https://www.myjoyonline.com/petroleum-industry-facing-imminent-apocalypse-as-csos-push-to-get-gnpc-to-explore-and-produce-its-own-oil/-------https://www.myjoyonline.com/petroleum-industry-facing-imminent-apocalypse-as-csos-push-to-get-gnpc-to-explore-and-produce-its-own-oil/

The Civil Society Platform on Oil and Gas (CSPOG) is warning of an "imminent collapse” of the country's petroleum industry.

The Platform is pushing for the Ghana National Petroleum Company (GNPC) to be empowered to explore and produce the country’s oil reserves.

In a statement, CSPOG observes that “Ghana’s oil and gas industry faces grim prospects, as the world turns its attention from fossil fuels to renewables”.

Many of the world’s leading oil exploration and production companies including: BP, ENI, Shell, Total, ExxonMobil, and Chevron have all made commitments to shift from investing in fossil fuels to renewables.

It said with Ghana’s “reserves of existing producing fields fast depleting, the country risks an imminent downturn in the medium term, and a stranded asset in the long term” since the country will soon find it impossible to attract new investors with the capacity to explore and produce the substantial oil reserves still sitting untapped mostly offshore.

According to the Platform, the GNPC must be ready to step in, with the capacity to explore and produce Ghana’s oil reserves.

“CSPOG urges the Ghana National Oil Corporation (GNPC) to take its drive towards operatorship seriously, and to begin negotiations with potential partners towards arrangements that will help to fast track the achievement of this ambition”.

The civil society platform says the GNPC must partner International Oil Companies already operating in Ghana to build its capacity.

“Since Aker Energy has still not come on stream, it affords an opportunity to re-open discussion to see if the NOC could reach an accommodation with Aker on the matter of a partnership that revolves on mentoring GNPC into operatorship in the shortest possible time”, it noted.

The evidence

The Economist Intelligence Unit (EIU) has predicted that, in 2021, energy investment will shift from oil and gas to renewables. Solar and wind combined have been projected to record the strongest growth among all sources of energy in 2021.

Though the crude oil market seems to be on a rebound from the 2020 collapse, consumption is not expected to hit 2019 levels, providing even greater incentive for investors to turn to renewables.

The cost of capital has also not helped matters. From 2-3 per cent in 2010, it went up to 5 per cent in 2015, and currently between 9 and 10 per cent.

Last year, BP announced that, it was poised to build 50GW of renewable power by 2030, and to cut fossil fuel production by 40 percent. ENI has also announced that it intends to dispose of all non-core upstream assets and will no more undertake mega projects for oil and gas.

The other super majors, Shell, Total, ExxonMobil, and Chevron have made similar commitments, with Shell bent on leading the investment race in carbon-neutral energy production.

The situation, in the view of CSPOG, is further compounded by the EU Taxonomy agenda, a classification system, establishing a list of environmentally sustainable economic activities EU registered companies are encouraged to invest in.

The EU taxonomy is an important enabler to scale up sustainable investment, discouraging investments in hydrocarbons. Already, the daily production of Oil and Gas Majors in Africa is on the decline and projected to settle at 34 per cent by 2025, as they sell off assets in the upstream oil and gas sector to invest in renewables.

An analysis of the country’s oil production data since 2010 indicates that, unless new discoveries are made, Ghana’s oil industry will soon become moribund.

Already 50 per cent of the total Greater Jubilee reserves, 33 per cent of TEN Field, and 25 per cent of Sankofa have been produced. The Pecan and AGM fields operated by Aker were supposed to have made substantial progress towards production by now, but last year, Aker served notice that it was suspending its Final Investment Decision (FID) on grounds of a market slump, and project viability concerns.

Even if new discoveries were to be made, the country will still be confronted with the spectre of stranded oil, as fossil fuel will no more be attractive in the medium to long term. Demand will fall, together with price, taking away the incentive for crude oil exports.

The solution

The situation calls for urgent steps to secure the future of the industry. CSPOG believes that, when oil become a stranded asset, it will still have relevance for those countries that have the technical capability to exploit the resource for domestic use, just as in spite of coal being a dirty fuel, has remained relevant to the economies of countries that have huge reserves of the resource, such as Brazil, South Africa, China, Australia, and New Zealand.

In this regard, CSPOG urges the Ghana National Oil Corporation (GNPC) to take its drive towards operatorship seriously, and to begin negotiations with potential partners towards arrangements that will help to fast track the achievement of this ambition.

Since Aker has still not come on stream, it affords an opportunity to re-open discussion to see if the NOC could reach an accommodation with Aker on the matter of a partnership that revolves on mentoring GNPC into operatorship in the shortest possible time.

GNPC also needs to be resourced financially or redirect some of its non-core expenditure to commence exploration on Block 1, which was reserved for the Corporation during the first Bid Round and Licensing process. The Corporation should also fast-track data acquisition and eventual operatorship of the onshore Voltaian Basin to build capacity for operatorship of other fields.

The government, through the Ministry of Energy and the Petroleum Commission should ensure strict and effective implementation of the country’s local content regulations to build the needed capacity for Ghanaian businesses to be able to provide support services to the National Oil Company when it becomes necessary for the country to exploit its own hydrocarbon resources, just as is the case of coal in the Powder River Basin in the USA.

It is also imperative that we begin to think through our own local beneficiation capability strategy because a global carbon-neutral economy will de-emphasize crude oil refining as they become commercially unviable, and pose a challenge for the country’s need to make use of its otherwise stranded crude oil reserves.

It’s important to act now to avoid the imminent apocalypse that confronts our petroleum industry.

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DISCLAIMER: The Views, Comments, Opinions, Contributions and Statements made by Readers and Contributors on this platform do not necessarily represent the views or policy of Multimedia Group Limited.