GNPC: Ghana;s Oil is Safe

By J. Ato Kobbie, Managing Editor

The Ghana National Petroleum Corporation (GNPC) has assured Ghanaians that
partners in the Jubilee Field have put in place a comprehensive system to guard
against theft of oil to be produced from the field next month.

According to the corporation, all partners in the field have put together
effective monitoring mechanisms that would ensure that Ghana’s oil production
does not follow the path of some countries whose oil resource could be described
as a curse rather than a blessing.

Speaking to The Business Analyst in an interview, Mr. Victor Sunu-Attah, Chief
Petroleum Engineer of the national oil company, said the GNPC participated in
the designing of the floating, production, storage and offloading vessel (FPSO)
which is facilitating the Jubilee Field production and therefore was assured of
the safety of the oil.
The chief petroleum engineer outlined the elaborate process, which is in place
to ensure that the oil and gas to be produced from the Jubilee Field and other
subsequent fields for that matter is properly accounted for.
He mentioned some of these measures to include: meters attached to all wells to
measure oil and gas flowing from each one of them before getting on board the
FPSO, where meters have been installed to take measurements again.
Asked how GNPC could ensure that total oil from wells would be accounted for,
and not get lost along the line, Mr. Sunu-Attah said data in its native form
(i.e. raw data) would be transmitted electronically to GNPC as well as the other
partners at the same time and therefore each would independently be monitoring
and observing events.

He explained further that apart from the economic reasons for monitoring the oil
flow, the technical component is to assess how wells are performing.
“When the oil comes to the FPSO, it would be measured again before storage,” the
chief petroleum engineer disclosed, adding that apart from GNPC, the Customs
Division of the Ghana Revenue Authority (GRA) would have access to the meters as
well as supplies to tankers.
The GNPC official disclosed that supplies to tankers would also be monitored (in
the tankers), by personnel from international hydrocarbon inspection companies
such as SGS, DNV etc.

THE NUMB3RS
The Jubilee Field is the name given to an area that straddles two oil blocks,
Deepwater Tano and West Cape Three Points, following successive commercial oil
discoveries made in Mahogany-1 and Hyedua-1 exploration wells during Ghana’s
Golden Jubilee Anniversary year in 2007.
The field is offshore Ghana, with the nearest town, Bonyere, being 50 kilometres
away.

After the discoveries, the two blocks, which were close to each other, were
unitized or consolidated to ensure efficient and cost effective production of
the oil from the two fields. Several other successful wells following the first
two have increased the estimate of the Jubilee Field to between 800 million and
1.5 billion barrels of crude oil of the highest grade. Initial production
expected from the field under the first phase is 120,000 barrels of crude a day.

Production however commences at 50,000 barrels a day from December this year and
would peak and stabilize at 120,000 bpd from early next year.

Under the first phase of the development of the Jubilee Field, production is
expected to be in excess of 300 million barrels of recoverable oil, Kosmos
Energy, Technical Operator of the field had announced in July 2009.
The interest holdings of the Jubilee Partners were consolidated, assuming 50%
for Deepwater Tano block and 50% for the West Cape Three Points block.
The GNPC exercised its option of taking additional paying interest of five
percent (5%) in Deepwater Tano and two-and-a-half percent (2.5%) in the West
Cape Three Points blocks.

The Jubilee Field has Tullow Oil as Operator with the highest stake of 34.7046%,
whilst Kosmos Energy, the Technical Operator (to lead in exploration issues),
just as Anadarko, each holds 23.4913%. GNPC holds 13.7500%, whilst Sabre Oil
and Gas and the E.O. Group, hold 2.8127% and 1.7500% respectively.
The interest holdings of the partners determined how much contribution they make
in meeting the current costs of development of the field before and during
production.

The stakes of the partners determine what profit they would eventually be
reaping from the oil.
Before the unitization of the area straddling the two blocks, Tullow Oil
operated the Deepwater Tano block, where it held 49.95% interest, with Kosmos
and Anadarko holding 18% interest each. Sabre Oil & Gas held 4.05%, whilst GNPC
had a 10% carried interest.

However, GNPC exercised its option of taking up additional paying interest
following a discovery, and increased its stake to 15%.

The WCTP, on the other hand, has Kosmos Energy as the Operator, holding 30.875%
interest, just like Anadarko Petroleum, while Tullow Oil held 22.896% interest.
The other partners in that field were the EO Group, which held 3.5%, Sabre Oil &
Gas, 1.854% and GNPC having a carried interest of 10%. Here again, GNPC took up
additional interest of 2.5%, to increase its stake to 12.5%.

Development of the Jubilee Field has been on schedule.
FPSO Kwame Nkrumah has a production and processing capacity of 120,000 barrels
of oil and 160 million cubic feet (mmcf) of gas per day, with storage capacity
of 1.6 million barrels of oil.

The Jubilee development is based on a conventional subsea design located in
approximately 1,300-meter of water using a turret-moored floating production,
storage and offloading vessel (FPSO).

Even though under the plan of development approved for the phase-one development
17 wells, including up to nine oil producers, five water injection wells and
three gas injection wells, only 16 have however been drilled, with a shortfall
in the gas injection wells.

The development process has been designed so that gas produced would be
available for export to shore and/or be re-injected into the reservoir, in line
with the ‘zero-tolerance for gas flaring’ policy of the project.

The first 200 billion cubic feet of natural gas is being provided to the
national oil company, GNPC to form the basis for the development and
construction of a gas processing complex, which is currently planned to be sited
at Bonyere in the Western Nzema Area of the Western Region.


Expert Explains Africa’s Dev’t Challenge
By Liberty Amewode
There is absolutely no programme in Africa to entice the youth into agriculture
amid the rapidly dwindling numbers of those engaged in this important industry.
Consequently, Africa’s comparative advantage in the production and trade in
agricultural commodities since the mid-1980s has seriously been compromised.
And according to Mr. Kwaku Owusu-Baah, Director of Economic Studies,
Inter-African Coffee Organization (IACO), who made these assertions, if the
youth in Africa had had some sustained assistance programmes, many of them would
rather prefer to live in their rural environments than hustle in other urban
areas for nonexistent jobs.
“This is the time to begin to find solutions to the problem”, he stressed.
Mr. Owusu Baah made the remarks in an interview on the sidelines of the
just-concluded 5th African Economic Conference (AEC) in the Tunisian capital,
Tunis, held under the theme: “Setting the Agenda for Africa’s Economic Recovery
and Long Term Growth.”
He said the continent had no viable excuses for continued failure given the
immensity of its natural resources and expertise, but added that there was still
hope.
According to him, it is possible today for national governments to pursue
policies of good governance, infrastructure and private sector
development, internal resource mobilization and still fail to create an
appropriate agricultural business environment that could help give the
continent’s economies grassroots lease of life or resilience.
He said while the economic growths being witnessed today could be attributable
to the long-term impact of the Economic Recovery Programmes (ERPs) adopted by
most African countries in the 1980s and 1990s, the countries, as a matter of
policy, also pursued liberalization programmes under which they reduced their
support to agriculture.

“This was predicated on the erroneous assumption that market forces would pick
up the incentives so created”, he noted.

He observed that the expectation that market forces would lead countries to
agricultural efficiency should not have arisen at all since the private sector
which was to fill the gap left by government was not ready.
Asked what could explain the private sector’s failure to fill in the gap, Mr.
Owusu-Baah, who is also an Agricultural Economist, noted that authorities
usually failed to realize that poor people in agriculture, including the
individual household farmers who have been responsible for the bulk of the
African agricultural outputs also form part of private sector practitioners,
adding that despite their efforts, poverty is prevalent among them.
He said the ‘private sector’ that had the necessary resources for real
investment was not involved in agriculture.
“Agricultural relegation under government liberalization policies consequently
resulted in decline in investments in agricultural research, human development,
women empowerment, extension services, technological innovation, trade, among
others”, he observed, adding that the private sector should not be expected to
come from another planet when the government was doing nothing to invest in its
people’s brains and agricultural services.
According to him, agricultural cooperatives were even neglected, with SMEs and
women empowerment to credits and access to land being left out of government
policies, noting that this was a grave mistake.
Prompted to suggest solutions to some of these problems, Mr. Owusu-Baah was
emphatic. “Simply go back to agriculture” was his response.
“It is not entirely a private sector affair. At least the government should
participate to develop a motivating environment in the sector”, he offered,
stressing that governments should undertake more business development
services to support farmers and help them set up and manage cooperatives and
small scale processing plants.

He called on the African Development Bank to assist to find ways to capacitate
African countries on how to manage their resources and also increase its current
level of commitment to agriculture, while encouraging African countries to
commit at least 10 per cent of their budgetary allocations to agriculture as
required under the Maputo Declaration.

“The African Development Bank should continue to help African countries to set
their growth priorities right”, he said emphasizing that we should address the
issue of poverty if we want growth to be inclusive. See Page 10 for the full
interview.