Ghana's oil production declines for fifth consecutive year: PIAC report
The production of crude oil in Ghana has declined for the fifth year consecutively, raising serious concerns about the long-term viability of the country's oil business. The most recent report from the Public Interest and Accountability Committee (PIAC) indicates that crude oil production decreased from 71.44 million barrels in 2019 to a mere 48.25 million barrels in 2023. This shows an average yearly decline of about 9.2%, indicating continued production and investment challenges in the business.
Declining Output from Major Fields
The decline in local production is mostly due to falling production from the country's three behemoth oil fields: Jubilee, TEN (Tweneboa-Enyenra-Ntomme), and Sankofa Gye-Nyame. In 2023, the Jubilee Field was still leading in production with 63% of the country's total production at 30.44 million barrels. The SGN Field produced 11.09 million barrels (23%), followed by the TEN Field, which has been plagued by production problems, at 6.72 million barrels (14%).
Also, total raw gas production for the year was 255,171.97 million standard cubic feet (MMSCF) with SGN Field contributing 50%, Jubilee 30%, and TEN 20%.
Causes for the Current Decline
Several key reasons have been enumerated as being responsible for the consistent decline in Ghana's crude oil production. First, natural reservoir decline in the Jubilee and TEN fields has led to decreased well productivity. These fields, which started operation ten years ago, are now experiencing the normal decline phase of oil fields that have not had serious reinvestment or enhanced recovery.
Second, technical and operational delays have also caused production to be delayed. Issues such as equipment breakdowns, delayed maintenance, and the absence of timely intervention have resulted in unnecessary downtime and reduced efficiency.
Thirdly, the sector is bedeviled by declining investment. With global attention on renewable energy, international oil companies are now more selective in their investments, choosing lower-risk, greater-reward opportunities elsewhere. Ghana's upstream petroleum sector has thus seen lower capital expenditure, leading to fewer exploration activities and delayed field development.
Infrastructure bottlenecks, such as insufficient processing and storage capacity and regulatory uncertainty, have added to these problems, further deterring prospective investors and operators.
Effects on National Revenue
The decline in production has also had a direct monetary effect on the nation. Petroleum receipts deposited into the Petroleum Holding Fund (PHF) were worth $1.06 billion in 2023—a whopping 25.65% drop from the preceding year. The report also included that the revenues from Jubilee Oil Holdings Limited (JOHL) worth over $70 million alone in 2023 were withheld and did not find their way into the PHF. This increases the withheld amount to over $343 million, with implications for transparency and accountability in the industry.
Recommendations and the Way Forward
To address the ongoing slump, PIAC has proposed a number of initiatives. These include the re-investment in mature fields to make use of enhanced oil recovery (EOR) techniques, which can maximize output from mature wells. On top of this, there is the suggestion to attract new investments by enhancing the regulatory environment, bringing fiscal security, and streamlining licensing procedures.
In addition, PIAC suggests upgrading infrastructures to enhance oil and gas processing, transport, and storage. Policy reforms are also essential, especially in the enforcement of accountability measures and ensuring petroleum revenues are adequately managed and reported.
The steady decline in oil production puts the economy of Ghana at risk, especially with the role petroleum revenues play in funding development projects and balancing the budget. Doing nothing in the short term might result in continued losses in valuable resources and economic opportunities for the country.
Ghana stands at a crossroads—either restore its oil sector through targeted interventions or suffer long-term stagnation in a vital sector of its economy.
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Ghana's oil production declines for fifth consecutive year: PIAC report
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