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Petroleum Resource Management in Africa: Lessons from Ten Years of Oil and Gas Production in Ghana 1st Edition Theophilus Acheampong full chapter instant download
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Edited by
Theophilus Acheampong ·
Thomas Kojo Stephens
Petroleum Resource
Management in
Africa
Lessons from Ten Years
of Oil and Gas
Production in Ghana
Petroleum Resource Management in Africa
Theophilus Acheampong ·
Thomas Kojo Stephens
Editors
Petroleum Resource
Management in Africa
Lessons from Ten Years of Oil and Gas Production
in Ghana
Editors
Theophilus Acheampong Thomas Kojo Stephens
University of Aberdeen Stobe Law
Aberdeen, Scotland Accra, Ghana
University of Dundee University of Ghana School of Law
Dundee, Scotland Accra, Ghana
© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer
Nature Switzerland AG 2022
This work is subject to copyright. All rights are solely and exclusively licensed by the
Publisher, whether the whole or part of the material is concerned, specifically the rights
of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on
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Preface
v
vi PREFACE
Above all, our thanks and appreciation go to God, the Almighty, for
the gift of life and the successful publication of this book.
Even without oil, we are doing so well... With oil as a shot in the arm, we’re
going to fly… We’re going to really zoom… you come back in five years,
and you’ll see that Ghana truly is the African tiger, in economic terms for
development… Oil is money, and we need money to do the schools, the roads,
the hospitals… I assure you that if others failed, Ghana will succeed because
this is our destiny to set the good pace for where we are. So, we’re going to use
it well.
—John Agyekum Kufuor, Ghana’s President (2001–2008),
speaking at the formal announcement of the first commercial oil
discovery in the country on 19 June 2007
ix
x INTRODUCTION
1 See http://www.petrocom.gov.gh/discoveries.html.
2 The risks are highest in the exploration phase and so most governments in the devel-
oping world structure their petroleum agreements to have some sort of carried interest
participation in which the state will bear its share of the exploration and development
costs on successful discovery and appraisal. The state is sometimes even carried at the
development phase and only begins to pay at the production stage.
Key milestones in Ghana’s upstream oil and gas industry (Source Authors’ construct)
INTRODUCTION
xi
xii INTRODUCTION
Oil and gas production and exports have provided a critical boost to
Ghana’s economy over the past ten years. It has become a fundamental
component of the country’s industrial strategy and transition towards an
upper-middle-income country, acting as the lever to provide jobs and
energy security. For example, since 2010, Ghana has produced 453.89
million barrels of crude oil from three existing fields: Jubilee, Tweneboa
Enyenra Ntomme (TEN) and Sankofa Gye Nyame (SGN). According to
official statistics, Ghana has earned an estimated US$6.55 billion in oil
receipts from royalties, carried and participating interest (CAPI), corpo-
rate income taxes (CIT) and, to a lesser extent, surface rentals.3 Also, oil
rents, which are the difference between the value of crude oil production
at regional prices and total production costs, have increased to 3.63% of
GDP between 2011 and 2019 from an average of 0.54% of GDP between
2000 and 2009, according to World Bank statistics.4
However, concerns have also been raised that Ghana, despite this
newfound wealth, continues to grapple with poverty, inequality, lack of
employment opportunities, conflicts over the use of maritime resources—
especially for fishing—and a lack of linkages to help diversify the economy.
Other negative externalities of Ghana’s oil and gas industry often cited
include rapid urbanisation of the Sekondi-Takoradi metropolis and the
six coastal districts in the Western Region and oil discharges and pollu-
tion. These concerns raise both a philosophical and empirical question:
how well have these panned out, and to what extent will they affect
the future of oil and gas exploitation in Ghana? This question is also
guided by recent literature which shows that countries can fall victim to
the presource curse, whereby euphoria of, for example, bountiful natural
revenues for development, is met with significant disappointment.5
3 See Ministry of Finance and the Public Interest and Accountability Committee (PIAC)
reports. Available at: https://mofep.gov.gh/publications/petroleum-reports and https://
www.piacghana.org/portal/5/25/piac-reports.
4 See https://data.worldbank.org/indicator/NY.GDP.PETR.RT.ZS?end=2019&locati
ons=GH&start=1971&view=chart.
5 Bauer, A. and Mihalyi, D., 2018. Premature Funds: How Overenthusiasm and Bad
Advice Can Leave Countries Poorer. NRGI; Frynas, J.G. and Buur, L., 2020. The
presource curse in Africa: Economic and political effects of anticipating natural resource
revenues. The Extractive Industries and Society, 7 (4), pp.1257-1270; Cust, J. and Mihalyi,
D., 2017. The presource curse: Oil discoveries can lead first to jubilation then to economic
INTRODUCTION xiii
jeopardy. Finance & Development, 54(004). Mihalyi, D. and Scurfield, T., 2020. How
Africa’s prospective petroleum producers fell victim to the presource curse. The Extractive
Industries and Society.
xiv INTRODUCTION
The book covers the following broad themes split into four multi-
disciplinary sections and eighteen (18) chapters with supporting appen-
dices:
1. The industry developments during the past decade, and how they
influence government, the IOCs and the sub-contractors operating
in the country.
2. Channels that have been impacted by Ghana’s economy and devel-
opment outcomes.
3. Lessons from other petroleum-producing countries on petroleum
sector management and governance during the last decade.
The first part of the book addresses issues of regulating and managing
Ghana’s upstream oil and gas industry. It begins with Chapter 1 by
Thomas Kojo Stephens and Seyram Dzikunu, which assesses Ghana’s
upstream oil and gas licensing policies and legislative developments and
how they have impacted the development of the oil industry. Tsatsu
Tsikata follows this in Chapter 2, examining the GNPC and its contri-
bution to Ghana’s oil and gas industry. This chapter examines the current
and historical political economy dynamics driving GNPC’s overarching
strategic objectives, including plans to become a world-class operator by
2027. Chapter 3, by John Agyekum Kufuor, examines his government’s
(2001–2008) role in Ghana’s oil find. He recounts the strategy and policy
changes adopted and the outcomes of these policies. The former includes
targeting the right IOCs, block size management and focus on deepwater
exploration, Board involvement in Joint Management Committee (JMC)
meetings with the IOCs and retooling of GNPC staff and improvement
in conditions of service.
In Chapter 4, Kwaku Boateng analyses how the Petroleum Commis-
sion, set up in 2011 and assuming responsibility as Ghana’s upstream
petroleum sector regulator, has performed on three core duties: regu-
latory, advisory and technocratic functions. Chapter 5 by Fui Tsikata
examines the Ghana-Côte d’Ivoire maritime boundary dispute. It assesses
what was at stake in the litigation—that is, more than 30,000 km2 of
maritime territory, a significant part of which Ghana had awarded explo-
ration rights to oil companies over the years, and the resources contained
therein. It also assesses the outcome of the ruling by the Special Chamber
INTRODUCTION xv
of the International Tribunal of the Law of the Sea (ITLOS) which delim-
ited the maritime boundary and pronounced on several related issues. In
this same vein, Pierre Klein concludes the section in Chapter 6 by exam-
ining the teamwork and interaction between internal and external teams
in the preparation and management of the Ghana-Côte d’Ivoire maritime
boundary litigation. He argues that despite some linguistic hurdles and
cultural differences, the close and constant cooperation between Ghana’s
internal and external teams ensured a very high degree of consistency and
reliability of Ghana’s position before the ITLOS Special Chamber.
Part two of this book assesses the impact of oil and gas on Ghana’s
socio-economy. Theophilus Acheampong and Abdallah Ali-Nakyea in
Chapter 7 assess the competitiveness of Ghana’s upstream petroleum
fiscal regime vis-à-vis the twin goals of investment attraction and revenue
maximisation. This chapter assesses the fiscal regime attractiveness against
key features of optimal fiscal policy: efficiency of targeting economic
rents, risk sharing, neutrality and progressiveness. In Chapter 8, Ishmael
Ackah and Joe Asenso discuss the key fiscal policy implications of Ghana’s
continuous reliance on natural resource revenues. They also review
the role of Ghana’s fiscal institutions in managing the oil boom, the
operational aspects and the political economy of fiscal policymaking in
Ghana. In Chapter 9, Seth Terkper also reviews the fiscal framework
and performance of Ghana’s Petroleum Sovereign Wealth Fund (SWF).
The arrangements under the petroleum revenue management law are
to ensure a delicate but important balance of fiscal goals that include
savings, spending, fiscal stabilisation, debt management, investment or
development, and crisis management.
Austin Dziwornu Ablo, in Chapter 10, assesses the extent to which
Ghana has gotten it right with local content and local participation, more
so, given that in 2013, Ghana introduced a local content regulation (L.I.
2204) to help local participation in its nascent oil and gas sector as
well as create other synergies with the broader economy. Ben Boakye,
in Chapter 11, examines developments in Ghana’s gas markets and how
the burden of politics and institutional weaknesses continue to act as a
constraint on unleashing the economic potential of gas for development.
Following this, Part Three of the book looks at the state of gover-
nance in Ghana’s oil and gas industry. In Chapter 12, Ferdinand Adadzi,
Nana Serwaa Godson-Amamoo, and Jemima Nunoo review Ghana’s
petroleum governance regime, identifying challenges and progress made.
The chapter analyses and identifies the measures and institutions put in
xvi INTRODUCTION
place to ensure good governance, and outcomes of the country’s oil and
gas governance arrangements using industry metrics. The authors also use
various case studies to illustrate how political economy and political settle-
ment variables have impacted Ghana’s oil industry governance outcomes.
In Chapter 13, Steve Manteaw and Emmanuel Graham review the impor-
tant role that civil society and other non-governmental organisations have
played in the passage and implementation of policies and regulation and
the social practices of oil and gas companies in Ghana. The chapter
also analyses the Public Interest and Accountability Committee (PIAC),
a citizens-led statutory body established under the petroleum revenue
management law, to monitor and evaluate compliance by the govern-
ment and other relevant institutions in managing and using petroleum
revenue investments. Chapter 14, by Jasper Abembia Ayelazuno and
Ishmael Ayanoore, examines social inequities and injustices of Ghana’s
oil and gas industry at two interrelated levels: global (international) and
national (local). The chapter concludes by contemplating several radical
interventions to address these inequities and injustices at both levels.
Completing this section in Chapter 15 is Kwamina Panford who provides
an overview of key developments and highlights of Ghana’s oil and gas
production from 2007 to 2020, major challenges and the policy and prac-
tical measures needed to optimise the use of these resources. The chapter
stresses what Ghana has done right, what has not been done and/or done
wrongly, and how this can be fixed.
The book’s final section goes beyond Ghana to look at other petro-
development issues in a wider African context. Victoria Nalule, Pauline
Anaman and Theophilus Acheampong, in Chapter 16, assess the implica-
tions of the energy transition for the development of Africa’s vast oil and
gas resources. It further examines the existential question of how African
nations would fund development if they are to give up on exploring
newfound oil and gas resources due to climate concerns. In Chapter 17,
Berryl Claire Asiago and Hope Wanjira Miriti document the experi-
ences and lessons from other new African petroleum-producing nations
on petroleum sector governance. The chapter reviews and compares the
regulatory agents and bodies responsible for implementing local content
policies to pursue equitable petroleum resource management in Uganda,
Tanzania and Kenya.
The final chapter (Chapter 18) by Thomas Stephens and Theophilus
Acheampong returns the gaze to Ghana and sub-Saharan Africa. It looks
INTRODUCTION xvii
more closely at the future of the oil and gas industry on the conti-
nent and the context for inclusive economic development and growth.
The chapter draws on the main issues and recommendations arising
from the preceding chapters. It then critically reflects on key aspects
of petroleum resource management, including what revenue and non-
revenue approaches could be adapted to not only enhance the value
addition of Africa’s petroleum industry, but critically, on inclusive devel-
opment and poverty reduction.
Contents
xix
xx CONTENTS
Index 627
Editors and Contributors
xxiii
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La igualtat es condició de la llibertat. Desde’l moment que varias
iniciativas s’agrupan y han de manifestarse al meteix temps, per
forsa han de subjectarse á reglas generals que determinin fins á quin
punt pot arrivar cada una de ellas. Al Estat li correspon fixar
aquestas reglas, pera las quals no pót tenir altre criteri que’l de la
igualtat, puig que iguals són las entitats á que deu aplicarlas. La lley
ha de ser general é igualataria, sens concedir preferencias á cap
individualitat en perjudici de las altras.
Fins las escolas que sostenen que una de las missions del Estat es la
de amparar al débil contra’l fort, fentlo intervenir en la distribució
dels medis morals y materials de benestar y de perfecció, per més
que’s diguin igualatarias, no pretenen de fet sinó consagrar la
desigualtat. Si’ls recursos socials han de favorir als que per llurs
condicions no tenen prou forsas propias pera sortir victoriosos en la
lluyta per la existencia, los medis que s’emplehin han de ser
desiguals. La evolució que van fent las escolas socialistas, apartantse
del comunisme igualatari y declarantse en pró del col·lectivisme
anárquich, es la millor proba de las ventatjas que lo element llibertat
va guanyant sobre l’element igualtat. La regeneració social no
s’espera ja de la regimentació autoritaria, que convertiria als pobles
en ramats, sinó que’s busca pel camí de conservar y fomentar la lliure
iniciativa individual y corporativa. Las reformas més tracendentals
que indican aquellas escolas, són las referents al dret civil, á la
organisació de la propietat moble é inmoble. En lo terreno polítich, la
escola col·lectivista en mitj de sas vaguetats tendeix á la exageració
del particularisme.
Entenguis be, que al dir Estats grans y Estats petits parlem sóls de
una manera relativa. En la Grecia antigua, ahont lo tipo del Estat era
la ciutat, la aglomeració d’alguns centenars de mils ciutadans era
considerada un Estat grandíssim, mentres que al cor del Assia, al
costat dels grans imperis despótichs, una nació d’alguns milions
d’habitants ab prou feynas mereixia’ls honors de ser atesa com
entitat política. En los temps moderns l’Estat no’s condensa en una
ciutat ni tampoch en una comarca, sino que s’extén á moltas y
comprén, per regla general, alguns milions d’individuos. La extensió
d’un Estat, ademés, es relativa als medis de comunicació entre las
parts que’l forman. Avuy que’l telégrafo ha suprimit las distancias
pera la paraula, y los camins de ferro las han escursadas pera’l
transport material de personas y objectes, un Estat que s’estengui á
cents kilómetres quadrats de territori es més petit que los que en
temps no molt llunyans se reduhian á poquíssimas lleguas. Entre’ls
Estats grans, donchs, comprenem als que ho són comparats ab los
majors del món civilisat, y entre’ls petits hi contem als que ni per la
extensió del territori ni per llur població poden posarse al costat dels
grans, tant si’s forman no més que d’una ciutat, com si comprenen
ademés una comarca gran ó varias de petitas. L’Estat gran, baix lo
punt de vista que estem examinant, es lo que disposa d’elements y
forsa pera fer sentir son pes al exterior: l’Estat petit es lo que, per no
disposar de tals medis, ha de reduhirse á la vida interior. La Fransa,
la Gran Bretanya, la Russia, la meteixa Espanya, son en aquest sentit
Estats grans: la Bélgica, la Holanda, los Cantons suissos, Andorra, las
ciutats lliures de Alemania, consideradas en llur vida interior, son
Estats petits.
Una lley, pera ser al meteix temps justa y útil, ha de atendre tant al
element histórich com á las tendencias filosóficas, tant als fets com á
las aspiracions. Ha de conformarse ab las necessitats reals y positivas
d’aquells pera quins se dicta, pero sens apartarse dels principis
generals de justicia. La definicio del dret per medi de la lley ha de ser
sempre relativa.
En aquest, ademés, la acció social pera’l foment del progrés pot ser
molt més enérgica que en l’Estat gran. Lo gobern está en relació
constant y directa ab los gobernats, y per poch que s’ocupi d’estudiar
las tendencias que’s manifestin, tindrá medi de fomentar las útils y
de combatre las perjudicials. Los serveys generals poden
desempenyarse ab tota regularitat, essent pera ells un esperó
constant de millora la vigilancia inmediata del públich sobre’ls
encarregats de prestarlos. En l’Estat petit hi ha entre tots los
elements components una compenetració que es completament
impossible en los Estats grans, y si en ells arriva á entrarhi la noble
emulació en alguna de las manifestacions de la activitat, los resultats
son assombrosos. Testimoni d’aixó’n son las ciutats gregas de la
época clássica y las petitas repúblicas italianas del Renaixement.
¿Quin Estat gran pot alabarse de haver fet tant com la més
insignificant d’aquellas ciutats ó repúblicas, en pró del avens de la
humanitat?