Ghana’s Petroleum Hub, first in Africa
ONE of the questions I keep getting from friends who know that I work in the energy sector is what I call ‘the TOR question’.
Essentially, what exactly is it that stops the Tema Oil Refinery from getting back on its feet to be able to refine our crude oil locally and ultimately, help bring down pump prices, among others?
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It is a perfectly reasonable question to ask, but the answers are not as simplistic as one may believe.
Amid all the past and present challenges the organisation has had and continues to have, with political ping pong and union activism thrown in for extra measure, TOR, to many, is a blot on the nation’s conscience and a symbol of many things that they see wrong with this country.
One of these fine Tuesdays, we will have a full-blown analysis here to try to deal with the TOR question.
But today I focus on an interesting and exciting project in the offing – the idea of a petroleum hub.
Vision
In line with the President’s vision to develop a modern, diversified, efficient, and financially sustainable “energy economy”, the Petroleum Hub Development Corporation (PHDC) was established.
The vision was to ensure that all Ghanaian homes and industries have access to adequate, reliable, affordable and environmentally sustainable supply of energy to meet the needs and to support the accelerated growth and development agenda envisaged for the country.
PHDC was established by an Act of Parliament – Petroleum Hub Development Corporation Act, 2020 (Act 1053) with the mandate to promote and develop a Petroleum and Petrochemical Hub in Ghana.
This industrialisation agenda in the petroleum (midstream to downstream) industry will create jobs, add value to our rich natural resources making Ghana self-sufficient and globally competitive.
The industrialisation agenda was timely to take advantage of the African Continental Free Trade Area (AfCFTA) initiative.
Facilities
The Minister for Energy, Dr Matthew Opoku Prempeh (MP), has demonstrated his commitment to see this vision through, making the Petroleum Hub Project an investment location of choice.
The Ministry of Energy undertook to develop infrastructure in the midstream and downstream petroleum industry as a strategic anchor and a pillar of growth dubbed “to become the Petroleum Hub of choice by the year 2030”.
This project, which is private sector-led, will secure investments and development of key, ancillary and other infrastructure.
The key infrastructure includes three refineries with a minimum capacity of 300,000 barrels per day (bpd) each, five petrochemical plants, 10,000,000m3 storage tanks, jetties and port infrastructure.
The ancillary infrastructure and services include Liquefied Natural Gas (LNG) terminals, pipelines, power plant, rail and road network, airfield, water treatment services, repairs and maintenance services, nautical services, waste treatment facilities, logistics, security and emergency response centre, residential and commercial areas, light to medium industrial areas, modern laboratory, and recreational areas.
Other services and infrastructure such as fabrication workshops, metering and calibration services, equipment supplies, logistics services, remote monitoring and diagnostics, lubricant storage and supply, inspection and certification services will also be available.
Investment model
The Integrated Petroleum Hub will sit on a 20,000-acre parcel of land in the Jomoro Municipal Area in the Western Region.
The project, which is estimated to cost US$ 60 billion will be the first of its kind in Africa and largely financed by private investors.
Government will provide the land, basic infrastructure and social amenities, such as, roads, rail, air strip, electricity, water, schools, hospitals etc.
Again, the government will provide an enabling legal and regulatory environment, as well as economic incentives for businesses and the investor community through the operation of a free zones concept.
The government is poised to provide these incentives to attract investments to bridge the demand and supply gap in the petroleum midstream and downstream markets.
Consumption of petroleum products
For successive years, the consumption of petroleum products in Africa has been following an upward trend. According to The PWC Africa Energy Review 2022 Report, Africa’s consumption of petroleum products was around 194 million metric tonnes (MT).
Leading downstream energy specialists, CITAC Africa, has also reported that in West Africa, consumption of petroleum products is about 45.2 million MT.
At a projected annual growth rate of about seven per cent per annum, it is estimated that this figure will most likely peak at about 78 million MT by the year 2030.
In Ghana, according to the National Petroleum Authority (NPA), our consumption totalled 4.2 million MT in 2022, with a continuous rise in the consumption trend.
Our existing infrastructure is inadequate to meet demand in a manner that would ensure efficiency in fuel supply and fuel security.
Strategic positioning, energy transition
In Africa, majority of the petroleum products is imported from Europe, USA, and the Middle East.
Having an integrated Petroleum and Petrochemical Hub in the sub-region has the potential of making Ghana a huge market for refined petroleum products and petrochemical services.
The government is committed to prioritising, developing, promoting and managing the hub project for the mutual benefit of investors and Ghanaians.
PDHC says it is also mindful of the global energy transition and its impact on such investments.
In line with Ghana’s Energy Transition Plan, the Corporation has outlined its sustainability plan with two key pillars.
Pillar 1 is balancing the economic, environmental and social considerations and Pillar 2 is the empowerment of people through local content maximisation and gender integration.
Thus, local entrepreneurs will have the opportunity to do business with foreign investors in the Petroleum and Petrochemical Hub, which will facilitate the financial growth of these enterprises.
All these business linkages will create about 780,000 direct and indirect jobs within the Hub.
The Petroleum and Petrochemical Hub, when completed, will improve Ghana’s economy and the economy of Africa as a whole.
The development impact of this project will be beneficial to both our investors and the Ghanaian people.
The call to invest in Ghana’s Petroleum and Petrochemical Hub is the way to go with investment and wealth creation.
There are several exciting dimensions to this project and we will be following them on these pages in due course.
For more information on PHDC, please visit their website on www.phdc.gov.gh or follow them on all their social media platforms.
Rodney Nkrumah-Boateng
Head, Communications & Public Affairs Unit,
Ministry of Energy,
Accra.
E-mail: [email protected]
