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Crude Production Drops For 4th Consecutive Year…As Revenue Also Dips

Domestic crude oil production has continued its significant decline for the fourth consecutive year. In 2023, there was a notable decrease in output with production plummeting to 48.25 million barrels (bbls) – down from a peak of 71.44 million barrels in 2019.

Moreover, from the three producing oil fields – Jubilee, Tweneboa-Enyenra-Ntomme (TEN) and Sankofa Gye Nyame (SGN) – a total 48.2 million barrels were obtained in 2023, indicating a decrease of approximately 7 percent from the 2022 figure of 51.7 million barrels.

According to the 2023 Annual Report of the Public Interest and Accountability Committee (PIAC), this signifies an average annual decline rate of 9.2 percent over the four-year period – 2019 to 2023.

Specifically, the Jubilee Field produced 30,444,217 barrels, accounting for 63 percent of total production. The TEN Field contributed 6,716,278 barrels, representing 14 percent, while the SGN Field produced 11,086,541.61 barrels, making 23 percent of total production.

Raw gas production also showed substantial figures, with a cumulative total of 255,171.97 million standard cubic feet (MMSCF) in 2023. The SGN Field was the largest contributor with 127,203.02 MMSCF, or 50 percent of total raw gas output. The Jubilee Field produced 77,900.05 MMSCF, accounting for 30 percent while the TEN Field contributed 50,068.90 MMSCF, representing 20 percent.

Despite the production decline, average achieved price for crude oil from all three fields was robust – averaging US$78.067 per barrel for the year 2023.

The ongoing decrease in crude oil production, coupled with the revelation that the country has not signed any new Petroleum Agreement (PA) since 2018, as reported by PIAC, underscores the urgent need for strategic interventions and investments in Ghana’s oil sector to stabilize and possibly reverse the downward trend.

Consequently, the total revenue paid into the Petroleum Holding Fund (PHF) in 2023 was US$1,062,323,419.12. This amount represents a 25.65 percent decrease from that of 2022.

The Committee’s report noted that carried and participating interest (CAPI) remains the largest contributor at 44.31 percent, followed by corporate income tax (CIT) at 34.38 percent and royalties at 20.67 percent.

Non-compliance with PRMA

PIAC reported that the total proceeds from JOHL received in 2023, amounting to US$70.4million, were not paid into the PHF for the second consecutive year. This brings the cumulative proceeds of unpaid revenue into the PHF by JOHL to US$343.1million as of end-2023 – A situation it said is in violation of the Petroleum Revenue Management Act (PRMA).

Against this background, PIAC reiterated its position that proceeds from liftings of JOHL and other subsidiaries of Ghana National Petroleum Corporation (GNPC) constitute petroleum revenues within the meaning of Section 6 (e) of the Petroleum Revenue Management Act, 2011 (Act 815) and Section 2 of the Petroleum Revenue Management (Amendment), 2015 (Act 893), and therefore must be paid into the PHF.

JOHL, an offshore company initially registered in the Cayman Islands, was acquired by GNPC through a ‘share purchase agreement’ worth over US$164million between Ghana and Anadarko WCTP Company in 2021, when the latter announced plans to offload its interests. The company holds a 7 percent commercial interest in the Jubilee and TEN oil fields operated by Tullow Ghana.

Meanwhile, GNPC in an earlier PIAC report justified its position that proceeds from JOHL’s liftings do not constitute petroleum revenues to be paid into the PHF, considering the PRMA and the legal status of JOHL. However, PIAC disagrees with GNPC’s position and insists that the proceeds from JOHL’s liftings should be transferred to the PHF in accordance with provisions of the PRMA.

PIAC also noted that total actual petroleum receipts for the period paid into the PHF were US$1.062billion. This was distributed with GNPC receiving US$245.5million while the Annual Budget Funding Amount (ABFA) received US$485.9million, with Ghana Petroleum Funds (GPFs) being allocated US$330.5million.

The Committee said since the PRMA coming into force in 2011, use of the ABFA has been guided by a medium-term development strategy without a long-term national development plan approved by parliament.

In view of this, PIAC restates its recommendation that selection of the ABFA priority areas must be guided by a long-term national development plan approved by parliament in conformity with the Act.