After five consecutive years of declining oil output, Ghana has recorded a promising increase in crude oil production, with a 10.7% year-on-year growth in the first half of 2024. This turnaround, reported by Ghana’s Public Interest and Accountability Committee (PIAC), signals a positive shift for the country’s petroleum sector, which plays a vital role in its economy.
Ghana’s oil production had experienced a steady decline since peaking in 2010, largely due to diminishing yields from established fields. By 2023, production had dropped to a five-year low, despite efforts to sustain output through new wells. However, PIAC’s latest report shows that crude oil production climbed to 24.86 million barrels by mid-2024, reversing a 13.2% decline seen in the first half of 2023.
This recent surge in production is primarily attributed to the Jubilee South East (JSE) project, managed by Tullow Oil, which began production in late 2023. The JSE is an extension of the Jubilee field, Ghana’s first major oil discovery, which had faced challenges in maintaining high output levels in recent years. With the JSE project now contributing to national production, Ghana’s oil sector appears to be on the rebound.
Ghana’s economic gains from this growth have been substantial. By June 2024, the country’s petroleum revenue surged by 56% to reach $840.8 million. This boost is especially significant, as petroleum revenues account for approximately 7% of government income. Gas production also saw a modest rise, increasing by 7.5% to 139.86 million standard cubic feet by mid-year, which further supports Ghana’s energy infrastructure.
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Despite the encouraging production numbers, Ghana’s petroleum industry continues to face challenges. PIAC official Dwamena noted that regulatory requirements impose substantial costs on petroleum companies, as laws mandate a minimum 12% free and carried interest for the state on every project, potentially discouraging investment. In some cases, this state interest can reach as high as 20%, based on specific negotiations. “This has been a disincentive for some investors,” Dwamena explained, highlighting a complex balancing act between national revenue goals and attracting foreign investment.
Looking to the future, Ghana aims to boost its energy resources by selling additional exploration rights, ensuring untapped fossil fuels are utilized and generating revenue to support the country’s energy transition. Major players in Ghana’s oil industry include Eni, Tullow, Kosmos, and PetroSA, with each contributing to the country’s production landscape.
Further bolstering the sector, Ghanaian President Nana Akufo-Addo recently inaugurated construction on a $12 billion oil refinery capable of processing 300,000 barrels daily. This ambitious project is part of Ghana’s long-term plan to meet West Africa’s growing demand for refined petroleum products, with the region consuming roughly 800,000 barrels daily—of which nearly 90% is currently imported. The refinery is set to position Ghana as a key supplier of refined oil products and by-products by 2036.
As Ghana’s oil sector rebounds, these developments reflect the country’s commitment to maximizing its natural resources while balancing challenges and opportunities within a dynamic energy landscape.
