Energy Strategist and a Senior Oil Production Operations Specialist with Petroleum Development Oman, Dr. Yusif Sulemana has lauded government’s decision for the Ghana National Petroleum Corporation (GNPC) to be a stand-alone operator in Ghana’s upstream portfolio through its subsidiary Explorco.
Raising concerns that the country’s hydrocarbon exploration may become stranded, the Minister of Finance, Ken Ofori-Atta proposed that the Petroleum Revenue Management Act (PRMA) be amended to allow GNPC enter into reserve-based lending transactions to raise funds so its subsidiary Explorco can acquire assets for hydrocarbon exploration.
Candidly, the global call for a shift from fossil-based fuels to renewables and the accompanied disinterest of oil majors and banks to provide financing for exploration and development activities remain threatening, therefore warranting the decision.
According to the Energy Consultant, this initiative by the government has long delayed, nonetheless an important undertaking, considering the fact that investments in hydrocarbon exploration and development activities are gravitating towards zero.
“…it is something we should have thought about a long time ago. And that kind of investment or push cannot be better thought than now. In fact, if there is any single organization that stands the chance of guaranteeing the nation Ghana, energy security, it is GNPC.”
Dr Yusif Sulemana
Investment decline in hydrocarbon warrants the call
Noting that, although investments into hydrocarbons have assumed a downward trajectory as investors explore opportunities in renewable energies, the world of hydrocarbon will still remain relevant decades ahead, Dr. Sulemana argued.
“The fact that there is growing capital discipline and the upsurge of ESG initiatives tells us that, we are gravitating to a point where investment will be constrained into the world of hydrocarbon. And so, [countries] that will have strategic advantage are those that have home-grown policies that can take advantage of their world of hydrocarbon internally.”
Dr Yusif Sulemana
For instance, Exxon Mobil, an oil giant recently announced the withdrawal of its interest in the Deepwater Cape Three Point oil block in Ghana, leaving the resource stranded, as the country does not have the capacity to pick up from where the oil major left off. Therefore, the call by the government is in the right direction, and “the best time to do that is now,” he stressed.
The reason is that, currently, crude oil prices in the world market is very favorable, “and if there is any time to go to the capital market to source for funds to invest into your upstream portfolio, is now. Because, investment into the upstream portfolio is hinged onto the global oil prices. When oil prices are favourable and [the country] has the resources, it stands the chance of gaining investment into the sector.
He however, emphasized that, the benefits of this venture notwithstanding, “getting the money is not the whole game, but having a robust strategy that will turn the money into assets that the nation Ghana can benefit [should be the way to go].”
Also, Dr. Sulemana called for a concerted approach to help realize this initiative in a progressive and sustainable manner.
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