Ghana’s oil production outlook hangs in the balance
Ghana’s oil production is still in its infant stages

Ghana’s oil production outlook hangs in the balance

FITCH Solutions expect Ghana’s total liquids production to see moderate growth in the near term, with crude, NGL and other liquids production increasing from 142,440 barrels per day (b/d) in 2022 to 145,390b/d in 2024 following recent investments in the Jubilee and TEN fields by Tullow Oil.

While these investments would prevent significant short-term declines, the key upside to Ghana’s long-term oil production outlook is the 110,000b/d Pecan Field development, the future of which is currently in limbo following a dispute over the involvement of Russia-based Lukoil.


Provided that the controversy surrounding Lukoil’s participation is resolved and a final investment decision is achieved by the end of 2024, we expect Ghana’s oil production to grow to nearly 200,000b/d by 2029.

These investments consist of a multi-year drilling campaign at the Jubilee and Tweneboa-Enyenra-Ntomme (TEN) fields, which currently account for approximately 80 per cent of Ghana’s upstream output.

In 2022, Tullow’s investments included four new wells (three water injectors and one producer). In 2023, Tullow plans on introducing six wells, which will come online by the third quarter.

These investments will enable Ghana’s oil industry to reverse natural declines and moderately boost short-term production with production at the Jubilee field expected to exceed 100,000b/d in 2024.

To maintain this level of output, a total of 49 production and injection wells are planned to be introduced to the fields by 2030. As of February 2023, Tullow plans to invest approximately USD300mn in Ghana to support these projects.

Jubilee Field boost to prevent declines in 2023

Further progress on the Final Investment Decision (FID) in the Pecan development is essential for Ghana to return to pre-pandemic levels of oil production (which averaged 197,000 b/d in 2019).

The Pecan field, which is part of the Deepwater Tano Cape Three Points licence block, has an estimated reserves of 334mn boe. It is operated by Aker Energy, who maintains a 50 per cent stake while the other partners include Russia-based Lukoil (38 per cent), Ghana National Petroleum Corporation (GNPC) (10 per cent), and Fueltrade (two per cent).

The development of the field has faced a variety of headwinds over recent years such as concerns over the capital cost of the project and the size of GNPC’s stake.

However, the key barrier since February 2022 has been the participation of Lukoil. Due to the Russian invasion of Ukraine, Aker Energy has been hesitant to put forward its updated Plan for Development to the Ghanaian government and commit to FID whilst Lukoil is involved in the project as the risk of sanctions levied on Russian oil and gas companies could limit Aker’s ability to work with Lukoil and interfere with operations at the field. According to media reports, Aker CEO Øyvind Eriksen noted that development plans would not be passed to Ghanaian authorities until Lukoil’s participation was resolved.

To overcome this hurdle, Aker has recommended that Lukoil divest their share. As of February 2023, the latest update on the dispute indicates that Aker is continuing a dialogue with Lukoil and the Ghanaian authorities to come to a solution and has not put the project itself on hold, instead just delaying their development plans.

Provided that the controversy surrounding Lukoil’s participation is resolved and FID is achieved by the end of 2024, we expect Ghana’s oil production to grow to nearly 200,000b/d by 2029.

Given the willingness of the Ghanaian government to support the project, potential for breakthroughs and compromise in the negotiations between the partners, and the higher oil price environment, we believe that FID is still possible despite the dispute, but is not likely to be reached until 2024 at the earliest.

In terms of sanctions, as of February 2023, Lukoil is subject to US energy sector sanctions under Executive Order 13662, which prohibits investment in upstream projects abroad where Russian-based oil and gas companies have participating interests of over 33 per cent.

Aker seeks to comply with all international sanctions. Despite Lukoil’s 38 per cent stake, the restrictions levied on Lukoil would not apply to the Pecan field development as the project was initiated before January 29, 2018.

Given this exemption, it is still possible that the project can proceed with Lukoil still participating, though we acknowledge significant downside risks from the historic record of delays.

We forecast that it will take 35 months from FID for the first oil at the field, meaning that if FID is reached in 2024, production will begin in 2027 at the earliest. With this in mind, we forecast that Ghana’s oil production will grow to a peak of 198,190 b/d by 2029, before declining by an average of three per cent a year until 2032 due to the lack of other projects in the pipeline.

Connect With Us : 0242202447 | 0551484843 | 0266361755 | 059 199 7513 |

Like what you see?

Hit the buttons below to follow us, you won't regret it...