Since the discovery of oil and gas in Ghana in 2007, Ghana’s oil and gas sector has developed and continues to do so more than ten years later.
The growth of the oil and gas sector in Ghana since the significant find has put the country’s economy into a strong period of growth with the IMF now predicting an 8.8% GDP growth for this year.
The economy, while remaining diversified and not reliant upon oil, has been growing continuously. As the IMF noted in 2018, as oil production increases, Ghana’s economic growth will continue to increase by a significant level.
On discovery of the oil and gas, Ghana looked to Norway’s example to build their oil industry. Norway, through their oil production, has consistently been ranked as one of the wealthiest countries in the world.
As the Former President of Ghana, John Kufuor referred to when oil was first discovered, Ghana looked to Norway and considered the importance of Wealth Funds.
This example of Norway, and some other oil producing countries, has led to the set up of three Wealth Funds for Ghana to try to maximise the benefits of the oil discovery; one for the development of infrastructure, the second for if oil revenues fall below expectations and the last for the benefit of future generations.
Ray Sowah, MD of GCB notes that “Oil offers Ghana the opportunity to restructure and to move its people into the upper middle-income bracket, having said that, there are serious lessons to be learnt from neighbouring Nigeria and these lessons should guide the development of Ghana.” By Ghana looking to other countries who have experience of this industry to find its own best practice, it is clear that Ghana has been proactive about deciding how to structure its oil and gas industry and has been determined to ensure that the country benefits from the discoveries in the best way possible.
The IMF forecast for GDP growth means that Ghana’s economy is on track to be the fastest growing in the world this year and the country’s oil and gas industry has contributed to this.
The World Bank consistently attributes the growth in Ghana’s economy to the growth of the oil and mining sectors, and it would therefore be logical to conclude that as oil and gas production increases in Ghana, then Ghana’s fortunes look set to continue on this trajectory as the economy as a whole reaps the benefits.
The oil and gas industry in Ghana has brought several international companies to the country for increased involvement in the growing market. ExxonMobil announced last year that it had signed a petroleum agreement with Ghana’s government further highlighting the increased interest that international corporations are now showing in the country.
The influx of foreign companies provides also a financial injection into other areas of the economy such as the need to develop more homes and provide increased services that are required for the international workers who are residing in Ghana for these job opportunities. The recent discovery by Eni demonstrates how the industry is growing with help from international parties.
The activity of foreign companies in the industry will allow local partners to take advantage and gain more insight into the industry.
The oil and gas industry is still fairly new to the country, so allowing foreign companies to aid in the development of the industry will serve Ghana and the country’s future in the years to come. Local partners can work alongside foreign investors and increase their knowledge and study techniques to enable them to grow and become more dominant within the country’s oil and gas sector.
To properly explore the extent of the oil and gas fields; the country must continue to allow non-indigenous companies to come and invest in the process as well as aiding in the further development of the industry.
The growth of the oil and gas industry has encouraged Ghana’s economy to flourish and, if the predictions are accurate, it will continue to do so and will for the foreseeable future. As the industry grows the benefits for the country will also increase, and in turn can only be a good thing for Ghana and its people.
By Peter Petrou and Phyllis Sowah