In October 2020, the Ghanaian government passed the Petroleum Hub Development Corporation Bill, an initial step in the development of a refining and petrochemicals complex that will see Ghana become a central refining hub for the West African region. The development is set to provide a boost for local companies and allow Ghana to best take advantage of new regional trade opportunities.
A BOOST IN LOCAL OPPORTUNITIES: While Ghana’s oil and gas sector has largely been dominated by international players, the oil and gas hub is in line with the government’s goal to flip the paradigm and have local players becoming more involved.
“The industry used to be wholly managed by multinational companies, while now we have close to 65% local participation, and equity, in the market. However, the multinationals still control quite a sizeable portion,” National Petroleum Authority CEO Mustapha Abdul-Hamid told The Energy Year in October 2021. “Local companies should be able to expand their capabilities within the industry,” he said.
The hub is expected to create a transfer of technical knowledge between international and local players, boost activity for local companies through expanded opportunities and create a rise in employment. The entire project aims to generate at least 780,000 jobs, which will in turn foster local talent.
PHDC aims to ensure the new openings the hub creates are well leveraged by locals. “In order to foster local content development, the corporation will implement training programmes for artisans and graduates to create opportunities for Ghanaians to work in the hub,” PHDC CEO Charles Owusu told The Energy Year.
REGIONAL DYNAMICS: Operationalised in January 2021, the African Continental Free Trade Area (AfCFTA) will remove restrictions on travel and import and export of goods regionally. The agreement covers the 55 African Union member states, with 38 having deposited their instruments of ratification as of September 2021. It aims to open access to goods and services and enhance travel and economic opportunities for citizens.
According to the Brookings Institution, a functional open trade agreement could raise consumer and business spending in Africa to USD 6.7 trillion by 2030. Meanwhile, real income levels could rise by 7% and exports by USD 560 billion, and 30 million Africans could be raised out of extreme poverty status by 2035.
For its part, Ghana is banking on the AfCFTA to boost its ability to access regional markets for the petroleum hub project to succeed. The country is positioned to benefit from its geographical location as a central African country with direct borders to other nations and access to coastal waters to facilitate trade. But regarding whether the AfCFTA will spur a step change in petroleum trade levels, much will depend on the mechanism’s ability to smooth over bottlenecks.
UPSTREAM UPSWING: Ghana’s hub vision is also dependent on an upswing of activity in its upstream sector to supply crude oil and gas for the production of petrochemicals. Due to low oil prices and problems associated with the Covid-19 pandemic, investment in this area remains low. TotalEnergies cancelled its proposed acquisition of Occidental Petroleum’s shares in the Jubilee and Tweneboa Enyenra Ntomme (TEN) fields in May 2020, and with ExxonMobil’s exit from the market, this left only Eni and Tullow Oil as key players.
Additionally, strong competition from other parts of Western Africa make it imperative that the plan moves forward without delay to succeed. While Ghana aims to be a petroleum hub by 2030, there are other projects on the continent that are vying to take the spotlight. Nigeria’s massive 650,000-bpd Dangote Refinery is expected to begin production in 2022 and will be a main competitor for the region’s growing demand for petrol, diesel, aviation fuel and plastic products.
However, the region has robust demand projections. In West Africa alone, demand for refined petroleum products is anticipated to rise from 43.6 million tonnes in 2019 to 60.3 million tonnes by 2026. If Ghana can move forward at pace with the petroleum hub, it can leverage its position and new trade opportunities to take a large share of new demand.
Russell Boodoo, regional business development manager at TOSL Engineering, talks to The Energy Year about the company’s role in supporting… Read More
Suresh Pillai, CEO of Mark Technologies, talks to The Energy Year about the company’s involvement in Jurassic gas production and… Read More
Narvin Salick, district manager of Gyrodata Trinidad, talks to The Energy Year about how the company has been impacted by… Read More
Billy Lacobie, CABGOC’s managing director for Southern Africa, talks to The Energy Year about recent strategic and operational developments in… Read More
Angola is working hard to increase its power generation capacity by boosting hydro and solar energy, as well as linking… Read More
Jasem Al Nouri, deputy managing director of Nouri Industrial Establishment, talks to The Energy Year about the company’s long-standing commitment… Read More
This website uses cookies.