Mr. David Ampofo, the Chief Executive Officer (CEO) of the Ghana Upstream Petroleum Chamber, has highlighted the lack of new investment in the country’s upstream petroleum industry as the key issue of the sector.
According to the petroleum industry player, the upstream industry has plateaued due to government’s inability to attract new investment into the sector.
Mr. Ampofo, speaking during an interview noted that the remedy to the problem was for the government to make the sector more attractive to investors, rather than adopting an adversarial role, adding that: “The industry needs to replace its reserves which requires the addition of new resources, deals, and investors to the sector.”
“Something is definitely wrong with the investment environment in my view, but I believe there is room to improve. And I think part of it is also the overall perception of the industry, we must overcome that. If we perceive oil investors as just there to exploit us and so on, we will be in no hurry to work with them. That must change.”
Mr. David Ampofo
The CEO emphasized that the industry’s private investors are risking significant amounts of capital that they bring into the country to seek returns. Therefore, he urged the government to create a more attractive environment for companies to invest in Ghana’s upstream petroleum industry.
“The way to perceive it is to create a much more attractive environment that enables companies to make those investments.”
Mr. David Ampofo
A Call On Government To Respect Tenures And Provisions Of Agreements
More so, Mr. David Ampofo has urged government to respect the provisions and tenures of agreements with upstream petroleum sector players.
According to him, the government has a responsibility to attract new investment into the sector if it expects to generate more revenue, hence, premature reviews of contracts might give the country a bad reputation in the investor community.
“When I hear it, I cannot believe it. Government needs to be in a position to do certain things. The market always dictates it. If really it is a matter of deciding that no! this is what government wants to do instead, go ahead. In the end, the market will tell you, either you get investors coming in and working on those new terms that you want or notice that nobody comes at all.
“And remember, we are dealing with an asset that is not there forever. Government is here with me and we are going through an energy transition. The thing that worries me is the risk that if Ghana is not careful, it can end up with what we call ‘stranded assets’.”
Mr. David Ampofo
The industry player further urged government to wait for the tenure of agreement to end before reviewing contracts.
“When the time comes by all means, do that. I’m saying when government has agreements, they’re time bound, they have provisions and that needs to be respected. If the time comes to review an agreement by all means review it. But you don’t just get up and say ‘I have agreement with you and now I feel suddenly I’m not so happy so I want to review it.’ If the agreement makes provision for that by all means you can do it.”
Mr. David Ampofo
Mr. Ampofo’s remarks come at a crucial time for Ghana’s petroleum industry, as the country seeks to address challenges such as declining oil production, high debt levels, and a potential drop in oil prices. The country’s upstream petroleum sector has a significant potential, and attracting new investment would be critical to unlocking that potential and driving growth in the industry.
Ghana has made strides in the past few years to improve the investment environment in the sector, with the government implementing policies such as the Petroleum Exploration and Production Act – which seeks to provide a clear legal framework for investment in the industry.
However, there is still more work to be done to create a truly attractive environment that can unlock the sector’s potential.
If Ghana can create such an environment, the country’s upstream petroleum industry could experience a significant boost, with new investments driving growth and enabling the industry to replace its reserves and expand.
Ultimately, this could have a positive ripple effects throughout the Ghanaian economy, creating jobs and driving economic growth.
