GHANA. Opportunity. First Oil. Creates a Wealth of

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1 GHANA First Oil Creates a Wealth of Opportunity This special report has been produced by Star Communications for distribution with Oil & Gas Journal

2 Contents A Year of Great Achievements 2 A 4 Deeper 6 An 8 Local All production and editing was done by Star Communications. For more information: Writing: Mark Beresford Production Development: Danielle Jacobsen Design & Layout: Javier de Miguel Year of Great Achievements Underground Emerging Hub for Africa Heroes First Oil to First Gas Rising to the Challenge General Data Photos: Tullow Oil, Kosmos Energy, WAGPCo Published November 2011 The publisher wishes to thank the organizations and individuals whose contributions made this edition possible. Your contributions are appreciated enormously. Special thanks to Daniel Bernard of Oil & Gas Journal and to the staff of the magazine for their support and cooperation. The oil that is now flowing from the Jubilee field is fueling the emergence of a major economic power in Africa. Supported by international capital and a best practice regulatory framework, Ghana is poised to become a major global center for investment in offshore production and services The almost twelve months since the first oil gushed from Jubilee have been a dramatic time for Ghana; the country has posted the highest rate of economic growth anywhere in the world, at 34 per cent in the second quarter, joined the group of lower middle income countries on World Bank classifications, and consolidated its place among the oil powers of Africa with a series of offshore discoveries. As we watch oil flow from the depths of the ocean, it is our prayer that many more such commercial discoveries would be made in the coming years, to put our country in the league of major oil producing nations, President John Evans Atta Mills said at the first oil ceremony in December Over the course of the last year, that prayer has gone a long way to being answered. Although the Jubilee field, operated by Tullow, has taken longer than expected to reach its initial target production of 120,000 barrels per day, with output currently at 105,000 bpd, it should be pumping its target level by the end of Meanwhile, the offshore area around Jubilee has provided a fertile ground for further exploration. Tullow is now planning to invest at least $4 billion with its partners, national oil company Ghana National Petroleum Corporation, Anadarko, Sabre Oil and Gas and Kosmos Energy, in developing two other offshore oil fields in the country, Tweneboa and Enyenra (formerly known as Owo). Tullow has already completed conceptual engineering for the project, and in September 2011 initiated FEED contracts for a FPSO vessel. By early 2015, the partners expect to pump up to 125,000 barrels per day from the fields, which Tullow estimates have similar resources as Jubilee, with reserve potential of up to one billion barrels of oil. And across the country s offshore, other international oil companies are also partnering with GNPC in exploring and appraising what, it has become clear this year, is at the center of major new offshore oil province. An unprecedented proportion of deep water wells in the western offshore waters of the country have found oil and gas. The success rate of exploratory wells in this sub-basin so far has been about 80 per cent, which is astounding, says Nana Boakye Asafu-Adjaye, the chief executive of national oil company Ghana National Petroleum Corporation, or GNPC. The appraisal and development program for Enyenra-Tweneboa follows the $3.4 billion that the Integrated Project Team invested in developing Jubilee, in a record time of just forty months to production. And immediately after they hit the production target for the field, and complete this first phase of development, the project partners plan to embark on Jubilee Phase 1A development in early 2012; this will consist of eight additional wells and associated infrastructure, and will maintain Jubilee plateau production until around Quality The Ghana story is as much about quality as it is about quantity; the crude from Jubilee is very light and sweet crude oil, with relatively low sulfur content. Commissioning Ceremony of the FPSO Kwame Nkrumah The first cargoes of Jubilee crude that GNPC and partners have sold were to refineries in the US, Europe, and China. Mr. Asafu-Adjaye says that the companies have been able to obtain on average a price of more than $110 per barrel, a significant premium to Brent and WTI benchmarks. And international interest in Ghana s energy sector is not confined to acquiring the oil from Jubilee or even to just investing in the upstream. The success rate of exploratory wells in this sub-basin so far has been about 80 per cent, which is astounding. Nana Boakye Asafu-Adjaye CEO of GNPC In the last year, investors and financial partners have arrived in Ghana from all corners of the world, and are partnering the country in all areas of the energy industry. This year, China Development Bank has lent the country $3 billion to finance the development in particular of gas infrastructure, while PetroSaudi has signed a strategic alliance with GNPC to work in the areas of oil and gas exploration, development and production, as well as in oil and gas services and infrastructure development. Economic Opportunity The macroeconomic impact on Ghana of the oil discoveries has been unprecedented, and the government is now focused on making sure that the surge in headline growth does not have negative consequences for the country as a whole. In April, Parliament gave its final approval to the much-debated Petroleum Revenue Management Bill. This legislation aims to protect the economy from the threat of Dutch Disease, in which a country becomes too dependent on oil, and currency appreciation because of commodity exports makes local industry uncompetitive. The bill sets aside 30 per cent of revenue from oil and gas production into two heritage and stabilization funds, following international best practice. The next major legislative development is expected to be the approval of the Local Content Bill that is currently being debated by Parliament. Combined with the establishment of an independent regulator, this will complete the legislative framework for the energy sector, and ensure that it is the people of Ghana that benefit most from the remote offshore discoveries. As President Atta Mills stressed at the first oil ceremony in December, his vision is for the oil and gas discoveries to lay the foundations for the complete industrial development of the country, based in particular on investment in the electricity, aluminum, petrochemicals, and fertilizer sectors. Thanks to the continued offshore discoveries, to the legislation that has been approved, and to the support of international partners, over the course of 2011 Ghana has moved even closer to realizing that vision. There are still many things to be done as we look to become a regional hub for oil and gas activities and services, Mr. Asafu-Adjaye says, but the commercial production of oil from the Jubilee field and the new discoveries that have been made offshore Ghana offers the country a great opportunity to create a vibrant oil and gas industry. GNPC and the government of Ghana welcome partners in the industry to join them in this endeavor. 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3 thick accumulation of oil and gas pay. And over the course of 2012, the company will explore a range of other attractive prospects across the Deepwater Tano license. Deeper Underground The Jubilee discovery has been followed by new finds and exploration across Ghana s deepwater regions. And while much of the focus is on the area around Jubilee, exploration is continuing across eastern waters, while GNPC is beginning to open up the vast onshore basin A series of recent discoveries have confirmed that the Jubilee discovery was no one-off; a wide range of international oil companies in partnership with GNPC are now appraising major deepwater finds near the Jubilee field and in eastern Ghana. Meanwhile, this year GNPC has begun to unlock the potential of the country s unexplored onshore resources. I think the potential for oil and gas in Ghana is as great as it is in Nigeria, a senior official at GNPC says. Given what we now know, we have only scratched the surface in the western basin. The Tweneboa, Enyenra, and Ntomme complex - a series of oil and gas condensate discoveries which have been made to the west of the Jubilee is currently coming to the end of its appraisal program. Operator Tullow believes this complex could have a combined potential that is similar in size to Jubilee. GNPC will work with our partners to fully appraise these discoveries and develop them, says Nana Boakye Asafu- Adjaye at GNPC. Eirik Raude semi-submersible rig, Jubilee field By the end of 2011, Tullow expects to submit to the government of Ghana a formal declaration of commerciality for Enyenra and Tweneboa. The appraisal work on Tweneboa Enyenra is ongoing. As we speak it is about per cent completed and we expect it to be completed in the first half of next year, Mr. Asafu-Adjaye says. Tullow also expects to begin appraisal drilling and testing in the fourth quarter of 2011 at the nearby Teak field, where in February an exploration well found a Other regions And it has become increasingly clear over the course of 2011 that Ghana s hydrocarbon resources are not limited to the West Cape Three Points and Deepwater Tano blocks that grabbed the limelight from 2007 to In April, Italian major Eni announced the successful appraisal and testing of the Sankofa discovery in the Offshore Cape Three Points block. Eni said that the appraisal well has significantly increased the preliminary estimate of gas in place at the discovery, confirming Sankofa s potential to become the first development of nonassociated gas from the Ghana offshore. Elsewhere, Eni has finalized the farm-in agreement that has given it a 35 per cent stake, and operator status, in the Keta Basin in far eastern Ghana. That block borders the waters of Togo, where Eni acquired two exploration licenses in We are now seeing more activity in the eastern offshore area, Mr. Asafu-Adjaye says, and Eni will be drilling a well in the Keta block in the last quarter of this year. In addition to GNPC, Eni s partners here are Afren and Mitsui. In the Deepwater Tano/Cape Three Points block, US independent Hess said in June that its aptly named Paradise-1 exploration well had encountered 150 meters of oil and gas condensate. Hess operates the block, with a 90 per cent stake, and has also applied to operate a block in the Keta basin with partner Rockfield. Hess still has to decide whether to embark on appraisal of this discovery straight away, or to look at the other prospects within the block first before embarking on an appraisal program. Suction pipes used in subsea infrastructure The Paradise discovery looks quite promising in terms of the thickness of pay, however it still needs to be appraised, Mr. Asafu-Adjaye says. In addition to these recent discoveries by existing operators in the country, the government is also preparing to award a new set of exploration licenses. Mr. Asafu- Adjaye says that a number of companies have submitted applications to enter into agreements with GNPC and the government of Ghana. We are currently evaluating these applications, he says, and we believe that by the end of the year there will be two or three license awards. Onshore potential However, it may be Ghana s unsung onshore, away from the deep water drama of Jubilee and its peers that could hold the greatest potential for exploration. There are indications that the so-called Voltaian Basin, which covers more than 40 per cent of the country s land mass, or over one hundred thousand square kilometers, may be geologically similar to the hydrocarbon-rich basins of Libya and Chad. In addition to this unexplored area, there are also onshore extensions to Tano Cape Three Points and to the Keta Basin, and GNPC is already evaluating applications for the onshore extension to the Tano Basin. Development of the vast Voltaian Basin is at a much earlier stage than at either these onshore extensions or the offshore itself. However, indications of hydrocarbons were found in water wells that were drilled in the Basin as far back as the 1960s, and GNPC is now beginning to unlock the potential of the area. GNPC is beginning to gather basic information for the region, such as gravity and magnetic data, it will then progress to the interpretation of this data and to acquire seismic data. The Voltaian Basin is relatively underexplored and we need to collect additional reconnaissance data, including regional 2D seismic data, to enable us to assess the hydrocarbon resources and demonstrate more clearly the potential of the basin, Mr. Asafu-Adjaye explains. We know how Logistical support to the oil and gas industry Ghana, Côte d Ivoire, Equatorial Guinea, Senegal, Guinea Bisseau, Mauritania, Benin, liberia, sierra leone, gabon and Cameroon info@menergyinternational.com Accra +233 (302) / Takoradi +233 (31) / We know where Onshore and Offshore catering services high quality healthy food and service is our priority Tel: / info@meacatering.com S p o t l i g h t o n G h a n a I I / 4 S p o t l i g h t o n G h a n a I I / 5

4 A New Energy Hub Emerges for West Africa In the last year, Ghana has become home to an investment boom in infrastructure, logistics and engineering facilities The gradual ramp-up of production at Jubilee, and the exploration and appraisal of other deep water wells across the coast, has been accompanied by a surge in onshore investment that is now turning Ghana into the logistics center for E&P across West Africa. We are pleased to see that some operators are using Ghana as their base for operations in nearby countries such as Sierra Leone, Liberia, and Côte d Ivoire, Nana Boakye Asafu-Adjaye at GNPC says. For the Ghanaian government, attracting investment from oil service companies is a strategic priority; the country s stable political climate and its attractive environment for business give it a major competitive advantage over its neighbors when it comes to establishing regional bases. Ghana is clearly a contender to be the location for the strategic hub of National Oilwell Varco in the Sub-Saharan Africa region, says Richard Agyeman-Yeboah, VP Finance for Africa at the company, a worldwide leader in high technology down-hole equipment to upstream and service companies. Infrastructure investments In recent months a series of foreign and local companies have announced plans to provide Ghana with a world class backbone of transport and logistical infrastructure, investing in new ports, logistical support centers, and engineering facilities for the offshore industry. In August, London-based investment group Lonrho signed a MoU with the government of Ghana to develop and manage a new oil logistics port on a 2,000 acre site in western Ghana to service the growing demands of the offshore oil industry. The feasibility study and environmental impact study for the project should be completed by the end of 2012, Lonrho said. Local companies are also ramping up their investments in infrastructure. Menergy International, a fully Ghanaian company which is a major supplier of personnel to the energy industry, and catering services through its sister company MEA Catering, is planning a $25 million investment in a state-of-the-art support base in western Ghana. Chief Executive Officer Daniel Mensah says that when the site is complete, it will include a heliport, training center, machine shop, warehouses, offices and catering services. All your needs will be met when you go into the base, Mr. Mensah says. You will be able to store equipment in warehouses, work on them with tools in the machine shop, and transport them out by truck or helicopter. Menergy isn t the only local company that is expanding in this rapidly growing sector. Amaja Oilfield Services is also diversifying into new support services and engineering facilities, and has already invested $3 million in establishing a mechanical workshop for the offshore industry, Oilfield Machine Shop (OMS), close to the port of Takoradi. We are completely committed to investing and growing the local infrastructure to meet the expectations of the industry, says Africanus Mensah, the chief executive of Amaja Oilfield and OMS, as Ghana consolidates its position at the heart of West Africa s energy market. President Atta Mills at First Oil Ceremony S p o t l i g h t o n G h a n a I I / 6 S p o t l i g h t o n G h a n a I I / 7

5 Local Heroes Local content regulations that prioritize employing Ghanaians and using local companies are ensuring that all Ghanaians can benefit from the oil and gas discoveries Less than one year after oil began to be pumped out of Jubilee, a thriving oil services sector has emerged that is now providing new training and new employment opportunities across the country. The government s development of a series of local content requirements has led to a surge in the number of indigenous oil services companies. These companies are partnering with foreign investors, investing in training and education, and creating high value jobs on the Ghanaian mainland, so that the whole population can share in the benefits of the offshore discoveries. It is the local content policy that will allow us to benefit from our discoveries. Daniel Mensah CEO Menergy International The country s local content bill is currently being debated in Parliament. Under the terms of this legislation, foreign companies operating in the E&P sector will be required to employ a rising percentage of Ghanaians in both blue and white collar positions; 50 per cent of management positions and 30 per cent of technical positions must be held by Ghanaians from the start of operations, rising to 80 per cent in five years. Preparation of the local content and local participation policy document has now been completed, says Nana Boakye Asafu-Adjaye at GNPC. The key points of the policy are capacity building, knowledge and technology transfer and finance. Those are the key drivers that will enable Ghanaians to actively participate in the sector. In the services sector, the local content bill mandates at least 90 per cent local employment and incountry expenditure on certain supplies and services. And in the evaluation of bids in this sector, the bid with the highest level of Ghanaian content is selected, when all other conditions are equal. Many Ghanaians are now returning to the country from jobs in energy abroad to seize these new opportunities to find employment and build businesses. The VP of Finance fro Africa at National Oilwell Varco (NOV), Richard Agyeman- Yeboah, has returned home to participate in the construction of a local oil services industry, after working for NOV in the US, Norway and South Korea. Since establishing NOV Ghana in 2009, the company s strategy of employing local workers has played a major part in its rapid expansion, to the point where it is already the clear market leader in Fluid and Solids Control Equipment Being from Ghana is a great help on the ground, Mr. Agyeman-Yeboah explains. We understand the culture of the country and its people, which has helped tremendously to be able to fast track our development not only in Ghana but in the Sub-Region as well. One Ghanaian who has participated actively in the domestic oil and gas sector for nearly twenty years is Daniel Mensah, chief executive and founder of Ghana s very first oil field services companies Menergy International. Menergy has been operating in the country since 1992, when it partenered with GNPC and provide drilling crews for rigs. In those days, Menergy would also supply Ghanaian onshore and offshore workers to other countries across West Africa, and as far afield as Angola and Libya. Now, many of those workers are returning to ply their trade in their home nation and share in the resources boom, Mr. Mensah says. It is the local content policy that will allow Ghana to benefit from the discoveries, he says. The regulators and politicians have made local content a very high priority on their agenda. Investing in Training Ghanaian companies are also investing heavily in training local workers so that they can compete on equal terms with larger companies from outside the country. Across western Ghana, the country s new breed of oil service companies is now focused on improving the capacity of their local workers, often sending them abroad to receive state-of-the-art training. Africanus Mensah, chief executive of AMAJA Oilfield Services, says that he has invested significantly in providing international training for the employees of the company s latest venture, Oilfield Machine Shop. We have recruited Ghanaians and sent them outside the country for training in similar machine shops, Mr. Mensah says. We will start the operations with an 80 Delivering Power The dynamics of the electric power business requires that transmission systems are always far ahead of demand. GRIDCo is poised to provide this leadership as we work towards the development of a modernized and robust national transmission network. per cent Ghanaian work force and gradually increase it to 100 per cent in one year. Technology transfer to the Ghanaians is one of our key strategies. Meanwhile, NOV is running an International Development Program that sends locals hires overseas for two years of training at various NOV facilities worldwide, before they return to Ghana or country of origin to work. The company has also appointed a Ghanaian national as its Health and Safety Director for all of Africa; locals are our biggest assets, Richard Agyeman- Yeboah explains. We always try to bring Ghanaians home, they have much more expertise, hand on knowledge and training plus they understand the local culture and way of doing business. TEL.: FAX: gridco@gridcogh.com www. gridco.com S p o t l i g h t o n G h a n a I I / 8 S p o t l i g h t o n G h a n a I I / 9

6 First Oil to First Gas The offshore gas discoveries of Jubilee and other fields promise to transform the economy. Investments in new gas-powered electricity plants and transmission infrastructure are paving the way for the rapid industrialization of the country, and are positioning it as the power hub for all West Africa WAGP Terminal in Takoradi Although the time taken at Jubilee from discovery to the first production of oil was little more than three years, a world record for a development of this scale, the path to the monetization of the field s gas resources is proving to be more complex. Currently, the gas from Jubilee is being reinjected into the sub-sea field or flared on the surface. However, investments in infrastructure over the coming months are set to transport the gas for processing onshore, laying the foundations for a new source of power generation and for the wider industrial development of the country. The development of Ghana gas is still in its embryonic stages, says Kweku Andoh Awotwi, the chief executive of stateowned electricity generation company Volta River Authority (VRA), but VRA will be the first anchor customer of gas from the Jubilee field, the only customer who can immediately take the 60 mmscfd that will be available after gas stops being re-injected, sometime in the next months. The Ghana National Gas Company (GNGC) has taken over the implementation of the gas project from Ghana National Petroleum Corporation. Land has been acquired for the processing plant at Bonyere in western Ghana, and is currently being demarcated while environmental studies for the project are being carried out. Offshore, the 14 kilometer deepwater section of the pipeline that will bring the gas from the FPSO at Jubilee to the shore has already been installed. Although the 35 kilometer pipeline needed in the shallow water is still missing, the route survey ing Ghanaian gas into the rapidly expanding global market for Liquefied Natural Gas (LNG), in which Eni says is already a major player. The company has already begun talks with the Ministry of Energy and GNPC to fast-track the development of these discoveries. GNGC These investments in the gas upstream and downstream are being combined with significant institutional reforms. The most significant of these reforms was the establishment in July of Ghana National Gas Company (GNGC), whose mandate is to manage and sell the natural gas discovered in the country, and to develop a network of pipelines, treatment plants, and storage facilities. We are taking off from where GNPC left off and it is our desire to work collaboratively in the national interest, GNGC Chief Executive Officer George Sipa Yankey told Bloomberg News in an interview in August. The immediate focus of the government is on the use of the offshore gas as a fuel for power plants. In a subsequent stage, the gas will then be used as feedstock for a whole range of new downstream industries. The government is committed to fast tracking the development of a robust, efficient and viable infrastructure required for the commercialization of our recent gas discoveries in the country, Energy Powering the Economy For 50 years ( ) the Volta River Authority (VRA) has been the sole provider of electrical power for industrial, commercial and domestic use in Ghana. To maintain its leadership, VRA is expanding its thermal generation capacity to take advantage of Ghana gas as well as introducing wind and solar into its portfolio to ensure reliability, sustainability and competitiveness in the West African energy market. For more information, please contact the Chief Executive Officer: chiefx@vra.com Minister Joe Oteng-Adjei said when establishing GNGC. The broad objective of government is to develop the gas resources initially for the domestic market, mainly for power generation, fertilizer production and the petrochemical industry. Power Generation As more offshore gas comes on-stream, pipelines will be constructed to bring gas to power plants across the country and fuel Ghana s economic expansion. This gas will be crucial if the country is to fulfill its plans to increase its generation capacity to 5000 megawatts from around 2000 megawatts now, and to become a net exporter of power to neighboring countries. The government has set a target of providing 100 per cent of the population with access to electricity by 2020, up from 66 per cent currently, and is moving to attract international capital into its generation sector, based on the promise of a secure supply of gas and electricity demand that has grown by 6 per cent per year over the last five years. VRA has plans to add between MW of thermal capacity in the next five years, Mr. Awotwi says. In addition to the gas from Jubilee and other discoveries, Ghana is already using another source of gas for the expansion of its generation capacity the 678 kilometer West African Gas Pipeline (WAGP), which for this project has now been undertaken. The pipeline and processing plant project are being financed with a $800 million loan from the China Development Bank and should be completed within two years, with the first gas being commissioned by early 2013 at the latest. Once built, the plant will be able to process 300 million cubic feet of gas a day from Jubilee. And Jubilee is not the only gas discovery in the country s offshore. At the end of July, Italian oil major Eni made a significant gas find at the Gye Nyame well in the Offshore Cape Three Points block. This discovery is 16 kilometers east of the Sankofa gas discovery of 2010, which Eni also operates. Eni says that by consolidating the volumes of this find with the Sankofa discovery, it now has the opportunity of supplyof Ghana and Setting the Standard for Public Sector Excellence S p o t l i g h t o n G h a n a I I / 1 0 S p o t l i g h t o n G h a n a I I / 1 1

7 has been providing gas from Nigeria since March Although supply has been erratic due to problems of disruption in Nigeria, average volume has picked up in Thanks to these new supplies of gas, the expansion of the electricity market in the country is drawing interest from international investors; the first real competitor to VRA, the 200MW Sunon-Asogli generation plant, built by Shenzen of China, began operating in August 2010, using gas from the WAGP. Meanwhile, the 220MW power plant of the Takoradi International Company (TICO) is being expanded to a combined cycle plant of 330MW. TICO is a joint venture between VRA and the Abu Dhabi Energy Company (TAQA). The Asogli project and the TICO project demonstrate the level of private participation in the sector, says Charles Darku, chief executive officer of the national transmission system operator, GRIDCo. With the rise in electricity demand we are experiencing, there is room for more investors to come in with power plants. The local workforce plays an important role in the energy sector Bedrock for the future Because of this surge in new generation capacity, GRIDCo is currently undertaking a massive investment program to provide the country with the transmission infrastructure to bring electricity across the country, and beyond. That program will require around $1 billion in capital expenditure over the next five years, Charles Darku says. This country cannot progress without a robust and efficient grid, and that message is now getting home to everyone, Mr. Darku says. To really demonstrate economic growth, we need to have a strong grid in place. GRIDCo was spun off from the Volta River Authority in Its role now is to ensure transparent access to the grid to a new breed of independent power producers, to reduce transmission losses, and to consolidate Ghana s role as the power hub of the West Africa region. We are creating the future for the country, as an industrialized economy based on a premium source of power, Mr. Darku says. We are enhancing the quality of life in Ghana, and creating the bedrock for the future. Our mission is to make sure that we have the infrastructure to deliver the new power. Mr. Darku says that in the last year, GRIDCo has raised $150 million of financing from a range of national and international sources; contributors have included the governments of South Africa, France, South Korea, and the World Bank. As a new company, we have successfully won the confidence of lenders, Mr. Darku says, and we are now putting in place a second stage of project financing for our infrastructure. Ghana has already started exporting to Burkina Faso, after GRIDCo invested $80 million in an interconnection project this year, and it is increasing exports to Togo and Côte d Ivoire. The country s net exports of electricity have risen to 930GWh in 2010 from just 263GWh in 2008, according to the country s Energy Commission. We are creating the future for the country, as an industrialized economy based on a premium source of power. Charles Darku CEO of GRIDCo With the increase in generation capacity, Ghana plans to look beyond these markets to Nigeria and other countries which are facing massive deficits, the Energy Commission said in its 2011 report. Ultimately Ghana is poised to become the super power of the power industry in the sub-region. Momentum is definitely picking up for power exports, Mr. Darku says. Ghana is so centrally located that we are going to have leadership of the West African Region, and mobilize our resources to support the power needs of other countries. Meanwhile, the Energy Commission has drafted a renewable energy bill, in a bid to increase the diversity and security of the country s energy supply, and to ensure that there will be enough gas to supply all the competing demands of the market. Following international best practice, this bill, which still awaits the approval of Parliament, will establish a regulatory framework that sets attractive feed-in tariffs for potential private sector investors in this area. It will also require certain bodies to buy specific amounts of their energy requirements from renewable sources, and establish a renewable energy fund to invest in the sector. VRA is currently planning 100MW of wind projects, and has also just acquired land for what will be the first solar site in all of West Africa. That comes on top of the 360MW in thermal capacity that it expects to add in the next five years. The unit cost of electricity over the life of these renewable energy projects is cost competitive, and is expected to improve over time, Mr. Awotwi says. The West African region is particularly blessed with substantial solar resources, and this is an area where we see long-term comparative advantage. And by 2020, Ghana expects renewable energy, excluding hydropower, to represent 10 per cent of the country s electricity generation, releasing the country s gas resources for the development of high value and employment-intensive downstream industries. Utility air pipe pressure testing Power hub This financing is not only supporting GRIDCo s efforts to bring electricity to every corner of Ghana; it is also allowing the country to become a power hub for the West African Power Pool (WAPP). Thanks to the establishment of the WAPP, formed by Member States of the Economic Community of West Africa States (ECOWAS), any surplus from the 5000MW generation capacity after the domestic market has had its fair share will be sold to the sub-region. If the West African Power Pool is able to facilitate the completion of the various projects across the region, VRA will be well placed to build cost competitive generation, Mr. Awotwi says. S p o t l i g h t o n G h a n a I I / 1 2 S p o t l i g h t o n G h a n a I I / 1 3

8 Rising to the Oil Challenge Ghana After successfully managing the economic and political challenges of oil production, Ghana is heading confidently into a crucial election year Historically, Ghana has always been in the vanguard of African development. It was the first sub-saharan country on the continent to become independent from Britain, and in more recent times it has enjoyed an unprecedented five consecutive democratic elections and two peaceful transitions of power. And it has become clear over the course of 2011 that the country is also leading the way in the development of its energy resources. While Ghana may only be sub-saharan Africa s seventh largest oil producer, the country has drawn the attention of the world s energy industry as it blazes a trail in best practice oil and gas governance. This year, the government has implemented an exemplary regulatory framework for oil and gas. It has also followed through on its commitment to extend the principles of the Extractive Industries Transparency Initiative (EITI) to the oil and gas sectors; Ghana is one of a select band of African countries certified as compliant. The legislative reforms that the country is making in order to increase private sector investment are not limited to the oil and gas industry. In the World Bank s authoritative Doing Business guide for 2011, Ghana rose to 67th out of 183 countries, from 77th in Internation- The substantial investments we secure will take us closer to the levels achieved by other middleincome countries. President John Evans Atta Mills ally, Ghana has also sealed major new partnerships in the last twelve months, with China providing a $13 billion funding package for infrastructure development, South Korea signing a $1.5 billion housing deal and India becoming one of the top five foreign direct investors. These new sources of capital will become crucial, as Ghana prepares to receive lower amounts of foreign aid now that it has officially become a Middle Income Country. The substantial investments we secure will take us closer to the levels achieved by other middle-income countries in road and rail construction, in the oil and gas industry, education, health, provision of water, electricity and even waste management, President Atta Mills said in his State of the Nation address for And it is the presidential elections of 2012 that will pose the first real challenge to politicians commitment to the country s road map for oil revenues. Even though it is entering an electoral year with a widening fiscal deficit, it is essential that in 2012 Ghana sticks to the path it has steered so far for oil and gas, giving foreign investors the confidence to keep carry out their billion-dollar developments - and consequently provide the country with the best possible reason for celebrating the 20th anniversary of Ghana s democratic constitution. General Data Country Official Name: Republic of Ghana Capital: Accra (-1 GMT) Government: Constitutional Democracy President: John Evans Atta Mills (Jan 2009) Independence: March 6, 1957 (from UK) Legal System: Based on English common law and customary law; has not accepted compulsory ICJ jurisdiction Administrative Division: Provinces (10) Official Language: English Location:West Africa Climate: Tropical Total Area: 238,533 sq km / 148,218 sq mi Land Area: 227,533 sq km / 141,382 sq mi Population: 24 million (July 2010 est.) Currency: GHC ($0,62 - Oct est.) GDP/PPP: $61.97 billion (2010 est.) GDP per Capita: $2,500 (2010 est.) Real Growth Rate: 5.7% (2010 est.) Petroleum Resources The Exploration History: Initial phase: Second phase: Third phase: Current phase: to date Ghana Sedimentary Basins: Côte d Ivoire-Tano basin including Cape Three Points sub-basin (Cretaceous target) Central (Saltpond) basin (Paleozoic Basin-Devonian target) Accra/Keta basin (Tertiary & Cretaceous targets) Inland Voltaian basin (Paleozoic basin) Total Resource Base: 26 Billion barrels of oil equivalent (est.) Total Sedimentary Coverage: 157,000 Sq km / 60,618 sq mi Offshore: 50,000 Sq km / 19,305 sq mi Electricity (Hydro and Thermal) Global Competitiveness: 122/134 Inflation Rate: 10.7% (2010 est.) Labour Force: million (2010 est.) Main Industries: mining, lumbering, light manufacturing, aluminum smelting, food processing, cement, small commercial ship building, oil & gas Natural Resources: gold, timber, industrial diamonds, bauxite, manganese, fish, rubber, hydropower, petroleum, silver, salt, limestone Export Commodities: Gold, cocoa, timber, tuna, bauxite, aluminum, manganese ore, diamonds, horticulture Import Commodities: Capital equipment, petroleum, food Export: $7.552 billion (2010 est.) $5.737 billion (2009 est.) Imports: $10.71 billion (2010 est.) $9.807 billion (2009 est.) Offshore Drilling Density: 1 Well to 450 sq km / 174 sq mi Number of offshore licenses: 13 FPSO Capacity: Oil: 120,000 bpd / Gas: 160 mmcfd Offshore Players (Operators & Partners): Tullow Oil, Kosmos Energy, Anadarko Petroleum, Sabre Oil & Gas, ENI Ghana, Vitol Upstream, Hess Ghana Exploration, Lukoil Overseas, Gasop Oil Ghana, Oranto Petroleum, Lushann, Eternit Energy, Tap Oil, Challenger Minerals, Afex Oil, Afren Energy, Mitsui E&P Ghana, GNPC, Rockfield. Proven Oil Reserves: 660 million bbl (1 January 2011 est.) Proven Natural Gas Reserves: 2.65 billion cu m (1 January 2011 est.) Oil Production: bbd (Oct est.) Installed Capacity: 2,000 MW 5,000 MW Electricity Penetration: 60% 85% Transmission Lines: 4,000 km Annual Growth: 10% Web References Ghana National Petroleum Company Volta River Authority National Petroleum Authority Ghana Investment Promotion Centre Ghana Ports and Harbour Authority Ministry of Energy Ministry of Finance and Economic Planning Ministry of Transportation Ministry of Information Energy Commission GRIDCo Tema Oil Refinery Kosmos Energy Tullow Oil AMAJA Oilfield Services Menergy International Mea Catering National Oilwell Varco West African Gas Pipeline Company RDFC Holding Baker Hughes Tenaris Ghana Oil Info West Africa Gas Pipeline Sources: BP s Statistical Review of World Energy 2011, CIA Factbook S p o t l i g h t o n G h a n a I I / 1 4 S p o t l i g h t o n G h a n a I I / 1 5

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