Dr Matthew Opoku Prempeh has said the country stands ready to attract the necessary investments into its upstream petroleum sector o bring wealth and growth to the country.
“Ghana is definitely poised to attract the requisite investments to drive its upstream petroleum sector.”
The minister was speaking at the 2022 edition of the Africa Energy Week in Cape Town, South Africa on the topic: ‘Leveraging the Private Sector to Develop a Vibrant Oil and Gas Industry’.
He said the decision to invest in a country by multinationals including international oil companies does not happen by chance or automatically.
“It begins with determining the risk levels of the investment climate in the country under consideration. Country risks might include economic, political and business risks that are unique to a specific country and that might result in unexpected investment losses.”
Opoku Prempeh said, “the Government of Ghana is not oblivious of these factors and has over the years worked consistently to achieve virtually all of them. Ghana has recorded GDP growth averaging 7% over the last decade, with the exception of the last two years where Ghana like other countries has been affected by the global economic downturn.”
“The country has also established strong democratic credentials and has a tested Constitution and a thriving independent media landscape,” he added.
The minister said the country stands as a beacon for the continent with energy access of 88.50% and is ready to lead the West African region to become the energy hub for providing reliable and sustainable energy to stimulate socio-economic growth.
He added, “In the quest to attract the requisite investments to propel the energy sector, with the goal of achieving the vision of making Ghana the energy hub of West Africa, the government has developed policies and strategies to ensure the smooth operations of the sector.”
The minister said that the country has made significant progress in establishing linkages between the petroleum sector and the rest of the economy, “thus avoiding the petroleum sector becoming an enclave economy”.
“To further deepen sectoral linkages and facilitate the effective and efficient utilisation of its oil and gas resources, the Government of Ghana is developing a petroleum and petrochemicals hub to be made up of refining and processing facilities, port discharge, storage, distribution and transportation facilities as well as trading of petroleum products in Ghana for the West African market and beyond.”
“The establishment of a petroleum hub is one of the government’s strategic private-sector-led anchor initiatives that would serve as a new pillar of growth in the Ghanaian economy. This US$60 billion phased project will be a significant addition to Ghana’s economy, as the country would become a net exporter of petroleum products,” he added.
“If African governments and the private sector could work together in a transparent and mutually beneficial way, it will be a strong part of the development history of the continent and for that matter its investor partners.”
He said, “Africa has suddenly become a new hotspot for oil and gas activities at the same time as it has to compete for risk capital in an industry whose very existence is being challenged by the energy transition agenda and the systematic shift in investments from fossil fuels to clean and renewable energy”
Dr Opoku Prempeh said the impacts of the energy transition on upstream petroleum investments are already being felt, adding that “Debt funding sources are dwindling as many financial institutions in the developed economies take the posture of a shift from funding fossil fuel projects.”
“For instance, the European Investment Bank (EIB) declared an end to funding oil, gas and coal projects at the end of 2021, cutting €2 billion of yearly investments. This is against the backdrop that, as of June 2020, the EIB had funded €13.4 billion of fossil fuel projects.”
He added, “the International Finance Corporation (IFC) and Multilateral Investment Guarantee Agency (MIGA) have committed to aligning 85% of their direct financing with the Paris Agreement by July 2023 and 100% by July 2025. All these steps impact upstream petroleum investments from independent oil companies who depend mostly on debt capital for their operations.”
Dr Opoku Prempeh said recent developments in global geopolitics have added to these challenges although they provide new opportunities for Africa in maximising private investment inflows into the oil and gas sector.
“It is my firm belief that, if we, resolve together to champion a vision of developing our natural resources by leveraging on these opportunities; we can avoid the stranding of our petroleum resources in spite of the challenges.”