Ghana’s crude oil production for 2024 and beyond is expected to significantly decline considering the prevailing trend for the past 4 years, an industry expert has predicted.
The country’s oil production has been witnessing a constant decline since 2020 recording an annual reduction rate of 9.2%, according to data from the Public Interest and Accountability Committee (PIAC).
PIAC has identified that factors causing the downward trend include the natural depletion of oil fields due to maturity, investment constraints caused by the global energy transition, technical and operational challenges, and legal, regulatory, and fiscal challenges.
This decline threatens petroleum revenues which the country’s annual budget heavily depends on.
The Technical Manager of PIAC, Mark Agyemang, speaking in an interview with The High Street Journal revealed that this trend is expected to proceed into 2024 and even beyond.
He said that if the government does not consciously ensure that new wells are brought on board to support the existing ones, Ghana’s oil and gas sector might collapse in the next 10-15 years.
Furthermore, he bemoaned the underdevelopment of the gas value chain which is playing a role in the declining oil production. He therefore calls for the full commercialization of the gas value chain which he believes will help to increase oil production.
“All things being equal there will continue to be a decline this year if new wells are not brought on-stream and we still maintain the same wells we have. And one major factor of the decline is that we have not commercialised gas properly. Currently, as we speak, we don’t have enough processing facilities to take all the gas that is being produced. That is why we are re-injecting most of the gas,” he explained.
He added that “the companies are being cautious because of you increase production of oil, that means gas will come and the country cannot take all the gas. We need to fully commercialize our gas value chain and put certain measures in place to prolong this decline that we are witnessing. If not, if it continues like this without new fields being brought onstream, then the next 10 -15 years, we should be witnessing a collapse of the oil and gas industry.”
This decline in oil production comes at a time when the country is also experiencing a reduction in cocoa production leading to a significant reduction in cocoa revenues. This is mainly attributed to the illegal mining menace coupled with smuggling, bad weather, and crop diseases.
The Summary of Macroeconomic and Financial Data published for July 2024 by the Bank of Ghana revealed that cocoa revenues for the first half of 2024 declined by almost 50% compared to the same period in 2023. Ghana earned just US$760 million from cocoa exports in the first half of this year compared to a whopping US$ 1.45 billion in the first half of 2023.
This represents a staggering 48% decline. Industry watchers believe the reduction will continue given the current development in the sector.
With both cocoa and oil recording significant declines, it means two major cash cows and foreign exchange earners of the economy are gradually losing their grip on supporting the economy.
This trend, if not drastically checked with urgency could spell doom for the economy as many significant national projects and programmes such as Free SHS, Agenda 111, Budget Financing, and Cocoa Roads among others all depend on these two for funding.
