In a troubling continuation of a five-year trend, the Public Interest and Accountability Committee (PIAC) has released its annual report for 2024, indicating a notable decline in crude oil production in Ghana. The situation, which reflects broader challenges within the country's petroleum sector, has raised concerns about sustainability and accountability in resource management.
The report highlights a significant contraction in crude oil production, which fell from a peak of 71.44 million barrels in 2019 to just 48.25 million barrels in 2024. This marks a decline of 0.01 percent from the previous year and a staggering average drop of 7.4 percent over the last five years. This prolonged reduction in output raises critical questions regarding the future viability of Ghana's oil sector and underscores the importance of strategic planning and investment.
On a more positive note, the 2024 report revealed that total petroleum revenues surged by 27.8 percent, increasing from approximately $1.06 billion in 2023 to about $1.36 billion this year. This revenue growth, primarily attributed to rising oil prices, marks the second-highest annual revenue recorded since the inception of oil production in Ghana, surpassed only by the impressive figure of $1.42 billion in 2022.
However, despite this financial uplift, the report contains alarming revelations. Specifically, it notes that proceeds from the Ghana National Petroleum Corporation’s (GNPC) Explorco liftings, amounting to $145.68 million, were not allocated to the Petroleum Holding Fund (PHF) in 2024. This deviation from standard protocol has raised red flags about the management and prioritization of national resources, particularly in light of the Petroleum Revenue Management Act of 2011, which aims to ensure that petroleum revenues are allocated effectively to support national development.
The implications of this oversight are profound, as the report highlights the absence of allocations from the Annual Budget Funding Amount (ABFA) to the Industrialisation Priority Area during the review period. This lack of prioritization, coupled with concerns regarding the financial obligations of GNPC, paints a complex picture of the industry’s governance. The report warns of a worrying trend where financial liabilities associated with GNPC—particularly related to Karpowership and Litasco guarantees—are being transferred to GNPC Explorco. This shift risks loading Explorco with debt, potentially undermining its ability to operate effectively as a commercial entity.
Despite the Ministry of Energy's ongoing efforts to attract investments into the upstream petroleum sector, the report starkly notes that no new Petroleum Agreements were signed in 2024. This represents the fifth consecutive year without new agreements, initiating serious concerns about the sector’s attractiveness and competitiveness in the global oil market.
In light of these findings, PIAC has highlighted the urgent need for government action to revitalize the upstream petroleum industry. The committee recommends a multi-faceted approach to boost investment, emphasizing that proceeds from GNPC Explorco’s operations should be viewed as indirect state ownership and thus should be directed into the PHF.
Furthermore, the report advocates for increased collaboration between key entities, including the Ghana Revenue Authority, the Petroleum Commission, the Bank of Ghana, and the Ministry of Energy, to enhance the recovery of Surface Rental arrears. There's a critical need for the government to define specific programmatic goals that align with the prioritization of diverse industrial sectors before selecting the Priority Area for petroleum revenues.
As Ghana navigates the intricacies of its oil production landscape, it is evident that leadership and accountability will be vital components in reversing the trend of declining production. The PIAC report serves as a wakeup call for stakeholders to recommit themselves to the principles of transparency and efficiency in managing the country's natural resources.
Moreover, with accountability at the forefront, the PIAC emphasizes the necessity for Parliament to enforce greater oversight of the Ministry of Energy and its affiliated agencies. Increased commitment and collaborative efforts to secure foreign investment will play a pivotal role in revitalizing the upstream industry and, by extension, the nation’s economy.
The findings of the PIAC report not only illuminate the ongoing challenges in Ghana's oil sector but also underscore the pressing need for proactive measures to ensure sustainable development. As the government contemplates its next steps, the insights from the PIAC’s 2024 annual report will be crucial in shaping policies that prioritize not just revenue generation but also long-term stability, accountability, and transparency in the management of Ghana's rich natural resources.
In conclusion, while the increase in petroleum revenues offers a glimmer of hope in an otherwise challenging environment, the persistent decline in production calls for immediate attention. Addressing these challenges will require a concerted effort from the government, industry stakeholders, and the public to ensure that Ghana's oil wealth translates into lasting benefits for its people and the economy. With the right strategies and solutions, there is still potential to turn the tide and revitalize Ghana’s oil and gas sector.