Ghana’s petroleum industry, though relatively young has been touted as having the potential to moving the country from a developing country to an emerging one. The growth of the industry is highly dependent on ensuring that petroleum products produced at the downstream sector of the industry are distributed consistently and timely to consumers through an effective and efficient supply chain system.
Pitfalls in the Oil Industry exacerbated by the pandemic
Ghana’s heavy reliance on expatriate specialists required for critical maintenance works on offshore installations has attributed to sluggish growth in Ghana’s hydrocarbon sector.
More than US$4.7bn worth of projects lined up in Ghana’s hydrocarbons sector has been postponed indefinitely as uncertainties surrounding the COVID-19 pandemic weighed in on investor’s risk appetite.
The CEO of the Petroleum Commission, Egbert Faibille Jnr, speaking at a webinar organized by the think tank Africa Centre for Energy Policy (ACEP) to discuss COVID-19 response strategies in the oil and gas industry, said that the pandemic has sent significant shock waves across the industry and has crippled both local and international oil companies doing business in Ghana.
Explaining the immediate impact of the virus on the industry, the Petroleum Commission boss cited the postponement, in March, of the US$4.4bn Aker Energy Pecan field development.
The Norwegian oil firm had been expected to receive approval from the government for its plan of development in the second quarter of 2020 and to subsequently commence operations.
The country’s current producing oilfields, Jubilee, TEN and Sankofa, generate about 200,000 barrels of oil per day, and the Pecan project was expected to nearly double that output by 2023 if it went ahead on schedule.
An additional US$324m worth of projects relating to companies carrying out exploration and appraisal activities have also been put on hold.
“The companies were due to undertake various drilling campaigns, acquisition and interpretation of seismic, geological and geophysics data. The Eban 1X exploratory well of Eni, Nyankom 1X and Kyenkyen-1X appraisal programme of AGM, Afina -1X appraisal programme of Springfield, exploratory well drilling campaigns of Amni, Eco Atlantic and GOSCO have all been postponed,”
The chairman of the African Energy Chamber NJ Ayuk said,
“we are seeing force majeure in Cameroon, in Senegal. Exxon Mobil is delaying gas project in Mozambique. In Uganda, some companies are delaying exploration. Frankly, most projects are going to get delayed”. Mr Ayuk deepens the wounds on the industry by saying, “2020 is going to be a tough year for everybody and everyone needs to buckle for the ride… You have twin issues of the price war and the coronavirus– you can’t make this up. Hollywood couldn’t have written this script. 2020 is done!
Culled from The Vaultz Magazine June 2020 edition –
Read: AFRICA’S OIL AND GAS INDUSTRY IN CHEEK BY JOWL WITH COVID-19 PANDEMIC
Supply chain disruptions
The Petroleum Commission chief stated that the pandemic has revealed weaknesses in the local supply chain relating to manufacturing, construction and the industrial base.
The border restrictions imposed as a result of COVID-19 have led to the unavailability of critical spares, goods and materials in the industry.
“The compelling need to fly in expatriate specialists required for critical maintenance works on offshore installations amid the pandemic has contributed to delayed schedules. The rude awakening of this pandemic should allow the industry to invest in local supply chains as well as training and development of indigenous Ghanaians.”
A need for an effective delivery system
The logistics function is only one of many areas that affect supply chain performance in the petroleum industry. Integrated process management, information systems and information sharing, organizational restructuring, and cultural reorientation are as equally important (Ikram, 2004).
The need for integrated processes from procurement of raw materials to the delivery of the final product is crucial for a company’s success.
To manage their supply chain and reduce costs, oil and petrochemical companies are outsourcing their logistics functions. As the trend in outsourcing has grown, these companies have become increasingly reliant on third parties which is the case here.
