GHANA
“Kosmos is extremely excited about the opportunities for oil exploration in Ghana and has an active drilling programme planned for the next several years,” says W. Greg Dunlevy, Kosmos Energy’s executive vice-president and chief financial officer. “Kosmos continues to explore its existing assets in West Africa, including Ghana, and seeks new-venture opportunities throughout the region.” The Ghanaian government’s big challenge will be whether it maintains the balance between reaping the wealth from oil and making sure it is prepared for the deluge. Human rights activists and local communities are urging Ghana to take things slowly, but time is not an advantage that Ghana has, particularly with the world in the grip of an economic downturn. Ahead of the presidential election in December, the government ramped up spending on infrastructure, civil servant salaries and other projects to please the country’s 24 million people, 20 per cent of whom are considered extremely poor. That profligacy led President Mills’s government to declare that Ghana was “broke.” Then, in March, the Standard & Poor’s credit agency cut its outlook on Ghana and the newly revamped national currency, the cedi, fell from parity with the US dollar to 1.4 to the dollar.
Golden Jubilee
Oil discoveries in Ghana
“In 2009, it emerged that the 2008 deficit is likely to be in the region of 15 per cent of GDP, which is massive,” says Remy Salters, a credit analyst at Standard & Poor’s. “It’s not often around the world that you find fiscal deficits of that size.” Salters estimates that Ghana spent $2.2 billion last year on importing oil – the country consumes 60,000 barrels a day – and President Mills will no doubt be eager to erase that expense. He will want to add the income that oil will bring (an estimated $20 billion from Jubilee alone by 2030) as he seeks to meet the government’s promise of whittling the deficit to 3 per cent in four years. In the rush to get oil pumping, Ghana’s government may be under pressure to overlook questions that its own civil society groups would like to have answered. One of the big ones is the fate of the Ghana National Petroleum Corporation (GNPC) which owns a small stake in the Jubilee Field and regulates the oil industry, a dual responsibility that some believe is a conflict of interest. That points to the larger fact that because Ghana has never had any oil to export, its regulatory framework is fairly weak. Gold mining in Ghana has ignited tensions between the government and indigenous groups who argue that they do not profit. Regular Ghanaians may not see the financial windfall they are hoping oil will bring. Almost all of Ghana’s oil is far offshore, meaning that jobs will be limited to highly qualified workers in the oil sector. The industries that would spring up to support those workers will also be limited. The American branch of Oxfam recently issued a report, Ghana’s Big Test, which urged the country to stop issuing licences until it can make sure oil benefits all the country. “There is precedence for countries to try to pace the growth of the sector so that their institutional and legal framework can catch up,” it said.
AFP/Getty Images
Financial windfall
Oil fields 1. Jubilee 2. Tweneboa
Accra 2
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