Petroleum rakes in US$840 million over half-year, highest since production started in 2010

The government has received the highest petroleum revenue for a single half-year since the start of petroleum production in Ghana in 2010.

Data from the 2024 Semi-Annual Report of the Public Interest and Accountability Committee (PIAC) shows that petroleum receipts for the period increased by 55.6% from US$540.46 million in the 2023 half-year to US$840.77 million over the same period in 2024.

Consequently, crude oil production also increased from 22.45 million barrels in the first half of 2023 to 25.86 million barrels in the same period this year, posting a growth of 10.7 per cent compared to a decline of 13.2 per cent in the previous period.

The significant rise in revenue was due mainly to increased production over the period, especially with the coming on stream of the Jubilee South East (JSE) project.

Sharing findings of the PIAC annual report on thr 2024 first half-year in Accra on Wednesday (6 November), the new chairman of PIAC, Constantine Kudzedzi, said that provided the country remains on the current path, the upward growth trend is expected to continue to the end of the year.

“Looking at the half-year development, if we continue that way there is a likelihood that the overall performance of the year would be better,“ Kudzedzi said.

“Oil production fluctuates. We have started with 30,000 [barrels] per day. All things being equal, we can increase, depending on the quantity of oil available to produce.”

Surface rental

The PIAC chairman said that surface rental arrears remained high at US$1.2 million, excluding those covering terminated petroleum agreements.

“There was neither allocation nor disbursement to the industrialisation priority area during the period under review,” he said.

“The retention of the current cap of US$100 million on the Ghana Stabilisation Fund (GSF) for the year 2024 is not in accordance with the formula stipulated in the Petroleum Revenue Management Regulations 2019 (LI 2381) and does not help build the fund to serve its purpose.”

Kudzedzi said a proper application of the capping formula under LI 2381 would have returned US$530.1 million for the reporting period.

Discounted lean gas

Kudzedzi announced that PIAC had also noted that Ghana National Petroleum Corporation (GNPC) was yet to establish a reserve fund, a requirement outlined in Section 18 of the related Provisional National Defence Council law (PNDCL 64).

He said this reserve fund is crucial for covering anticipated expenditures in GNPC’s long-term plan, especially considering that petroleum revenue allocations for Level B expenditures might be discontinued in 2026, as stipulated in the Petroleum Revenue Management Act (PRMA).

The committee noted that although the discounted industrial development tariff (DIDT) was suspended by the Ministry of Energy in January 2023, Ghana National Gas Ltd Company (GNGLC) continued to invoice lean gas volumes at discounted tariffs.

Kudzedzi said PIAC had identified that no petroleum agreement was signed during the period under review, as has been the case since 2018.

“PIAC notes that in comparison to first half 2023, [fewer] drilling operations on the Jubilee field were carried out during the period under review,” he added.

Recommendations

Kudzedzi argued that the Ghana Revenue Authority (GRA) should take immediate steps to recover outstanding surface rentals and also ensure that surface rentals assessed are paid into the Petroleum Holding Fund (PHF) no later than 28 February each year, as provided for in Regulation 5(1)(b) of LI 2381.

He said that GNGLC should comply with the directive from the Ministry of Energy to suspend the implementation of the DIDT.

“The committee urges the Ministry of Finance to demonstrate the essence of prioritisation of the Industrialisation Priority Area by consistently committing disbursement of the ABFA to the priority area,” he said.

He added that Parliament should decline or review any cap on the Ghana Stabilisation Fund (GSF) that deviates from the statutory provision, and direct the Minister of Finance to comply with Regulation 8 of LI 2381.

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