Ghana, Nigeria Set to Strike Oil Deal

Accra, Ghana - An agreement is underway between Ghana's state-owned Tema Oil Refinery and the Nigerian Petroleum Corporation for the supply of 30,000 barrels of crude oil daily beginning 1 November.

A 130-day credit facility is being favourably considered by the Nigerian authorities to assist Ghana find a way out of the current fuel crisis that has hit its capital and other major towns.

This followed the conclusion of technical discussions initiated by Ghana's Vice-president John Evans Atta Mills when he visited Abuja Monday.

Ghanaian deputy minister of Mines and Energy, Simon Abingya told a press conference in Accra Thursday that an agreement to this effect would soon be signed.

He said a technical team is currently in Abuja drafting a document to facilitate the supply to Tema Oil Refinery.

Abingya said, in the meantime, letters of credit for the supply of 80,000 metric tonnes of crude oil have been opened to ensure that enough fuel is available before the agreement comes into force.

The letters of credit covers 450,000 barrels of oil for October.

Abingya disclosed that a swapping arrangement is, however, being worked out with VITOL, an oil refinery company, for the supply of two other parcels from 1 November.

He complained that Tema Oil Refinery (TOR) has a problem with its inefficient steam boiler that is affecting the premium reformer.

"The lack of the steam boiler is responsible for the inability of TOR to refine naftar, a component of crude oil. Hence the product is re-exported back and the money used to import other products necessary for the operations of TOR."

He said a 60-tonne boiler is expected by the end of October, adding, "TOR would be at full blast and refining at full blast."

Abingya also explained that government is unable to plan strategically because of the distortion arising from the trends in the global market place.

"We pegged the expected price hike within the year to up to 25 dollars a barrel, with an exchange rate of 4,000 cedis, but this have gone up to between 34 and 37 dollars and an exchange rate of more than 6,000 cedis."

This is a reference to the exchange rate of the local currency to the US dollar.