Oil price crash a blessing in disguise for Ghana
September 22, 2017 | 6:29 pm| | | Start Conversation
A decade after oil was discovered off the coast of Ghana, hopes that it would provide rocket fuel for the economy have given way to a more sputtering reality.
The crude price crash in 2014, coupled with production setbacks, means that revenues have fallen short of initial expectations. Some observers think this was a lucky break. “Ghana would have risked going the way of Nigeria if oil had stayed above $100 per barrel,” says Steven Gray, deputy chair of the UK-Ghana Chamber of Commerce.
Nigeria, Africa’s largest oil producer, has become a cautionary example of how the mishandling of resource wealth can sow conflict, corruption and economic division. But “because prices collapsed early in Ghana’s oil history, it has not been such a strong driver of growth,” says Mr Gray. It is too soon to be sure that Ghana has escaped the “oil curse”.
Inequality has edged up since production started in 2010, according to UN data, and the country has fallen eight places over the same period in the annual “corruption index” compiled by Transparency International, the anti-graft group.
However, oil executives and diplomats give Ghana high marks for building from scratch a robust regulatory framework that has earned the trust of investors.
“They’re trying to be more Norway than Nigeria,” says a diplomat.
Charles Darku, head of UK-based Tullow Oil in Ghana, says the regulatory system has evolved in partnership with industry, with pragmatism being the guiding principle. The result has been rapid development of Ghana’s resources.
The country is on course to become the fourth-biggest producer in sub-Saharan Africa by 2020 with output above 240,000 barrels per day, according to Ecobank, the pan-African lender.
Production dipped last year to around 100,000 barrels a day because of disruption to Tullow’s Jubilee field caused by a mechanical defect on the floating production vessel that harvests oil and gas from deepwater wells.
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