Ghana is now meeting more than 30% of its fuel demand through local refining, a significant increase from the roughly 10% it relied on previously, according to the Chief Executive Officer of the Chamber of Oil Marketing Companies (COMAC), Dr Riverson Oppong.
The increase comes at a time when disruptions to global oil supply routes are making it more expensive and difficult to move petroleum products across markets.
For Ghana, which has traditionally relied heavily on imported refined fuel, having more products supplied locally could offer some relief when international supply chains come under pressure.
Speaking on Channel One TV’s The Point of View on Monday, September 14, Dr Oppong said Ghana is no longer as dependent on the international market as it used to be.
“The central [refinery] could only do 10%. Today, we are producing more than 30% of the local demand with locally produced crude oil,” he said.
That shift is becoming particularly important as the global oil market deals with disruptions around major shipping routes.
Dr Oppong said the current situation is showing that the challenge is not always whether crude oil or fuel is available. Getting the product to where it is needed can be just as important.
That has pushed up freight and insurance costs, which ultimately add to the cost of imported fuel.
Local supply offers some relief
The growing contribution from local refineries means a larger share of Ghana’s fuel needs can be met without bringing finished products into the country.
Dr Oppong said that can also reduce some of the costs associated with imports.
“If I am buying fuel from [the local refineries], I should expect the price to be lower because there is less as compared to a BDC or a trader that is bringing fuel… paying high premiums and also high CIF,” he said.
But local refining does not completely separate Ghana from the global market.
Fuel prices in Ghana are still influenced by international refined-product prices, meaning local producers can also feel the impact of movements in global markets.
So while producing more fuel locally can reduce some of the costs and risks linked to imports, it does not necessarily mean pump prices will remain unchanged when international prices rise.
An opportunity beyond the current crisis
Dr Oppong believes the disruption in global energy markets could also create an opportunity for African countries to expand their own refining capacity.
He said international oil companies are becoming more open to refining petroleum products in the countries where they produce crude oil in sub-Saharan Africa.
For Ghana, that could mean more investment in refining and a gradual reduction in its dependence on imported finished petroleum products.
