Ghana's Energy Sector, Oil and Gas News

Oil fell by two per cent yesterday as weak economic data from China, the world's largest energy consumer, weighed on prices and an OPEC source played down talk of an emergency meeting to stem the decline.

China's manufacturing sector contracted at the fastest pace since 2012 in January, adding to worries about demand from the world's second-biggest economy at a time when the market is already weighed down by a large supply overhang.

"The weak China PMI (purchasing managers' index) is driving down prices because China weighs on the entire commodities sector from the demand side of the equation," Carsten Fritsch, senior oil analyst at Commerzbank in Frankfurt, said.

Brent crude for the April futures were down by 1.8 per cent, or 64 cents to US$35.35 a barrel yesterday. The March Brent contract, which expired last Friday, settled at US$34.74 a barrel.

The drop in oil prices continues to create headaches for managers of the economy.

This is because a decline in crude oil prices has negative impact on national revenues, the very resources used to develop the country.

From last year, when commodity prices, especially that of oil, started sliding, there have been calls on government to reduce ex pump prices.

This was preceded by the deregulation in the downstream petroleum sector, which brought with it excitement in that segment of the industry.

Oil rallied in its biggest two-day advance since August after a slump to a 12-year low prompted some investors to buy back record bearish bets.

Oil supplies

West Texas Intermediate for March delivery gained as much as US$1.51, or 5.1 per cent, to US$31.04 a barrel on the New York Mercantile Exchange and was at US$30.89 at 10:14 a.m. in London. The March contract has advanced 8 per cent in two days, and the generic front-month futures has surged 16 per cent since the February contract expired on Wednesday, the most since August. The volume of all futures traded was more than double the 100-day average.

Brent for March settlement climbed as much as US$1.85, or 6.3 per cent, to $31.10 a barrel on the London-based ICE Futures Europe exchange. Prices are up 10 percent since Wednesday, also the most since August.

In a spate of 53 years, the Tema Oil Refinery (TOR), Ghana’s only refinery, has moved from a profitable crude oil refining company to an idling structure of buildings and plants that is now a drain on the national purse.

The refinery, which from the onset of operations refined crude oil for Ghana and its neighbouring countries, over the years broadened its scope of operations to include procurement, storage, refinery and distribution of crude oil.

Established in 1963 by the first President, Dr Kwame Nkrumah, TOR was expected to enhance the country’s economic, investment and development programs in the energy sector, especially with the start of oil production.

TOR which started as a simple refinery has subsequently been upgraded presently to a secondary plant with a residual fuel catalytic cracker (RFCC) and enhanced capacity of 45,000 both, equivalent to about 6,138 tonnes of crude oil per day.

After joining the league of oil producing nations, Ghana’s uphill task was to manage the high expectation that suddenly oil discovery holds the panacea for the country problems— from unemployment to more revenue translating to huge economic gains.

The high expectations were as a result of the unavailability of information to Ghanaians and even prospective industry players on the industry.

The celebration that characterised   the announcement of the discovery of oil in commercial quantities in 2007 is today making things worse as people still asked the question “where is the oil money.”

A rapid appreciation of the U.S. dollar may send Brent oil to as low as US$20 a barrel, according to Morgan Stanley.

Oil is particularly leveraged to the dollar and may fall between 10 per cent and 25 per cent if the currency gains five per cent, Morgan Stanley analysts including Adam Longson said in a research note dated Jan. 11.

A global glut may have pushed oil prices under US$60 a barrel, but the difference between US$35 and US$55 is primarily the U.S. dollar, according to the report.

“Given the continued U.S. dollar appreciation, US$20-US$25 oil price scenarios are possible simply due to currency,” the analysts wrote in the report. “The US dollar and non-fundamental factors continue to drive oil prices.”

As price of oil dips to its lowest in about 12 years, investors are becoming cautious of investing heavily in the oil exploratory activities, and this presents an opportunity to Ghana to make gas sector more attractive to international oil companies to explore and develop gas in order to become the game changer.

But the question remains; how can the gas component be developed into becoming the  game changer for Ghana, lead transformation agenda, satisfy domestic gas needs and save the country half a million dollars a year?

 It calls for the need go back to a failed attempt to create an industrial park where all oil and gas related activities can be sited and coordinated.

If not, as more activities discoveries are made, the whole country will be dotted with gas facilities and power plants in a very scattered and unplanned manner.

Ghana rushed in search of the revenue in 2007 and ignored all that needed to be place.  GNPC started planning for the indust

The government has set up a special account into which all new levies on petroleum products will be saved to enable it to defray the huge debt in the energy sector.

Presently, the energy sector debt is in the region of about US$1.4 billion, an amount which has exposed some banks badly.

A Deputy Minister of Finance, Mr Cassiel Ato Forson, who disclosed this to the GRAPHIC BUSINESS in an exclusive interview in Accra on January 6, said as per the law reviewing the taxes on petroleum, the government was bound to report on the monies accrued to Parliament every year and noted that “it is part of the measures we are adopting to ensure transparency in the use of the monies collected from the people”.

The Africa Centre for Energy Policy (ACEP) has questioned the rationale behind the continuous payment of the Tema Oil Refinery (TOR) debt recovery level, as its analysis shows that revenue generated from the levy is enough to clear the existing debt.

The ACEP maintained that between 2009 and 2015, total collection from the levy was in excess of GH¢1.9billion, which was enough to pay off the debt which had ballooned from GH¢450 million to GH¢900 million as at the end of 2009. 

Addressing a news conference in Accra, the Executive Director of ACEP, Dr Mohammed Amin Adam, said Ghanaians do not have to continue paying the levy.

“Our analysis shows that between 2009 and 2015, the total collection from the levy is in excess of GH¢1.9 billion. This effectively amortises the debt assuming an interest of 10 per cent. Ostensibly, the TOR Debt Recovery Levy has over the years been misapplied, aided by the weak oversight of Parliament,” he said.

Saudi Arabia has raised domestic energy prices by 40 per cent after the world's leading oil producer announced a record $98bn budget deficit last Monday citing rock-bottom global petroleum prices.

The budget deficit is the highest in the history of Saudi Arabia, but was not as big as some expected. The International Monetary Fund had projected a deficit of $130bn.

The kingdom has seen a sharp drop in revenues as oil prices have fallen more than 60 per cent since mid-2014 to below $40 a barrel.

Public revenues are the lowest since 2009 when oil prices dived as a result of the global financial crisis. Saudi income for 2015 was 15 per cent lower than projections and 42 per cent less than in 2014.

In order to address the situation, the Gulf kingdom has set the price of 95 octane gasoline at 0.90 riyals ($0.24) per litre up from 0.60 riyals per litre - a hike of 40 percent. The price increase took effect on Tuesday, the official SPA news agency said on its

Oil has continued its rollercoaster ride into the New Year, with Brent crude falling below $35 a barrel for the first time in 11 years.

Brent crude sank by 4.2 per cent to $34.88 a barrel, surpassing its late December fall, and taking the price to its lowest level since July 1, 2004.

The price of US crude dropped 3.3 per cent to $34.77 a barrel.

The sharp falls followed a short-lived rally last Monday after Saudi Arabia broke diplomatic ties with Iran.

Education makes a people easy to lead but difficult to drive, easy to govern but impossible to enslave. Henry Peter Brougham

When the government introduced Value Added Tax on petroleum products in September last year, some of us were ignored when we said it was  bound to have ripple effects on the economy because as our elders have so eloquently espoused, if you cut your tongue and chew it, you have not eaten any meat. This is so because after that act, you will lose your sense of taste and it would have been more worthwhile if you had not eaten your tongue.

Even with the drastic fall in global crude oil prices, we are feeling the bite from the excessive taxes imposed on oil. It does not make sense to tax consumers of fuel for transportation or other purposes to subsidise electricity generation when consumers of electricity are better positioned to do that. So does it fly in the face of logic to tax petroleum products to raise funds towards oil exploration when we ha

The oil price has fallen by more than 40 per cent since June when it was $115 a barrel. It is now below $70. This comes after nearly five years of stability.

At a meeting in Vienna on November 27, the Organisation of Petroleum Exporting Countries, which controls nearly 40 per cent of the world market failed to reach agreement on production curbs, sending the price tumbling.

Also hard hit are oil-exporting countries such as Russia (where the rouble has hit record lows), Nigeria, Iran and Venezuela. Why is the price of oil falling?

The recent National Insurance forum which attracted many stakeholders in the oil and gas sector, insurance regulator and practitioners couldn’t have come at a better time.

Indeed, the issue regarding only five per cent of the risks being insured locally may be worrisome as the chunk of the risks is sent outside the country in mainly reinsurance.

The Chief Executive Officer of the Ghana Chamber of Bulk Oil Distributors, (CBOD) Senyo Hosi, has hinted of plans by the Chamber to develop a new USD40 million Single Point Mooring (SPM) facility in Tema in the next two years.

The SPM facilitates the convenient handling of large vessels, petroleum and oil products and will be the first privately owned facility of its kind in Ghana.

Senyo Hosi made the disclosure while addressing the first ever Ghana International Petroleum Conference (GhipCon) in Accra on the theme: “The Changing Phase of Petroleum Repositioning Industry”, which aimed to discuss and find solutions to challenges that negatively affect the performance of the petroleum sector.