. Many infrastructure but we are willing to go has provided significant stimulus to the companies will make large investments the extra distance to ensure our clients economy and created a boom in the or diversify their services anticipating receive our services on time and to the petroleum sector. Our business began growth that never comes. There is no standard they expect. The expertise in Takoradi and we have seen the influx clear-cut plan for the future of oil pro- and experience of the staff we employ of oil companies there; the new future duction in Ghana; new sites may be dis- are crucial to Greenline’s strength. Our of the city and of the country is tied covered tomorrow that could for exam- ethos is that our success is their suc- to oil. Greenline Logistics has recently ple shift the focus of the industry away cess; they are the most important fac- registered as a service provider with from Takoradi. Managing our growth so tor in determining the quality of service the Ghana National Petroleum Commis- that we develop sustainably but can be that we provide; this core belief breeds sion (GNPC) as we see servicing clients responsive to the fluctuations of the oil an environment in which employees are from this industry as a major focus for industry is a major challenge. dedicated to keeping our clients happy our operations in the coming years. and are constantly striving for excel- In particular our real estate division is Will your growth strategy be to con- lence. • targeted to oil and gas clients and we tinue focusing on serving the Ghana- have significant plans for growth in this ian market or do you have any plans
Industry Explorations Global Business Reports // GHANA OIL & GAS 45 Courtesy of Technip SPECIAL SECTION
The Danger of Dutch Disease
Why Responsibility is Important When Developing Ghana’s Industry
Global Business Reports // GHANA OIL & GAS 47 Global Business Reports SPECIAL SECTION: ARTICLE Industry Explorations
Growth Brings Challenges
Ghana’s susceptibility It almost seems churlish to go on about service companies, increased by 8.3% the so-called “Dutch Disease”. After all, to $2.6 billion between January and to “Dutch Disease” by its very definition a sector can only be November last year; a supposedly sure the cause of this economic malaise if it sign that local industries can no longer is bringing investment to a country. The compete against foreign imports. oil and gas industry, for which the term There are, however, reasons to dismiss was originally coined and to which it is this bleak picture of an afflicted nation. still most commonly applied, attracts Lower than expected growth can be ex- voracious criticism when things go bad- plained by a multitude of factors: while ly. To launch an attack when things are fledgling industries undoubtedly face going well seems simply spiteful. challenges operating in a resource-dom- In Ghana, things are going well. There inated market, they can also accrue ben- are the inevitable complaints that occur efits. And while Ghana may be showing whenever expectations of instant pros- some symptoms of Dutch Disease, perity are not met by reality, yet oil rev- other trends are precisely the opposite enue has assisted a continual decline in of what one would expect. Estimated Petroleum poverty rates and an increase in a GDP- The trade deficit, though decreasing Revenues 2012 per-capita that already outperforms any year-on-year between 2010 and 2011, of the country’s regional peers. Income has not shown a significant long-term Source: Ghana 2012 Budget Amount inequality has risen slightly, but when worsening. Indeed, the largest quar- (GHS million) faced with the massive developments terly trade deficit of the past decade Royalties 236.87 in the overall economy the worries of was back in 2008. The lowest quarterly Dutch Disease that have persisted ever deficit of the past few years was in 2011. Carried and since 2007 look increasingly paranoid. Furthermore, the oil industry itself has a Participating iInterest 618.84 This is especially true when those wor- net negative impact on the balance of Corporate Taxes 384.11 ries reach a fever pitch after a year of re- payments, with $2.7 billion of crude oil cord GDP growth. Yet 2011, in the eyes exports against $3.3 billion of oil prod- Total receipts 1,239.82 of many, showed the first real symp- uct imports: this is hardly indicative of a toms of a deep malaise in the Ghanaian sector flooding the market with foreign economy. A failure of other economic currency to the detriment of other sec- sectors to achieve targeted growth has tors. been blamed on the rapid growth of the Neither can the problems of other in- oil industry and the subsequent inflow dustries be attributed solely to Dutch of foreign currency. In a classic case of Disease. Manufacturing, for example, the Dutch Disease, it is claimed that this has suffered due to the high price of is responsible for raising costs for other utilities and the removal of tax holidays. sectors, making them uncompetitive. Indications are that this situation will The figures certainly appear to support improve. The electricity sector grew by this conclusion. The manufacturing sec- 13.7% in 2011, exceeding the estimat- tor grew by just 1.7% against a target ed 13.3%. A National Industrial Policy of 7%. The slow-down here has been launched in June last year hardly points dramatic; up until 2008 it easily ranked to a government neglecting the sector. among the upper quartile of fastest While the volatility in prices of natural growing industrial production in the resource, and the subsequent effect on world. The agricultural sector grew just the economic health of a country reliant 2.8% in 2011, against a target of 5.3%. upon them, is thought to deter invest- In contrast, the mining and quarrying ment in other industries, the roughly sector, including and driven predomi- 800 projects being carried out last year nantly by petroleum, grew 225.4%. The by Indian and Chinese investors were trade deficit, driven predominantly by oil predominantly in the manufacturing
48 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations SPECIAL SECTION: ARTICLE
sector. 2011 Key Economic Indicators In the agricultural sector, the below-tar- Source: Ghana 2012 Budget get growth can be attributed to a drastic Description Target 2011 Projected outturn decline in the forestry and logging sub- to end of 2011 sector; every other sub-sector grew, including record production levels in cocoa production. Sectors such as con- Real GDP growth rate 7.5% 8% struction and finance have been increas- (excluding oil) ing their role in the economy over the Real GDP growth rate 14.4% 13.6% past few years. Ghana has a long way to (including oil) go before it becomes a single-industry 12 month CPI inflation 8.7% 9% economy. (average) Typically, a country suffering from Dutch Disease will show an appreciation in its End of period inflation 9% 8.6% currency. It is arguably this appreciation that hurts other industries more than Gross international Reserves not less than three months anything else; a strong currency raises reserves of import cover of goods and services. costs against foreign imports. This is Overall budget deficit 5.1% of GDP 4.8% of GDP what happened in Holland in the 1960s,
Economic Growth by Sector in 2011 Source: Ghana 2012 Budget targeted growth actual growth 250%
225%
200%
175%
150%
125%
100%
75%
50%
25%
0%
-25% Industrial Mining and Construction Electricity Water and ServiceHotels and Other Agriculture Manufacturing Sector Quarrying Sewerage Restaurants Services (including petroleum) Industry Explorations Global Business Reports // GHANA OIL & GAS 49 Global Business Reports SPECIAL SECTION: ARTICLE Industry Explorations
prompting the recognition of the prob- Currency Exchange Rates
lem, and this is partly what has caused Source: xe.com, Bundesbank speculation about Dutch Disease in Australia since 2009. The Ghanaian cedi has not shown this same trend. It has AUSTRALIA: AUD to USD slightly appreciated against the US dol- 1.2 lar in real terms, but has depreciated in nominal terms. Other examples of Dutch Disease (such as the two men- tioned above) show a dramatic apprecia- 1.0 tion in both real and nominal exchange rates. The Ghanaian cedi simply does not. 0.8 When Nigeria’s oil boom began in the 1970s, it marked the start of a long de- cline in for other sectors of the econ- 0.6 omy. Oil jumped from 5% of exports to 90%, and the former staples of the Nigerian economy; palm oil, cocoa, tim- ber, tin, etc; lost their position among 0.4 2008 2009 2010 2011 2012 the world’s leaders. It is only recently that Nigeria is starting to turn the corner in this regard, and is once again regard- GHANA: GHS to USD ed as an exciting destination for invest- 1.2 ment in all industries, rather than simply the petroleum sector. It is too early to discount the possibil- ity of the same happening in Ghana. 1.0 Previous examples would indicate that the true effects of Dutch Disease are not obvious until at least five years after 0.8 the initial resource boom. Yet with the awareness of the danger there now is, and the amount of scrutiny from me- 0.6 dia and analysts around the world, one would have thought that by now there would be more obvious symptoms. We may well see an increase in Ghana’s 0.4 2008 2009 2010 2011 2012 government expenditure this year. The salaries of public sector workers may well increase. The most probable ex- HOLLAND: Dutch florin to German mark planation is that this will be caused by 1.15 spending leading up to the December election; there are few governments in the world willing to tighten the purse- strings before an election. However, by 1.10 some this will be claimed as evidence of Dutch Disease, enabled, as it is, by oil revenue and causing, as it may, an 1.05 appreciation in real exchange rate. Yet to claim this, to say that any problems are a symptom of a deeper and more dan- 1.00 gerous affliction unintentionally caused by a successful oil industry, simply can- not be done with the evidence we cur- rently have. • 1975 1980 1985 1990 1995
50 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations SPECIAL SECTION: FACTSHEET
Examples of Dutch Disease: Nigeria
Non-oil Export Performance
Source: Shepherd University
1973 1974 1975 1976 1977 1978 1979 1980 1981 Volume Cocoa 214 194 175 219 168 192 218 187 108 Palm kernels 138 186 171 272 186 57 51 50 92 Rubber 49 61 61 34 28 31 34 31 24 Groundnuts 199 30 5 2 0 0 0 0 0 Total Non-Oil Exports (mil. of 1975 naira) 549 578 350 343 366 375 360 270 141
Basic Development Indicators
Source: Shepherd University
1970 1980 1990 Last year (in parentheses)
PPP GDP per Capita $255.96 $893.92 $983.04 $826.47 (2000) Life Expectancy at Birth 46 52 45 (2002) Male Adult Literacy Rate 59 74 (2002) Female Adult Literacy Rate 38 39 59 (2002)
Gross primary school 37 104 75 96 (2002) enrollment rate
Gross secondary school 27 22 19 enrollment rate
Agricultural Performance
Source: Shepherd University
Index of Output per Capita 1969-72 1974-78 1979-81 1982-83
Nigeria
Agriculture 100 91 91 84 Food 100 92 92 85
Developing World
Agriculture 100 103 105 104 Food 100 104 106 106
Industry Explorations Global Business Reports // GHANA OIL & GAS 51
The Business Environment: An Economy Breaking Down its Investment Barriers
“One piece of advice we always impart to foreign companies that come to Ghana is to demonstrate that they are making a long-term commitment to op- erations in the country and are not here just to make short-term gains. This is particularly relevant to the oil and gas sector as we have seen many countries that have discovered oil and been exploited by multi- national companies who have at best limited interest in benefiting the local population.” - Phyllis Christian, CEO, ShawbellConsulting Global Business Reports ARTICLE Industry Explorations
Doing Business
In macroeconomic terms, Ghana is at- aging director at Barclays Bank Ghana. Ghana as a destination tractive. Strong policies and exploita- “The rule of law is solid, so companies for foreign investment tion of the country’s natural resources know they will not wake up one day to led to a steady rise in the economic find their assets confiscated by the gov- growth rate from 2000 to 2008, peak- ernment. Ghana is a peaceful country ing at 8.4% in 2008 before the global with no terrorist activity or civil strife. economic crisis caused growth to fall to Power is handed from the ruling party to 4.7% in 2009, rising then to 7% in 2010 the opposition party every eight years, and a remarkable 14.4% in 2011. GDP and our democracy is much stronger growth is forecast at 11% for 2012. as a result. Additionally, we have one of Slight concerns remain, including high the most diversified economies in Af- inflation (19.3% in 2009 and 10.7% in rica, relying not solely on diamonds or 2010) that so often accompanies rapid copper, but a combination of gold, oil, economic growth. However, inflation cocoa, and agriculture. All of these fac- fell to a two-decade low of 8.4% year- tors combine to make Ghana a robust on-year in July 2011 and the overall rate nation and a haven for investment in West Africa.” Ghana’s economic Indeed, the relative turmoil that has af- fected Ghana recently, with the untime- freedom (2012) ly death of President John Atta Mills just a few months before the planned December election, did more to confirm this political stability than undermine it. Power was handed to Vice President John Dramani Mahama, and the De- 60.7 cember elections are expected by ana- Source: Heritage Foundation 2012 Index of Economic Freedom lysts to go forward without problem. for 2011 was 8.8%, achieving the Bank Yet Ghana’s stability has been estab- of Ghana’s 9% inflation target for the lished for longer than Ghana’s oil indus- Ease of Doing Business year. try. As a result, there are arguably more Ghana has the resources to immobilize concerns for investors in exploration Source: Doing Business database four-month reserves for import cover and production than there are for inves- Sub-Saharan World tors in other sectors of the economy. ranking ranking and the GDP of the country has shown 1 Mauritus 23 the true nature of the economy, accord- The regulatory framework governing ing to George Aboagye, CEO of the Ghana’s offshore petroleum industry is 2 South Africa 35 Ghana Investment Promotion Center. both extensive and complicated, falling 3 Rwanda 45 “In addition, the profit margin in Ghana under a variety of domestic laws and tends to be high, so investors are able international maritime treaties. This is 4 Botswana 54 to make money. However, local inves- compounded by the fact that that “Gha- 5 Ghana 63 tors who borrow within Ghana have na was not prepared in advance for the high interest rates of 22%, which is a discovery of oil, so the country is still 6 Namibia 78 challenge for smaller companies,” he trying to develop its resources to meet 7 Zambia 84 says. the demand,” says Hon. Joe Oteng-Ad- Other factors also contribute to Ghana’s jei, Ghana’s Minister of Energy. 8 Seychelles 103 attractiveness. “We have experienced The primary administrative responsibil- 9 Kenya 109 greater political stability in the last 20 ity for Ghana’s offshore fields lies with years than most other countries in the GNPC, who hold both commercial and 10 Ethiopia 111 region,” says Benjamin Dabrah, man- regulatory responsibility. The GNPC
54 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations
acts as a commercial, or private, en- Regional Ranking Ghana’s Economic Freedom tity with whom IOCs must enter into a Source: Heritage Foundation 2012 Index of Economic Freedom Source: Heritage Foundation 2012 Index of Economic Freedom Petroleum Agreement. Under a typical agreement, GNPC takes a 10% initial interest; with an additional 5% interest should the project become commercial. Mauritus 77 Ghana 60.7 Exploration periods last up to 7 years, World Average 59.5 at which point the contract can be re- Botswana 69.6 negotiated. Regional Average The government takes their royalties in 53.7 the form of oil, which the GNPC then Rwanda 64.9 Free Economies sells on the market. For example, the 84.7 overall total output for the first year of operation was 24,451,452 barrels. Cape Verde 63.5 20 40 60 80 100 Ghana’s share made up of royalties, carried and participation interests was South Africa 62.7 3,930,189 barrels representing 16.08%. Country’s score over time Progress in streamlining the process Source: Heritage Institute 2012 Institute of Economic Freedom and providing transparency has been Madagascar 62.4 rapid. It achieved compliant status with 62 the Extractive Industries Transparency Initiative in December 2010. In the last Namibia 61.9 61 quarter of 2011, the Ghanaian govern- 60 ment set up the National Petroleum Uganda 61.9 Commission. At the beginning of 2012, a World Bank grant of $100 million re- 59 quired the Ghanaian government to es- Ghana 60.7 58 tablish an independent petroleum regu- latory commission; it is believed this will 57 take the form of developing the regula- Burkina Faso 60.6 tions governing the National Petroleum Commission. • 50 60 70 80 2009 2010 2011 2012 Global Business Reports INTERVIEW MATTHEWS CONSULT Industry Explorations Interview with Anthony Matthews Managing Partner, Matthews Consult
Could you give us an overview of Mat- peaceful people, we never fight physically. thews Consult? On the other hand, we are very self con- In Matthews Consult we provide support science and we know what is right and and advisory services to companies look- what is wrong. I know for a fact that if ing to invest in Ghana’s oil industry. We somebody commits a crime in Ghana they guide our clients throughout the whole will immediately go to jail simply because process – from the acquisition of land to nobody – even their closest friends – will arranging their accommodation and trans- cover for them. Our culture and mindset portation. The industry is still very imma- make Ghana a safer country than most ture and this is one of the reasons for the of the developed European countries. As low demand of our services at this mo- a nation we are supportive of each other ment. The other reason is that most inter- and this is the basis of our culture. Many national companies which are interested people see South Africa as the most de- in operating in Ghana normally have every- veloped country on the continent but I thing set up for them before they get here think that Ghana is far ahead of South and they do not need a local representa- Africa in terms of democracy. We have tive. Our practices are designed to serve passed through many difficult periods and corporate needs and we do not work with we have learned valuable lessons which individual investors. help us in the development of the industry and the economy overall. What is your opinion of the regulatory framework in Ghana? What do you think would be the effect There is not a regulatory framework re- that the development of the oil industry garding foreign companies in Ghana. will have on Ghana? Many companies come here, work off- The discovery of oil in Ghana has been a shore and two weeks later leave the coun- true blessing for the country. The indus- try with our resources. These companies try is still very young and, although it will do not give anything back to the society take some time before the country starts or the government and, in my opinion, the benefiting from this newly discovered re- average Ghanaian does not benefit at all source, I am certain that the effect will be from these operations. The government is beyond positive. Given that we use this not taking any reasonable actions to stop discovery correctly, we could once for all this process. Nigeria experienced a similar build a stable electricity network, improve situation and even after the society started schools and build new ones, put money expressing its discontent explicitly there into the health system etc. All of these im- were only a few small changes that took provements are real possibilities and they place. could have a direct effect on the Ghana’s economy while making it more attractive Ghana has had a very stable political for foreign investors. In my opinion the oil history over the past four years. What industry here has a lot of potential and it do you think will be the outcome of the will grow above the estimates of the ex- upcoming elections? perts. Ghana has been and will always be a very democratic country. This, however, is not Where do you see Matthews Consult in entirely due to the government – the mind- five years? set of the Ghanaian society is very peace- As the industry evolves I expect the de- ful and democratic. There are many people mand for our services to increase. I predict expecting drastic economical changes, a very bright future for the oil industry in however, in my opinion, this will not hap- Ghana and I would advise any company pen. The Ghanaian society’s culture is very looking to invest here to do it now be- specific and straight forward. We are very cause in five years it might be too late. •
Industry Explorations Global Business Reports Industry Explorations INTERVIEW SHAWBELLCONSULTING
While the global players tend to be more Interview with practiced in relation to entry procedures, not all investors or newly-established en- terprises know where to turn in matters such as these. ShawbellConsulting offers Phyllis Christian the expertise and local knowledge that is needed to navigate these processes. CEO, ShawbellConsulting What are some of the difficulties that Could you provide us with a brief over- we can play in that is to ensure we keep service companies operating in the oil view of the services ShawbellConsult- them informed as regulatory frameworks and gas sector face? ing offers to the oil and gas industry? develop and to provide expertise and pro- The principal problem is that it is notori- ShawbellConsulting was established in fessional services they can rely on. Es- ously difficult to predict when the next 2002 with a focus on providing manage- tablishing lasting relationships with our major surge or downturn will occur in ment consultancy and legal services to clients builds our reputation and wins us the oil and gas sector. As a company of- government and private sector institu- future business. The secondary strategy fering services in this sector we have to tions. Today the business is split into three we are employing is to promote Shaw- manage our growth to anticipate these divisions: ShawbellConsulting Limited is bellConsulting and the services we offer fluctuations. We find ourselves caught the principal operation and offers man- through networking and other marketing in a catch-22 situation in which if we do agement consultancy and institutional opportunities. Our aim is to reach out not invest in the recruitment and training reform services, ShawbellConsulting Lex to any companies who are considering of more staff we would not be able to focuses on legal advisory and the Ghana Ghana as a destination for expansion or cope with rapid growth. However if we Institute of Consulting provides capacity- investment to have them recognize us as do and growth stagnates, then we face building support to professionals. Addi- their first stop for consulting, advisory or major losses. At ShawbellConsulting we tionally we organize the Skills Resource legal services. have the advantage of being a company Network which is a non-profit enterprise that offers diverse services to a variety of to help Ghanaian graduates and young What are some of the obstacles for sectors. This somewhat lessens our reli- professionals encounter employment companies looking to move into the ance on predicting market changes in the opportunities. ShawbellConsulting has a Ghanaian market and how can Shaw- oil and gas sector. This is important as it core group of clients that are doing busi- bellConsulting help to overcome them? guarantees our future and allows us some ness in the petroleum sector currently. The first thing we can do is to advise scope to dictate our own growth strate- Of note is a consortium exploration companies on the registration process gies. group which we have served since 2008 for businesses in Ghana. It is important and whom we successfully supported that they understand what their options What are some of the lessons that Gha- through the process of securing a license are and what requirements they will need na can learn from the experiences of to operate in Ghana. We were proud of to comply with. There are different condi- other oil-producing nations? that achievement as it was no mean feat. tions that apply to the process of register- One piece of advice we always impart to Our legal division has advised clients that ing as an external company to that of a foreign companies that come to Ghana offer support services to the industry local company. The registration procedure is to demonstrate that they are making and we have consulted on organizational depends also upon the function of the a long term commitment to operations development programs for various multi- company. A support services company in the country and are not here just to national companies in both the upstream which cannot be categorized as a petro- make short term gains. This is particularly and downstream petroleum sectors. We leum enterprise has specific obligations relevant to the oil and gas sector as we receive regular enquiries from companies with the Ghana Investment Promotion have seen many countries that have dis- considering entrance into the Ghanaian Centre, whilst petroleum enterprises in covered oil and been exploited by multina- market and have worked with them in an the upstream sector for example, have to tional companies who have at best limited advisory capacity. There is a real breadth contact the Petroleum Commission. This interest in benefitting the local population. to the capabilities that we can offer to the can be one of the primary obstacles for When ShawbellConsulting works with cli- oil and gas sector and we can only see our petroleum companies; defining exactly ents we encourage them to engage with business in this area growing. what their business is and then being local communities and to take corporate able to understand which laws will apply social responsibility seriously. This is not What are some of the growth strategies to that. Another issue relates to taxation; only because we want to see Ghana’s you employ to attract new clients and some companies are allowed to self- economy continue grow but also because develop your business? assess but others require direct assess- it makes commercial sense for our cli- The foundation for future growth is to en- ment by the Ghana Revenue Authority ents. A company that becomes a trusted sure that our existing clients receive the and must adhere to specific rules. The brand will be more successful than one high quality of service that they expect difficulty is that the rules and procedures that is not. Ghana must ensure that the oil from us. We want our clients to succeed for enterprises are not consolidated be- and gas sector continues to grow sustain- and for their businesses to grow; the role cause they cut across various agencies. ably and is regulated thoroughly. •
Industry Explorations Global Business Reports // GHANA OIL & GAS 57 Global Business Reports EXPERT OPINION Industry Explorations
The primary focus of the GIPC is to pro- ensure that Ghana will be able to export mote, encourage and facilitate invest- cheaper gas power as a commodity to Ghanaian ment in Ghana for both foreign and local neighboring countries like Nigeria that investors. Incentives have been created will have an increased demand for power under the GIPC Act to encourage com- in the near future. The West African Pipe- Support panies to register with the Registrar line currently imports gas from Nigeria to General and then with the GIPC as a Ghana, although we believe that this will solely Ghanaian company, foreign com- reverse and Ghana will be the net ex- for pany or joint venture. porter of power to Nigeria by 2020. The success of the GIPC can be meas- Since the Jubilee Fields discoveries in ured by the length of time that it takes to 2007, the number of companies that have Foreign register a company that is fully compliant registered with the GIPC has increased; with registration requirements. It is the currently 534 companies have registered role of the GIPC to enable companies to with the GIPC, which is a clear indication Investors establish projects and to provide them that the international investor commu- with the necessary support and services nity has become increasingly interested to facilitate production. in Ghana as an investment destination. George Aboagye, CEO, The number of jobs that are created, the The value of investment by registered Ghana Investment value of projects and volume of estab- companies in Ghana almost doubled lished companies are indicators of our from $300 million in 2008 to $550 million Promotion Centre success at the macro-level. The GIPC in 2009 and increased to $2.18 billion in (GIPC) promotes different districts and regions 2011. Registration does not guarantee by working with District Assemblies and that a company will perform, although Municipalities to secure land for inves- the response from investors to Ghana’s tors in addition to the GIPC Land Bank, economic performance has been posi- which has the same focus. tive. Some of the major successes of the This success is not solely due to the pres- GIPC have been our ability to aid the de- ence of oil and gas in the country. There velopment of projects to achieve value has been a stable political environment and create jobs. It is important for the in Ghana for over 20 years and political GIPC to grow sustainably and to en- dispensation has been improved, which courage the investment of international are factors that the international busi- banks into Ghana; this has been suc- ness community has recognized. Ghana cessful as there is interest from Ameri- has maintained low inflation levels and is can and Chinese banks. looking at initiatives to decrease interest With regards the oil and gas industry, and lending rates in order to encourage the 1994 GIPC Act does not facilitate further investment. investment into the mining and petro- Ghana has the resources to immobilize leum sectors. However, the Act was four-month reserves for import cover reviewed and the GIPC has now set lim- and the GDP of the country has shown ited constraints for the exploration and the true nature of the economy. In addi- extraction of mining and oil and gas. The tion, the profit margin in Ghana is 30%, GIPC participates in the registration of so investors are able to make money. oil and gas service companies that pro- However, local investors who borrow vide recruitment, training, transport and within Ghana have high interest rates equipment to oil and gas rigs. While the of 22%, which is a challenge for smaller GNPC is the primary player involved in companies. upstream activity, the GIPC is expected Ghana has demonstrated that it is an at- to promote investment into downstream tractive investment destination through activities. continued political stability and the coun- One example of this is the power sector. try’s commitment to improve macro- Ghana currently produces 1,000 MW, al- economic conditions. The institutions though the government has a target for that aid the development and promotion 5,000 MW of power supply to be gen- of investment in Ghana are maintaining erated in Ghana. The GIPC is looking to and continuing to develop a high level of attract independent power producers to service to the investment community. •
58 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations ARTICLE Paying for Progress The Ghanaian financial sector
Ghana’s financial sector is developing saw market turnover increase 224% in rapidly. From contributing of 7.8% of 2010, partly spurred by investment in GDP (including real estate and business the oil and gas sector, and was ranked services) in 2005, it has risen to 9.3% the most innovative African Stock Ex- in 2010. Alongside the telecommunica- change for 2010 in the Africa Investor tions industry, this growth spearheaded annual Index Series Awards, held at the the 6.1% service sector growth in 2010, New York Stock Exchange. In 2011, in although did not meet expected targets a sure sign of investor confidence, the in 2011. GSE saw the listing of its first interna- Ghana’s financial sector comprises 28 tional oil company, Tullow Oil. Yet at the banks (split roughly equally between beginning of 2012 the exchange was foreign and local ownership), 44 non- ranked third worst in Africa in terms of banking financial institutions and 17 investor returns, largely due to the de- insurance companies, alongside a preciation of the Ghanaian cedi against number of rural banks and insurance the US dollar: not everything in the path brokers. It is encouragingly diversified; to prosperity is straightforward. the share of sector concentrated in the Again, the government is aware of these top five banks has declined from 70% in issues and striving to correct them. The 2005 to 45.3% in 2011. GSE, as an entity, had a tax holiday that However, although Ghanaian banks expired in 2010. That was extended by are generally profitable, with an assts- another five years in the 2012 budget, to-GDP ratio that has seen consistent as well as a Capital Gains Tax exemption growth over the past few years and on gains made on the GSE. This is ex- increasing financing of private sector pected to encourage investment in the projects, high cost-to-income ratios and exchange. growing numbers of non-performing The banking system, despite its re- loans continue to be challenges. forms, still struggles to fully finance a These issues are, however, being ad- rapidly developing oil and gas industry. dressed by the government. Extensive Especially for local service companies reforms have been underway frequently wanting to partake in the boom their since the early 1990s. The Financial Sec- country is experiencing, business loans tor Adjustment Programme (FINSAP I remain difficult to obtain. For larger and II) and the Financial Sector Strategic projects, it must still be remembered Plan I (FINSSP I) led to the privatisation that roughly half of Ghana’s 28 banks of the banking sector and the develop- are very young; established less than ment of a capital market. The second a decade ago. They often remain under- phase of the Financial Sector Strategic capitalised and unable to coordinate Plan II (FINSSP II) was launched in 2011 large-scale projects. aims to further develop the sector, in- creasing access to finance and compe- tition. The country’s central bank, the Bank of The oil and gas developments have Ghana, requires all banks to increase been both a challenge and an opportu- their capital to $41 million by this year. nity for the financial sector. The Ghana- Foreign banks have already been asked ian Stock Exchange (GSE), for example, to do so. While this requirement will af-
Industry Explorations Global Business Reports // GHANA OIL & GAS 59 Global Business Reports Industry Explorations fect short-term earnings of the banks, it is expected to spur in- novation and therefore long-term health of the banks. The Bank of Ghana has also issued guidelines on risk manage- ment, aimed at improving risk management at banks, and inter- vention in troubled institutions, laying out criteria for intervening in weak banks. High inflation, which has affected the ease of lending in the past, is now being brought down by sensible gov- ernment policies, hitting single digits (8.8%) in 2011. The Ghanaian financial sector, as a whole, is not quite at the level required to support a fully developed oil and gas indus- try. However it is growing rapidly and, despite not reaching its growth targets in 2011, the Ghanaian government has proved their ability to sensibly manage and encourage its increasing role in the country’s economy. It can certainly contribute to the oil boom; the extent of its contribution will only grow. • Bank Capital to Assets Ratio (2011) 7.8% Source: World Bank
Bank Nonperforming Loans to Total Gross Loans Source: World Bank
% 30
20 17.6% 10
2003 2005 2007 2009
Ghana Nigera World
Domestic Credit Provided by Banking Sector Source: World Bank
% of GDP
150
100 27.7% 50
2004 2006 2008 2010
Ghana Nigera World
Industry Explorations Global Business Reports Industry Explorations INTERVIEW MENSAH, WOOD AND ASSOCIATES Interview with James Wood Partner at Edward Mensah, Wood and Associates Limited
Could you provide us with a brief intro- nominate insurance brokers, in order to the insurance industry. Edward Mensah, duction to Edward Mensah, Wood and arrange the insurance programs that are Wood and Associates Limited has tried to Associated Limited? normally placed on the London market. acquire business by relying on the quality Edward Mensah, Wood and Associated However, the Ghanian Law requires that of the professional service that we pro- Limited is a Ghanaian broking company insurance has to go through a local insur- vide as our portfolio mainly consists of with a global reach and well reputed lo- ance company registered in Ghana so lo- multi-national companies. However, there cally and internationally. The firm is the cal insurance companies collaborate with are some insurance companies who work local correspondent for Marsh & McLen- overseas insurance companies. Insurance by undercutting other companies, which is nan, the world’s leading broking firm and companies in Ghana have formed an oil something that has come to the attention other major brokers worldwide, making and gas pool that is managed by the State of the regulators. technical resources and specialized ex- Insurance Company who write all oil and pertise available to use. Edward Mensah, gas papers. What is your growth strategy related to Wood and Associated Limited works with Wood and Associates support any claim the oil and gas industry? a number of multi-national clients who are through a local process and we work with Our expectations for the future is that coming into Ghana or who are already op- clients directly for any claims to be finance many more oil companies will come into erating in the country. approved. the market and we will use our global lev- erage to become the best brokerage com- What suite of services does Edward What clients do you work with in the oil pany in terms of expertise and experience. Mensah, Wood and Associated Limited and gas industry? We want to be able to offer the same qual- provide to its clients? We work with major players like Kosmos ity of services to new clients that we offer Edward Mensah, Wood and Associated and occasionally we work with service our existing customers. Wood and Associ- Limited provides insurance Broking/Con- and equipment providers, although we do ates has the knowledge and expertise, in sultancy services to its clients whatever not class those companies as oil and gas addition to international connections that their insurance needs might be. clients. enable us to handle a number of target The firm is involved in all classes of insur- The top five insurance companies that risks in the market that other brokers are ance in Ghana, although we prefer to work we work with in Ghana are the SIC, En- not able to. with major insurance companies. We have terprise Insurance Company, Metropolitan We think that the development of the oil a wide range of clients, ranging from oil Insurance Company, Star Insurance and and gas industry in Ghana will impact our and gas companies to clients who are in- Vangad Insurance. The pool in Ghana has operations specifically by allowing the volved in manufacturing and commercial been created to include the entire mar- company to grow directly and indirectly activities. ket, which includes Africare and Ghanari through the oil and gas service sector. The oil and gas industry has expanded in who make up a substantial amount of the There will be more oil discoveries made Ghana and Edward Mensah, Wood and current policies that we have. Africare, in Ghana. Associated Limited is responsible for ex- Ghanari and SIC are the major players in ploration equipment for oil and gas com- the market in Ghana and account for 90% What is your final message for our panies. We have worked on the insurance of business. readers? for the construction of the Jubilee Fields The new players that are entering into and we will shortly be handling the insur- How can you describe the challenges of Ghana should have a long-term strategy ance for the development of Phase 1A of the insurance market in Ghana? to grow their operations in Ghana. The in- the Jubilee Project. The market is very competitive and there surance industry is here to support new is a high number of insurance companies companies and we want to work together What specific services do you provide and brokerage companies competing with new players to grow and develop the to oil and gas companies? against each other. There is a lack of control insurance industry in Ghana to the same We provide all aspects of insurance that from regulators who allow companies to high standards that are expected over- oil companies in Ghana are required to use unorthodox methods to yield results, seas. Local brokers currently have limited take out by law. However, the local insur- which is an issue in Ghana and many other knowledge about oil and gas insurance, ance market is not technically capable western African countries. The next topic which needs to be developed to enable to handle the risks so certain risks have for discussion at the WYKA conference in the insurance industry to have a better to be placed overseas. Oil companies Gambia will be unethical practices within future. •
Industry Explorations Global Business Reports // GHANA OIL & GAS 61 Global Business Reports FACTSHEET Industry Explorations The Ghana Stock Exchange
Listed Domestic 40 Companies (2011)
35
30
25
36Source: World Bank 2002 2004 2006 2008 2010
4 Market Capitalization of 3.5 Listed Companies (2011)
3
2.5
2 1.5 3.09 1 billion dollars 2002 2004 2006 2008 2010 Source: World Bank
Stocks Traded, 6 Total Value (2011) 5
4
3 0.3% 2 of total GDP 1 Source: World Bank 2002 2004 2006 2008 2010
6 Stocks Traded, Turnover Ratio (2011) 5
4
3 2 4.1% Source: World Bank 2002 2004 2006 2008 2010
62 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations INTERVIEW FIDELITY BANK LIMITED Interview with Edward Nana Yaw Koranteng Head of Energy, Oil & Gas and Mining - Fidelity Bank Limited
Fidelity Bank is currently the sixth larg- ing, Term Loans, Overdrafts and Treasury financial climate and what are some of est bank in Ghana and has the aim of Operations. With the midstream, our fo- the growth prospects that should en- being the largest by 2020. How impor- cus has been on project financing with courage investors? tant is the oil and gas sector to your am- emphasis on Tank farms and major Power There are some key indices which every bitious plans for growth? projects in Ghana. We are currently one investor looks at: political stability, secu- The oil and gas sector in Ghana is of great of the leading banks in project financing, rity of contracts, efficient financial sector, importance to the Bank due to the cas- notably power projects in Ghana. In the educated and literate populace and an ef- cade effect it is going to have on the entire Downstream sector, Fidelity controls ap- ficient infrastructure system. Ghana is ar- economy. With the flow of crude and uti- proximately 15% of the BDC market vis-à- guably the most democratic and politically lization of associated gas, the economy is vis a total of 26 banks. We seek to finance stable country in Africa at the moment, it due to expand tremendously. This will be through trade lines and club arrangements has an effective financial infrastructure and seen in the supply of vessels to pipelines, an average of USD$530 million for this relative investor friendly laws and a legal construction of storage tanks, refineries, year. system that is effective and guarantees power stations, transmission grids, public the sanctity of contracts. Focusing on the utilities, airports, construction and real es- How can Fidelity Bank compete with oil and gas sector, although we have only tate, manufacturing and hospitality servic- multinational banks for a market share very recently begun to extract commercial es. With an estimated contribution of GDP of upstream clients? quantities of oil we are already doing what being in excess of 40%, this sector shall For Fidelity and other local banks the our neighbours did not do. We have learnt also bring about lifestyle changes seen in biggest challenge is having a significant lessons from the experiences of other oil expansion of the middle and upper income foothold in the upstream sector which is producing nations and have emphasized class and a corresponding increase in con- dominated by multinational banks. One of the importance of a robust regulatory sumerism and spending patterns which the principal obstacles is that, the parent framework and the establishment of a lo- shall also provides immeasurable opportu- companies of the major oil producers is- cal content policy. This not only protects in- nities to the Consumer and Retail division sue directives to the effect that they must vestment but ensures transparency across of the Bank. only operate with specific banks based on the industry and builds local capacity. These sectors will also require financ- their balance sheets, geographical loca- Ghana is also the fastest growing econ- ing which raises the need for the bank to tions and brand reputations. Furthermore, omy, according to the World Bank with quickly adapt to the needs of the industry the scale of transactions and financing that FDI into the country increasing by ap- as a whole and position itself for the antici- the upstream companies require often proximately 300 per cent within the past pated sectoral changes. The Oil and Gas goes beyond the capacity of local banks. three years. This has seen major financial sector shall therefore inform our strategy However changing trends, local knowl- institutions zeroing down on Ghana, for or strategies across the various segments. edge of the local banks, multilateral as- example HSBC and Citibank have recently In my opinion, the growth of the oil and sociations, global club arrangements and established offices here. There are lifestyle gas sector and especially the gas industri- syndications coupled with the efficiency changes that are occurring; the increase in alization policy which will drive the coun- and timeliness of the local banks is mak- disposable income of Ghanaians with its try’s growth is the cornerstone of our busi- ing this less of an obstacle. Apart from domino impact on consumer spending and ness and critical to us achieving our goal of this, Fidelity’s strategy in this vein has also the real estate sectors. Ghana has the fast- becoming Ghana’s leading bank. centered on genuine partnerships with est growth rate (88 percent) of vehicle and the upstream majors through tailor made motor purchase in Africa and has recently Could you provide us with an overview solutions and support in community social overtaken Nigeria as a hub for air transport of the services and products that Fidel- responsibility initiatives which is key in with 36 airlines now operating here. These ity Bank offers to the oil and gas sector? our part of the world where oil companies are all indexes which demonstrate Ghana’s Currently our client base in the Oil and Gas can be viewed with suspicion. This gives continued growth. The obstacles Ghana sector is largely drawn from mid to down- us the advantage of being able to act as faces are in developing its infrastructure stream companies although we are mak- a partner with upstream clients and help at a much faster pace, establishing reliable ing significant forays in the upstream. We them to feel comfortable with and antici- power generation and in selling itself as a offer tailor made solutions to our clients pate the specific conditions of operating in proposition to the investment community. due to the complexity of their operations. Ghana. We however see these infrastructural de- However on a broader scale, our offerings ficiencies, economic growth and indicated consist of Project Financing, Cash Call Fi- Considering Ghana as a destination for factors as opportunities which should at- nancing, Contract Financing, Trade Financ- foreign investment, what is the current tract investors. •
Industry Explorations Global Business Reports // GHANA OIL & GAS 63 Global Business Reports INTERVIEW GHANA STOCK EXCHANGE Industry Explorations Interview with Ekow Afedzie Deputy Managing Director, Ghana Stock Exchange
Could you give us a brief history of the some foreign investors looking at Ghana. and so there will be a lot of finance will Ghana Stock Exchange, highlighting the Ghana was already attractive because of be released for financiers to invest. So it major milestones? its political and economic stability, but is time to go and raise the capital and the The GSE began operations in November Tullow Oil has now created opportunity GSE can provide these opportunities. So 1990. It is a company limited by guaran- for companies to go to the market to raise this is the main benefit for domestic com- tee so we do not have owners but we money and they are likely to get foreign panies. And by being listed, companies are have members: associate members and investors participating. looked at differently to other listed compa- license dealing members. The license nies because of the credibility associated dealing members are the brokerage firms How important is the small-medium with the GSE. and they have license to trade. The asso- sized business sector for the growth of ciate members have no license to trade. the Ghanaian economy? What are your projections for market We have 20 licensed members and 34 as- Small- to medium-sized companies are growth over the next 18 months? sociate members. All our processes are very important because most of the com- We are likely to get about four to five com- electronic so we tend to have a seamless panies in Ghana belong to that category panies listing on our market. Liquidity is flow of trading processes. That is one of and lack of finance has been one of the likely to improve depending on the kind of our biggest achievements, and won us main issues when it comes to sponsor- companies that come on to the market. In an award last year as the most innovative ing the growth of these companies. So terms of returns, I suspect these will re- stock market in Africa in a NYSE program. for them to be able to grow and aspire to main good on the market. We will also see contribute to the economy positively, they an alternative market in Ghana and new What are the requirements for compa- need to have access to long-term capital. features introduced into trading. These nies to list with the GSE? Creating an avenue for them to have long- would include margin trading and new We have two requirements; firstly they term capital is key and that is why we are products, for example. We are looking at must be a public company that can go to trying to create the alternative market for products that should go onto the market the vested public areas’ capital. Secondly, them to raise finance. and we are looking at the corporate mar- they need to meet certain requirements in ket more carefully to make it a more vi- terms of publication of their prospectus, What are the challenges for the GSE for brant environment that gives flexibility; disclosure of information about the com- helping the small domestic companies? opportunities for domestic companies to pany etc. When a company wants to list, So far with our original market we have improve liquidity and the number of shares the key aspect is they must have a capital not had many of these companies coming of the market. minimum that flows 25% of the company on to the market. Therefore, we want to to the public. They must also file audit ac- create an environment that enables us to How can the GSE be a barometer of the counts of three years to be on the first list. convince the owners of these companies financial climate in Ghana when foreign For the second list, there must still be a and promote the whole idea of sharing investors are thinking of investing in capital minimum of 25% but you must with others and the worth of the GSE. We Ghana? file audit accounts for only one year. We have encountered a few challenges with For the GSE to be a barometer of Gha- are trying to create an alternative market companies affected by liquidity issues; the na’s financial climate going forward, we meant for small- to medium-sized com- majority of portfolio investors do not buy would need to have all the sectors of the panies; companies with good prospects and sell all the time so there are liquidity economy represented; agriculture, mining, but without a track record. We will make issues. So going forward we need to have telecommunications etc. We are trying to simple requirements easier to meet to en- more companies and more shares for persuade more representatives of some courage companies to enter the market. them and the liquidity will improve. of these industries to participate. We are also trying to get policy makers to under- Since Tullow Oil listed on the GSE in Are there any other reasons why small stand and facilitate that process of getting July 2011, have any other foreign multi- Ghanaian companies and foreign com- companies to be a part of the market and national corporations followed suit? panies should be attracted to the Ghana so that we can enjoy the fortunes of these Not yet, however Tullow’s partner Kosmos Stock Exchange? companies locally. For now, the market is have announced that they will list this year. For the domestic companies, access to doing well and as a result we are always Since Tullow’s listing, our market capital capital is the key issue. We have pension on the radar when it comes to the financial more than doubled and it brought along funds reforms taking place in Ghana now market. •
64 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations INTERVIEW BARCLAYS BANK GHANA Interview with Benjamin Dabrah Managing Director, Barclays Bank Ghana
Can you give an overview of Barclays oil and gas sector, there are very few these factors combine to make Ghana in Ghana? banks that can actually compete with a robust nation and a haven for invest- Barclays has been in Ghana for 95 years Barclays. We have a very strong local ment in West Africa. now, and has been the preeminent bank presence that is backed up by nearly a in the country for much of that time. century of experience in the country, as What is the financial outlook for Gha- During 2006 to 2007 we underwent a well as the global reach of Barclays; this na in 2012? period of rapid expansion; unfortunately, is a set of unique qualities that sets us The depression of the cedi has been an the controls did not keep up with the apart from the rest. issue, but the government has taken rate of growth, and we suffered losses aggressive steps to combat this. The in 2008 and 2009. However, we learned Foreign investors have been quite worst is over, but right now we see the our lesson and restructured, dropping concerned about the depreciation situation as stabilizing, not strength- from 154 outlets in 2008 to only 82 to- of the Ghanaian cedi, which has lost ening. We expect interest rates to in- day. As a result, we have become more nearly 23% of its value in the past crease, which should bolster investor efficient, and were the most profitable few years. Does this trend reflect the confidence that actual yields are higher bank in Ghana last year. overall health of the country’s econ- than the rate of depreciation. Inflation omy? will obviously follow because a lot of What is Barclays Ghana’s relation- In the end, investors are after returns, goods here are imported, and when ship with the oil and gas industry? and they only care about the exchange the cedi devalues, things become more Having been in the country for so long, rate to the extent that it dilutes or af- expensive locally. The government has Barclays has a significant history with fects their return. The rate of deprecia- declared its intention to invest a great the oil and gas industries. Laws here tion is not an issue in itself; if the cur- deal in infrastructure, which should lead limit the exposure of small banks, pre- rency is depreciating at a predictable to a surge of activity that will hopefully venting them from lending too much rate, but the yields are higher than the translate into higher economic activity in money to one party, meaning that rate of depreciation, there is still a net the larger Ghanaian economy. The elec- large banks must get involved for fund- gain. As long as the yields stay ahead of tion this year will come and go without ing big-ticket transactions. Since the the rate of depreciation, we will be able the country blinking, so there should be liberalization of oil imports, we have to attract investors. no resulting economic hiccups. Overall, also supported oil distribution compa- we believe it will be another strong year nies here. As one of the biggest global While foreign investment in Africa as for GDP growth. banks, Barclays has a significant oil and a whole is down, it continues to rise gas franchise that is run out of Hou- in Ghana; why is this? What role will Barclays play in the ston. Some of the financing is done Ghana is in a unique position that makes further development of Ghana’s there, but we complete many transac- it particularly attractive. We have expe- economy? tions independently as Barclays Ghana; rienced greater political stability in the Barclays feel it is our responsibility to it depends on the size and economics last 20 years than most other countries continue to invest in Ghana’s future. of the deal at hand, as different parts of in the region. The rule of law is solid, so One of the values that Barclays is pas- the Barclays group have different fund- companies know they will not wake up sionate about on a global scale is the ing structures and appetites for pricing. one day to find their assets confiscated idea of citizenship. Other companies One way or another, we have an exist- by the government. Ghana is a peace- call this corporate responsibility, but we ing relationship with almost every major ful country with no terrorist activity or see it as being a citizen of the country player in the industry. civil strife. Power is handed from the rul- where you are operating. Our fortunes ing party to the opposition party every are inextricably linked with those of How do you think the influx of oth- eight years, and our democracy is much Ghana, and we see our role as a finan- er large international banks into stronger as a result. Additionally, we cial intermediary that actually facilitates the Ghanaian financial space affect have one of the most diversified econo- growth. Our actions speak for them- Barclays’ development targets? mies in Africa, relying not solely on dia- selves that if we have the expertise, we Competition will always have some kind monds or copper, but a combination of will provide support for the country in of impact, but when it comes to the gold, oil, cocoa, and agriculture. All of any way we can. •
Industry Explorations Global Business Reports // GHANA OIL & GAS 65
Into the Future Final Thoughts, Company Guide, and Index
“Ghana welcomes all investors into our country, pro- viding that they respect our laws and our people. It is vital to create employment for the growth of Ghana’s economy and it is important for investors coming into Ghana to use the same environmental standards and regulations as they would in their own countries. Ghana is prepared to set the pace for the whole of Africa.” - Dr. Joe Adjei, Minister of Energy, Ghana Ministry of Energy Global Business Reports FINAL THOUGHTS Industry Explorations
“Ghana has not experienced any major disruption of petroleum products. If you look at many countries in West Africa that have oil they have had that problem, yet Ghana has been ex- tremely stable in this regard. Whenever there has been a crisis in the electricity sector, the government has always come to BOST; they rely on us to supply diesel and crude oil for elec- tricity generation.”
Kweku Boateng, Programmes Officer, Bulk Oil Storage and Transportation Com- pany Limited (BOST)
“The industry has grown so fast that it has put a lot of pressure on the local companies. Be- cause of the swiftness of how things have gone the local players were not well positioned for growth. The equipment that explorers and producers need, for example, are things that no local company had ever considered in their business. Those companies that had foresight have partnered with international companies to allow them to compete.”
Abigail A. Harlley, Chief Executive Officer, AI Energy Group
“Global Energy Ventures was the first fabrication and inspection company in Ghana when it established a presence in 2008. The company currently has 60 employees in Ghana and an ad- ditional 60 employees in Abidjan. Ghana is becoming increasingly important for West Africa as a whole, so it has been an important focus for Global Energy Ventures to develop local content and establish a structure within the country from the very beginning.”
Darren Last, Operations Manager Ghana, Global Energy Ventures
“Ghana has had a 20% growth rate without oil and gas, but this will increase tremendously over the next two to three years with oil and gas investment. Ghana has a lot of potential and the longer companies wait to invest, the harder it will be.”
Toufic Haroun, Director, AA Horizon Limited
68 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations FINAL THOUGHTS
“Eventually, we would like to see every oil rig in Ghana staffed with Expro personnel, and delivering safely and sustainably. Another goal is to increase Expro’s local content; we are already at 95% on the operations support side, and are increasing the ratio on the operations side through initiatives such as the Graduate Development Program. Expro’s long-term vision is to have a 100% Ghanaian operation; we are committed to the country and will be here for many years to come.”
Allan Sutherland, Ghana Country Manager, Expro
“There has been increased competition in both Takoradi and throughout Ghana. Air Liquide was all over the country and then Dominion came in; however, with their entry, the oil and gas industry came in to Ghana and we have been able to take a share of the market. Now other companies are setting up their operations, which creates more opportunities and space to help our business.”
Anura Kaluarachi, General Manager, Takoradi Gas Limited
“Ghana is of great importance to our business; the corporate headquarters are now located in Accra and we see the country as a hub from which we can serve the African continent. Our goal is to become one of the largest logistics companies in Africa and Ghana is the fulcrum of our strategy for expansion and growth.”
Roy Aboku, Business Development Manager, Menergy International
“When ShawbellConsulting works with clients we encourage them to engage with local com- munities and to take corporate social responsibility seriously. This is not only because we want to see Ghana’s economy continue grow but also because it makes commercial sense for our clients. A company that becomes a trusted brand will be more successful than one that is not.”
Phyllis Christian, CEO, ShawbellConsulting
Industry Explorations Global Business Reports // GHANA OIL & GAS 69 Global Business Reports INDEX & COMPANY GUIDE Industry Explorations
NAME OF COMPANY WEBSITE PAGE ASSOCIATIONS, GOVERNMENT, AND FINANCE Barclays Bank www.barclays.com 48, 59 Bank of Ghana www.bog.gov.gh 53 Fidelity Bank www.fidelitybank.com.gh 41 Fidelity Bank www.fidelitybank.com.gh 57 Ghana Investment Promotion Centre (GIPC) www.gipcghana.com 27, 48, 52 Ghana Stock Exchange (GSE) www.gse.com.gh 53, 58 Ministry of Energy www.energymin.gov.gh 10, 27, 48, 67 National Petroleum Commission 49 Ghana Chamber of Oil and Gas www.ghanacog.com 25 PRODUCERS AND TRADERS Ghana National Gas Company (GNGC) ghanagas.com.gh 25 Tullow Oil www.tullowoil.com 13,14, 16, 18 Ghana National Petroleum Corporation (GNPC) www.gnpcghana.com 14, 25, 48, 49 Anadarko www.anadarko.com 14 Sabre Oil 14 E.O. Group eogroupghana.com 14 Vitol www.vitol.com 14 Trafigura www.trafigura.com 14 Kosmos www.kosmosenergy.com 14 SERVICE COMPANIES Expro exprogroup.com 18, 32, 33, 36, 69 Global Energy Ventures www.globalenergyventures.com 18, 30, 31, 32, 36, 41, 68 Menergy International www.menergyinternational.com 18, 30, 39, 69 Goil www.goilonline.com 19 AA Horizon www.aahorizon.com 26, 27, 68 ITSC www.itscghana.com 29 Greenline Logistics www.greenlinelogisticsgh.com 30, 45 Edward Mensah, Wood & Associates www.edwardmensahwoodassociates.com 30, 32, 55 Damco www.damco.com 32, 44 SGS www.sgs.com 34, 36 Takoradi Gas www.takoradigas.com 35, 37, 69 Technip www.technip.com 36, 38 ShawbellConsulting www.shawbellghana.com 36, 47, 51, 69 AOS Orwell www.aosorwell.com 43 Matthews Consult 50 Bulk Oil Storage and Transportation Company Limited (BOST) www.bost.com.gh 68 AI Energy Group www.aienergygroup.com 68 Engen Ghana www.engenoil.com 7 POWER GENERATION AND DISTRIBUTION Volta River Authority www.vra.com 21, 22, 24, 27 Ghana Grid Company Limited (GRIDCO) www.gridcogh.com 22 Electricity Company of Ghana (ECGI) www.ecgonline.info 22
This list represents a selection of the companies operating in the Ghanaian oil and gas industry and should not be considered a com- prehensive guide. GBR holds an exclusive and extensive oil and gas database for Ghana and the wider region. For further information on database access packages, please contact [email protected] or call +44 20 7612 4511
70 Global Business Reports // GHANA OIL & GAS Industry Explorations Global Business Reports Industry Explorations CREDITS
EDITORIAL AND MANAGEMENT TEAM
Senior Journalist: Angela Harmantas [email protected] Journalist: Tom Hurst [email protected] Project Coordinator: Pavlina Pavlova [email protected]
General Manager: Agostina Da Cunha [email protected] Regional Manager: Sharon Saylor [email protected] Graphic Designer: Gonzalo Da Cunha [email protected] Editor: Barnaby Fletcher
For more information about GBR, please email [email protected]. For updated industry news from our on-the-ground teams around the world, please follow us on Twitter: @GBReports.
THANK YOU
GBR would like to thank the following associations for their help in the research of this project:
Ministry of Energy www.energymin.gov.gh
Ghana Energy Commission www.energycom.gov.gh
Ghanaian National Chamber of Commerce & Industry www.ghanachamber.org
Ghana Investment Promotion Centre (GIPC) www.gipcghana.com
Petroleum Commission
We would also like to sincerely thank all the companies that took the time to give their insights on the market, with a special mention to George Aboagye, CEO, Ghana Investment Promotion Centre (GIPC), for his written contribution to this book, as well as to Leslie Asamoa, Consultant to the Finland-Ghana Chamber of Commerce (FINGHCC) for his assistant.
Industry Explorations Global Business Reports // BRAZIL CHEMICALS 2012 72 Ghana Oil & Gas 2012
Economy • Exploration • Oil • Natural Gas • Challenges • Services