Abstract
The Ghana National Petroleum Corporation (GNPC) was established by the Ghana National Petroleum Corporation Act, 1983 (PNDCL 64), as Ghana’s national oil company (NOC), among other things, to accelerate oil and gas exploration with a view to establishing production and reducing the country’s dependence on crude oil imports. It was also made responsible for importing oil for refining at the Tema Oil Refinery and ensuring an adequate and reliable supply of petroleum products. This chapter critically analyses GNPC’s evolution and role in promoting the exploration and the orderly planned development of the petroleum resources of Ghana and ensuring that Ghana obtains the greatest possible benefits from the development of its petroleum resources, as mandated by its statute. Various institutional capacity-building initiatives—human and technical resources—and international collaborations have helped GNPC development over the years. GNPC’s constant involvement in all the exploration activities, as the national commercial corporate partner, has provided continuity and consistency to Ghana’s exploration efforts. The development of natural gas-fired thermal power in Ghana, including the initiation of the West African Gas Pipeline project, is also largely owed to the Corporation. Nevertheless, GNPC’s ability to deliver on its mandate is constrained by pressures to deploy scarce resources on expenditures that are really Government responsibilities and on pre-exploration (reconnaissance) expenditures in the Voltaian Basin. The author argues that sustaining and increasing current production, developing discoveries, deploying innovative technology and enhanced recovery approaches and harnessing natural gas resources for national and regional energy requirements are the corporate priorities that will increase revenues and value for the nation—beyond the over six and a half billion US dollars of revenue realised in the 2010–2020 decade—and enable GNPC fulfil its mandate. Even as International Oil Companies (IOCs) strategise about their various paths to Net Zero, NOCs, such as GNPC, also need to develop national strategies and not simply follow the paths of IOCs. GNPC’s energy transition agenda must be within the national context for national benefit.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
All the Laws of Ghana bear the suffix “Act” due to the Laws of Ghana (Revised Edition) Act, 1998 (Act 562). PNDC laws will hereafter be referred to as Acts.
- 2.
Ghana Geological Survey Bulletin No. 40.
- 3.
Agripetco assigned its interest in 1984 to another small US company, Primary Fuels, whose entry led to the first petroleum agreement and GNPC participation negotiated under Section 35(1) and (2) of the new Petroleum (Exploration and Production) Law, 1984, PNDC Law 84. Primary Fuels also relinquished the block in 1985. https://www.petrocom.gov.gh/exploration-history (Accessed: 21 June 2021).
- 4.
Republic of Ghana, Economic Recovery Programme, 1983.
- 5.
Page 42, 1991–1993 Public Investment Programme, Ministry of Finance and Economic Planning.
- 6.
Section 20 GNPC Law, PNDC Law 64, 1983.
- 7.
It is claimed in a 2019 Ghana Petroleum Industry Report of the Chamber of Bulk Oil Distributors (CBOD) that the provision in Section 2(2)(e) of the GNPC Law that the Corporation is to ensure that petroleum operations are conducted in such manner as to prevent adverse effects on the environment, resources and people of Ghana can no longer be within the mandate of GNPC because “this mandate has now shifted to the Petroleum Commission, following the decision to separate regulation from the GNPC’s commercial operations” (Paragraph 1.5 at p. 49). This is surely an erroneous position. As is evident in the international oil industry and in international corporate practice, generally, commitment to environmental goals, notably addressing climate change, and having beneficial social impacts are not considered as regulatory matters outside the commercial perspectives of companies. The regulatory functions of the Petroleum Commission do not require an exclusion from the mandate of GNPC of responsibilities similar to those that companies the world over are expressing a commitment to. GNPC is to conduct its operations in line with its statutory mandate even as the Petroleum Commission also performs its regulatory role as provided for in the Petroleum Commission Act, 2011, Act 821.
- 8.
“10(1) A body corporate shall not, unless otherwise provided in this Act, engage in the exploration, development and production of petroleum except in accordance with the terms of a petroleum agreement entered into between that body corporate, the Republic of Ghana and the Corporation.” In Section 95: ““the Corporation” means the Ghana National Petroleum Corporation”. The distinctness of “the Corporation” from “the Republic” is maintained in this Act.
- 9.
Paragraph 4.2.9 of Select Committee Report signed on 30th March 2019.
- 10.
This provision was not adverted to in the Report of the Parliamentary Select Committee on Mines and Energy on the ExxonMobil agreement referred to earlier even though this provision in the legislation had come into effect and a competitive tender process was in fact launched by the Minister in October 2018.
- 11.
The provisions in Section 36 of the Petroleum (Exploration and Production) Act 2016, Act 919, which enable the Petroleum Commission to direct the use of facilities owned by “a contractor or the Corporation … a) by others if warranted by considerations for efficient operation and resource management, or b) for the benefit of society…,” show how significant the issue of ownership of facilities may be in the quest to optimise resources and/or benefit society.
- 12.
20 December 2010 Press Release by Kosmos Energy http://www.kosmosenergy.com/press/kosmos_PR_122010.pdf (Accessed: 28 July 2021); and US SEC Filing Amendment No. 6 to FORM S-1 https://www.sec.gov/Archives/edgar/data/1509991/000104746911004044/a2203496zs-1a.htm (Accessed: 28 July 2021).
- 13.
Clause 7.3 of Model Petroleum Agreement http://www.gnpcghana.com/files/ghana_model_petroleum_agreement1.pdf (Accessed: 15 June 2021).
- 14.
See http://www.gnpcghana.com/operations.html (Accessed: 25 June 2021).
- 15.
Page 24 of PIAC 2020 Annual Report. Available at: https://www.piacghana.org/portal/files/downloads/piac_reports/piac_2020_annual_report.pdf (Accessed: 18 July 2021).
- 16.
Paragraph 3.7 of 2017 PIAC Report. Available at: https://www.piacghana.org/portal/files/downloads/piac_reports/piac_2017_annual_report.pdf (Accessed: 18 July 2021).
- 17.
Environmental and social impact assessments also had to be undertaken and approvals obtained before the commencement of the reconnaissance activity by virtue of Section 9(6) of Act 919 quoted above, and, for an onshore project in a basin which covers about 40% of the land mass of Ghana, these assessments are obviously critical.
- 18.
2018 Annual Petroleum Report paragraph 60 Table 11 at p. 17; 2019 Report paragraph 78 at p. 22; 2020 Report paragraph 119 Table 20 at p. 41. In 2015, 2016 and 2017 also, amounts of US$1,525,016.43, US$4,383,162.28 and US$3,500,137.08 were expended by GNPC on the project. Between 2015 and 2020, therefore, a total of US$51,499,38.28 was expended on the project by the Corporation.
- 19.
Paragraph 65 on p. 22 of PIAC 2020 Annual Report. Available at: https://www.piacghana.org/portal/files/downloads/piac_reports/piac_2020_annual_report.pdf (Accessed: 18 July 2021). This is further elaborated in paragraph 158 of the same report under the heading, “Achievements,” as follows: “Based on the results of the integration, GNPC will plan the acquisition of 3D seismic in the most prospective locations in the basin. The 3D seismic data acquisition is expected to commence early 2021.”
- 20.
Ibid. at paragraph 3.6.5 on p. 24.
- 21.
Voltaian Basin promising—Dr. Mohammed Adam—Ghana MPS (2021). Available at: https://ghanamps.com/voltaian-basin-promising-dr-mohammed-adam (Accessed: 21 July 2021). A reconnaissance license only allows for “shallow drilling”—Section 9(2)(a) of the Petroleum (Exploration and Production) Act 2016, Act 919, quoted earlier.
- 22.
Section 7(3) of the Petroleum (Exploration and Production) Act 2016, Act 919.
- 23.
The December 2018 Report titled “Managing the Local Impacts of Potential Onshore Oil and Gas Development,” by Oxford Policy Management, under the Ghana Oil and Gas for Inclusive Growth (GOGIG) programme, raises many pertinent issues to be addressed in connection with exploration in the Voltaian Basin. These include land, livelihoods and residential displacements, community health and safety, and inter- and intra-community conflicts, among others.
- 24.
As expressed in Republic of Ghana: National Programme for Economic Development (Revised)) 1st July 1987 p. 10 paragraph 28: “Farmer confidence in the future of the industry will be sustained by an increasing share of the world market price going to him directly, not to Cocoa Board or to the Budget. This will also remove the temptation for cocoa to be smuggled to neighbouring countries.” COCOBOD subsequently continued on its own annually with the London syndications to finance cocoa purchases and this remains the mode of funding for cocoa purchases.
- 25.
The statement on the GNPC website http://www.gnpcghana.com/marketing.html that, “[t]he Marketing Division was dismembered as a result” of this decision in 1996 does not accurately reflect the facts since the Division and its Director and other staff remained part of GNPC after that decision.
- 26.
Oheneba Lovelace Prempeh, Finance Director of TOR from May 1988 to February 2001, notes in his “Ghana’s Oil and Gas Industry: An Overview of Ghana’s Petroleum Downstream sector, the implications for the upstream oil discovery and recommendations for the structural re-organisation of the oil and gas industry” report (2010) at p. 11 that “TOR never made a loss when it operated as a Tolling Refinery…” At pp. 17–18, he also notes “in September, 1996, after considerable pressure from the World Bank, and as part of the measures to accelerate the deregulation of the petroleum industry, the Ministries of Energy and Finance completely transferred the responsibility for the importation of crude oil and refined products and the marketing and sale of petroleum products from GNPC to TOR …TOR was suddenly transformed from a tolling Refinery into a full time oil trader…When TOR assumed responsibility for oil trading in September, 1996, TOR’s Processing Agreement with GNPC lapsed automatically leading to a cancellation of the processing fee. Consequently, TOR was left naked. No processing fees, no equity cash injection, no working capital and no power to fix the ex-refinery prices of its refined products. It was the genesis of TOR’s problems.” The author makes recommendations, summarised at p. 3, for “structural reorganization of Ghana’s oil industry,” including “..formation of a new Holding Company to oversee and co-ordinate the activities of GNPC as an international commercial trader, TOR as a Tolling Refinery earning “Processing Fees,” GOIL as a local oil marketing company and BOST as the operator of the country’s strategic stocks.” The first part of Oheneba Lovelace Prempeh’s report was published at https://www.ghanaweb.com/GhanaHomePage/features/An-Overview-Of-Ghana-s-Petroleum-Downstream-Sector-187641 (Accessed: 28 June 2021).
- 27.
There are still outstanding debts of more than US$58 million owed by TOR to GNPC from this supply of oil at Government request—captured in paragraph 9.3.2.11 Table 39 of the 2020 PIAC Report https://www.piacghana.org/portal/files/downloads/piac_reports/piac_2020_annual_report.pdf. The problems of TOR, unfortunately, remain https://www.ghanaweb.com/GhanaHomePage/NewsArchive/TOR-plant-collapsing-Workers-insist-1277149 (Accessed: 28 June 2021).
- 28.
Republic of Ghana, Public Investment Programme, Volume 2.6 Project Profiles and Summary Tables, Energy, April 1991, Prepared by Ministry of Finance and Economic Planning, p. 76.
- 29.
Republic of Ghana, Public Investment Programme, Volume 1, Main Report, p. 44.
- 30.
Ibid., p. 45.
- 31.
In its consideration of long-term thermal complementation options, the World Bank also stated that “[a]n economically attractive option over the longer term would be the proposed 330 kV West Africa Interconnection between Cote d’Ivoire, Ghana, Togo, Benin and Nigeria. This connection would provide access to any available low-cost, gas-generated electricity in Nigeria. … The thermally-based Nigerian system and the hydro-based system in Ghana would complement each other well inasmuch as thermal generation could cover shortfalls of hydro in dry periods and increased use of hydro in wet years would allow fuel savings. Nigeria could absorb at least 2,000 GWh of hydropower that would otherwise be spilled in Ghana in wet years” (paragraph 5.23 on p. 88). Gas-fired power based on natural gas from Ghana was evidently not viewed as a likely solution even as it was recognised in the study that: “The optimal utilization of the natural gas potential needs to be given particular attention. While natural gas is likely to be of little interest to international companies because of its limitation to the domestic market and its liability to price controls, it could provide significant benefits to the national economy. Natural gas might be an interesting option for the domestic energy market, especially electricity generation, provided it is delivered at a price not higher than about US$2.50/Mcf to be competitive with other sources of thermal generation” (paragraph 4.9 at p. 52).
- 32.
See https://www.vra.com/our_mandate/takoradi_thermal_power_station.php (Accessed: 14 June 2021). CMS Generation was later acquired by the Abu Dhabi national company, TAQA, which is now privatised and listed on the Abu Dhabi Securities Exchange (ADX).
- 33.
In 2013, the World Bank recognised that VRA faced imminent financial collapse (pp. viii and x). See World Bank. 2013. Energizing Economic Growth in Ghana: Making the Power and Petroleum Sectors Rise to the Challenge. Available at: https://openknowledge.worldbank.org/handle/10986/16264 (Accessed: 19 July 2021).
- 34.
The World Bank was focused on the Government providing incentives to the private sector for natural gas development and was later to support the ENI/Vitol Sankofa Gye Nyame project with a security package in respect of natural gas take-or-pay obligations of GNPC at US$9.80 per mmbtu, well beyond the market price of such gas. This was contrary to the position of the Bank in the 1990s when it strongly advised against VRA entering into gas take-or-pay obligations.
- 35.
This perspective was clearly different from that of the World Bank which highlighted the West African Electricity Interconnection with power from Nigeria as the long-term thermal power option to complement Ghana’s hydropower—see footnote 27 above.
- 36.
The Chief Operating Officer of Kosmos Energy was quoted in a 15 July 2009 news release as saying: “Kosmos and its Jubilee Field partners are providing the first 200 billion cubic feet of natural gas to GNPC at no cost to help fund the development and construction of the country’s initial gas infrastructure.” See: http://www.kosmosenergy.com/press/kosmos_PR_071509.pdf (Accessed: 16 June 2021).
- 37.
Paragraph 3.2 at p. 11 of 2020 Energy Statistics. Available at http://www.energycom.gov.gh/files/National%20Energy%20Statistics%202021.pdf (Accessed: 18 July 2021). The 2021 Energy Outlook of the Energy Commission notes at p. 20: “Thermal plants constitute 69.0% of total installed generation capacity in the country. The main fuel sources for the thermal plants are Natural gas, Light Crude Oil (LCO) and Heavy Fuel Oil (HFO). Up to 89% of installed thermal plants depend on natural gas as the primary fuel source due to its comparative advantage over oil in terms of indigeneity, cost and environmental friendliness.” See: http://www.energycom.gov.gh/planning/data-center/energy-outlook-for-ghana?download=120:energy-outlook-for-ghana-2021 (Accessed: 28 July 2021).
- 38.
Ibid. at paragraph 3.3 on p. 12. It is also reported on p. 13 that “Ghana has been a net exporter of electricity for three consecutive years. The net export registered in 2020 was the highest, increasing by 33.8% over 2019.”
- 39.
See 2021 Energy Outlook of the Energy Commission http://www.energycom.gov.gh/planning/data-center/energy-outlook-for-ghana?download=120:energy-outlook-for-ghana-2021 (Accessed: 28 July 2021).
- 40.
2021 Electricity Supply Plan—a power supply outlook with medium-term projections for Ghana http://energycom.gov.gh/files/2021%20Electricity%20Supply%20%20Plan_Final.pdf (Accessed: 30 July 2021); Acheampong, T., Menyeh, B. O., & Agbevivi, D. E. (2021). Ghana’s Changing Electricity Supply Mix and Tariff Pricing Regime: Implications for the Energy Trilemma. Oil, Gas & Energy Law, 19(3).
- 41.
See https://www.piacghana.org/portal/files/downloads/piac_reports/piac_2019_annual__report.pdf (Accessed: 1 July 2021).
- 42.
Paragraph 9.3.2.11 at p. 96 https://www.piacghana.org/portal/files/downloads/piac_reports/piac_2020_annual_report.pdf (Accessed: 2 July 2021).
- 43.
World Bank Group. Ghana Sankofa Gas Project. Available at: https://thedocs.worldbank.org/en/doc/969011518200591340-0100022018/original/BriefsGuaranteesGhanaSankofa.pdf (Accessed: 29 July 2021).
- 44.
The “OCTP Escrow Account” listed in the Table, however, appears to be a part of the security package that GNPC and the Government put up in respect of the take-or-pay obligation undertaken by the Corporation for gas supplies from the Sankofa Gye Nyame fields referred to above. If so, it is, properly, a GNPC responsibility and should not be in this Table of Government responsibilities that GNPC is made to fund. The existence of the Escrow account does underscore the point that payments to ENI and Vitol for gas are guaranteed, while GNPC does not get paid by GNGC and VRA for gas supplied.
- 45.
Paragraph 127 at p. 44 of the Report https://mofep.gov.gh/sites/default/files/reports/petroleum/2020-Annual-Petroleum-Report.pdf (Accessed: 2 July 2021).
- 46.
Paragraph 10.3 on p. 101 https://www.piacghana.org/portal/files/downloads/piac_reports/piac_2020_annual_report.pdf (Accessed: 2 July 2021). In the Gas Master Plan developed by the Ministry of Petroleum in 2016, a contrary view had been taken as follows: “based on international comparators, gas sector development is facilitated by providing a simpler structure more suitable to the nascent state of the gas market in Ghana. The decision to appoint GNPC as the aggregator of gas and making GNGC a fully owned subsidiary of GNPC will improve coordination in the sector and facilitate infrastructure investment and financing” (p. 11). See: https://uploads-ssl.webflow.com/5a92987328c28c00011db053/5bbf7dca7a04d6da6a45aa82_GMP-Final-Jun16.pdf (Accessed: 25 July 2021).
- 47.
PIAC 2019 Report paragraph 10 of Recommendations at p. 14.
- 48.
2020 Annual Petroleum Report of Minister of Finance, Table 19 on p. 42 https://mofep.gov.gh/sites/default/files/reports/petroleum/2020-Annual-Petroleum-Report.pdf (Accessed: 2 July 2021).
- 49.
See p. 98 https://www.piacghana.org/portal/files/downloads/piac_reports/piac_2020_annual_report.pdf (Accessed: 2 July 2021).
- 50.
See p. 16 https://mofep.gov.gh/sites/default/files/reports/petroleum/2020-Annual-Petroleum-Report.pdf (Accessed: 2 July 2021).
- 51.
Ibid., p. 18. The 2019 Annual Petroleum Report of the Minister of Finance had exactly the same statement at paragraph 28 on p. 5.
- 52.
2019 PIAC Report recommendation 11 at p. 14.
- 53.
Audit of Reserves, p. 13 https://www.tullowoil.com/application/files/9316/1969/2964/Independent_Audit_of_Tullow_Petroleum_Assets_final_2P_only_send.pdf (Accessed: 28 July 2021).
- 54.
Ibid., p. 19.
- 55.
Thus, Tullow announced completion of “the bi-annual redetermination of its RBL credit facility with $1.8 billion of debt capacity approved by the lending syndicate” in a press release of 7 October 2020 https://www.tullowoil.com/media/press-releases/rbl-redetermination-confirms-debt-capacity-18-billion-and-headroom-c500-million-capital-markets-day-be-held-25-november-2020 (Accessed: 23 July 2021). Also, Kosmos Energy announced a similar successful completion of “the amendment and extension of its reserve based lending (“RBL”) facility” in a 10 May 2021 press release https://investors.kosmosenergy.com/news-releases/news-release-details/kosmos-energy-successfully-completes-reserve-based-lending-1 (Accessed: 23 July 2021).
- 56.
Page 20. African Natural Resources Centre (ANRC). 2021. Enhancing the Performance of African National Oil Companies. African Development Bank. Abidjan, Côte d’Ivoire.
- 57.
Ibid., p. 104.
- 58.
Ibid., paragraph 2.2.3, p. 38.
- 59.
IEA—Net Zero by 2050—A Road map for the Global Energy Sector. Available at: https://iea.blob.core.windows.net/assets/822e602e-a42d-46a0-aec1-1f17b16e95d6/NetZeroby2050-ARoadmapfortheGlobalEnergySector-SummaryforPolicyMakers.pdf (Accessed: 15 June 2021).
- 60.
The claim attributed to the Chief Executive of Tullow Oil that the Jubilee partners have “paid a little over $6 billion to the State in taxes” https://www.myjoyonline.com/jubilee-partners-invest-over-19bn-in-oil-fields-since-2010-paid-6bn-in-taxes of 10 June 2021 is obviously wrong; most of the State revenues are through the GNPC carried and paid participating interests as well as royalties.
- 61.
Occidental regards these as “discontinued operations” and excludes them from its corporate presentations. https://www.oxy.com/investors/Documents/Earnings/OXY1Q21ConferenceCallSlides.pdf (Accessed: 26 July 2021).
- 62.
See https://www.eni.com/en-IT/media/press-release/2021/07/eni-announces-significant-discovery-block-ghana.html (Accessed: 26 July 2021).
- 63.
See footnote 12 above.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2022 The Author(s), under exclusive license to Springer Nature Switzerland AG
About this chapter
Cite this chapter
Tsikata, T. (2022). Role and Contribution of the Ghana National Petroleum Corporation (GNPC) as a National Oil Company: A Reflection. In: Acheampong, T., Kojo Stephens, T. (eds) Petroleum Resource Management in Africa. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-83051-9_2
Download citation
DOI: https://doi.org/10.1007/978-3-030-83051-9_2
Published:
Publisher Name: Palgrave Macmillan, Cham
Print ISBN: 978-3-030-83050-2
Online ISBN: 978-3-030-83051-9
eBook Packages: Economics and FinanceEconomics and Finance (R0)