The Institute for Energy Security, IES, has revealed that the drop in Ghana’s oil revenue in 2019 could be ascribed to the fluctuation of crude prices on the global market and the challenges experienced by Tullow oil at the TEN field.
Ghana’s oil revenue dropped by 5% to USD925 million in 2019 from USD977 million in 2018 despite the fact that oil production in the period under audit went up by 15%.
Speaking in an interview, the Executive Director of IES, Nana Amoasi VII, clarified that Ghana’s oil revenue projection in the 2019 national budget was also over-anticipated contrasting with the global benchmark prices.
“One of the factors was that the international crude price that was achieved by GNPC was far lower compared to 2018. Then we had low production from some key sales. For example, the TEN Field had to cut back on production because of loss of man-hours induced by some prolonged fishing activity especially the production well. They also recorded some low production rate from the reservoir because there was high water coming in. So, this mechanical and operational challenges contributed to the low oil production in the TEN field,”
he said.
Challenges Tullow experienced at the TEN field
In 2019, Tullow oil, the operator of TEN field and a co-operator of Jubilee field in Ghana revealed that because of production setbacks in Africa and South America, it had become necessary for the oil firm to cut off 25% of its workforce due to its global operations.
Ghana being one of the key markets for the firm was affected by the restructuring procedure. Tullow Ghana was, therefore, faced with production challenges at its Jubilee field where it had reinjected gas because there was no immediate means of offloading gas buyers. The gas reinjection reportedly led to around 30% cut in oil production.
Also, TEN field was confronted with some difficulties as one of the oil production wells had to be abruptly suspended because of what was described as an unexpected expanded ‘water cut’, a situation described as the proportion of water to oil in a production well. More water in the well implies less oil and less income.
2020 Budget to experience more disappointment as compared to 2019
In the 2020 national budget, government anticipated to amass USD1.567 billion from oil receipts, tied down on a price forecast of USD62.6 per barrel of crude.
However, oil prices have dropped dramatically up until now, selling at a price of USD40 per barrel of crude, which implies that USD743 million (around 53%) of the actual projected revenue in the 2020 national budget won’t be met.
The global oil industry was doomed right from the start of 2020, as global oil prices started experiencing a plunge due to the spread of the coronavirus pandemic from Wuhan, China to other countries, which caused a gigantic slowdown in economic activities around the world.
Additionally, the oil price war between Saudi Arabia and Russia added to the shock in the global oil industry as it contributed to the drop in oil prices.
