Where are the oil benefits – the everlasting citizen’s question

Business News of Wednesday, 20 December 2017

Source: Graphic.com.gh

2017-12-20

Floating Production Storage and Offloading(FPSO)

A country may be endowed with the most sought-after natural resources but when its benefits do not reflect in the lives of its people, it will be met with an open expression of anger when issues of the role of resources in national development are being discussed.

As the Ghanaian proverb goes, “An old lady feels uneasy when dry bones are mentioned in a proverb”, Oil resources became a new kid on the block and was well celebrated after the declaration of its discovery in commercial quantities and the expectations of all stakeholders were further heightened as the price of crude oil on the world market was at a record high.

The interests of government, investors and regulators on one side and the public and other civil society groups on the other, made it difficult for all to appreciate the contribution of the new sector.

The interests

Each group made inferences to the Ghana’s bitter historical precedent with gold, timber, manganese and bauxite among others and how the country did not benefit in their doomsday predictions.

The sad part after the commercial declaration was that, it seems there were no conscious efforts to gauge the sentiments of the people, to draw the line between those mistakes of gold, timber, manganese, and measure the projected impact of oil in 10-years.

That means there should have been a baseline, which would have clearly defined the starting point from when the discovery was made through the stages of exploration, development and finally production which would ensure the improvement, or comparison made based on what is available.

Baseline data

Obviously there has been a multiplicity of baseline data – the Ghana Statistical Service has a baseline data and also for the price sensitivity of shares on stock exchanges, as well as the environment to their operations the international oil companies (IOCs) also have collected baseline data.

But how are we validating all these data to create the needed awareness, shape our plans and strategies and inform society to ensure that after another decade of oil, impacts could be measured.

Oil companies for the sake of a peaceful and harmonious working environment continue to be “surrogate state or development partners” responsible for building, renovating and equipping health facilities, building water systems, education, even road and other social infrastructure in the region.

The truth is, an entity called government takes the revenue for national development, what the oil companies are doing is to secure the social license for their operation.

Therefore, after a decade of oil, citizenry are still asking where is the oil money? How have we benefited, or if companies in the oil sector decide not to carry out any social investment, what happens to host communities?

Johannesburg & Mining

In Johannesburg, the discovery of gold near Krugersdorp in July 1852 and mining activities started successively in various places on the Witwatersrand – the first gold from the main reef on the Witwatersrand was obtained in 1885, after which Johannesburg was laid out in 1886.

This discovery led to a turning point in South African history more than diamonds, and it changed South Africa from an agricultural society to become the largest gold producer in the world.

Unlike Johannesburg, South Africa, Ghana has a long history of mining, especially for gold. Gold from West Africa was traded to Europe at least as early as the tenth century.

The Precambrian auriferous, Tarkwa conglomerates of Ghana were developed in a modern way during the period 1876-1882 by Pierre Bonnat, the father of modern gold mining in the Gold Coast.

Again in 1895, the Ashanti Goldfields Corporation began work in Obuasi developing the Ashanti and other mines, which have produced the largest proportion of gold since 1900s in Gold Coast.

At the Obuasi mine, for few years, a million ounces of gold were mined. At Bogoso, since mining operations commenced in 1873, several million ounces of gold were produced, largely from extensive underground operations but little to show.

J’burg and Tarkwa-Bogoso & Obuasi

Today in Johannesburg, the city of Egoli (meaning City of Gold) and Kimberly are some of the beautiful places in Africa or in the world in a sharp contrast, Tarkwa, Bogoso, Obuasi, and other serious gold mining places in Ghana the story is different.

These resource rich areas in Ghana are in a very sorry state with people living in abysmal poverty. Therefore it is legitimate for people to ask questions such as where is the oil money, what are the impacts of oil.

After the discovery of oil, we were fast in comparing ourselves to Norway which has reached an advanced stage of development before the oil was discovered in 1963 and subsequent exploration in 1966, when Ocean Traveller drilled fruitless first hole in its initial exploration until in 1969 when Ocean Viking found oil.

In Norway, just like in Ghana, its main natural resources are natural gas, oil, copper, lead and timber and this sustains a stable and resilient economy backed by prudent management of this resource wealth that differentiates it as a nation and a shipping superpower, a seafood giant, and the world’s third largest exporter of petroleum.

$1-trillion mark

Today, in the third quarter of this year Norway announced that sovereign wealth fund surpassed the $1-trillion mark for the first time, driven by climbing stock markets.

The fund has grown to become one of the world’s biggest investors in stocks, owning $667 billion of shares in more than 9,000 companies.

Therefore if we in Ghana made mistakes of gold, timber, manganese, and bauxite, there is the need to look at how to explore diversity to Ghana’s advantage.

Economists were of the view that Norway has a highly-educated population and as a result a good foundation for sound economic development, even without oil what about us in Ghana?

Ghana had it all going – but we cannot put our finger to anything after millions of ounces of gold, millions of tones of bauxite, manganese, cocoa and countless timber species depleted without any sustainable plan.

At present, oil discovery has now become a serious yardstick to measure what the country can achieve but will the oil story be written differently?

What did Ghana benefit from the Saltpond Basin, since its inception as it inches towards decommissioning? The Minister for Petroleum has terminated the Saltpond Petroleum Agreement and the field has reached its economic limit.

Currently, a Committee has been established under GNPC to decommission the project, the most active Tano basin will also one day be next in line to be decommissioned, again will the story be different?

The perching fly & Kwame Sefa-Kayi

One of the biggest challenges faced Norway at the time of its discoveries at Ekofisk was skills, as it absolutely had no expertise in oil and gas production, compared to Ghana.

Before Ghana discovered crude oil, several Ghanaians were working on huge modern platforms in Libya, Equatorial Guinea, Nigeria, Huston and other parts of the world.

However, we failed to make use of them and depended on international companies for the first oil for every skill, even cleaners – local content was abysmal not even for a position of roustabout until the law in 2013.

As Ghanaian Proverb goes, “it requires a lot of carefulness to kill the fly that perches on the scrotum.” We have the oil, they have the money, and what do we do? Money first and skills later or we hit the fly hard to hurt our pocket?

It was heartbreaking that one of the giant oil service providers opted to employ Ghana’s engineers from its university as drivers to the visible expression of anger by a Ghanaian media delegation to Singapore for the first FPSO.

One of the country’s respected broadcasters, Mr. Kwame Sefa-Kayi, called for immediate withdrawal of that statement and an apology in Singapore.

The 10 Commandments

As we compare to Norway, it will be informative to state that the country’s politicians were reported to be very determined to prevent potential oil revenues from disappearing out of the country into the pockets of multinational companies.

To prevent this, the Norwegian government was said to have endorsed a series of measures nicknamed “The 10 Oil Commandments” to ensure that oil development benefited the nation.

The position adopted by the politicians required that oil companies who wish to exploit Norway’s petroleum resources are to finance research in Norway in the oil and gas sector at BI Norwegian Business School.

In the case of Ghana, when the oil prices were good, above the $110.00 mark, oil companies shipped monies out of the country to their home countries by in the name sponsoring Ghanaian students to study abroad, Ghana’s medical services were sidelined by “international” health service providers who were imported into the country.

Sprinkled oil money

Today, in the face of the dwindling crude oil prices, the country’s technical universities became the best place to sponsor students in the name of cost cutting and investing in more locals.

Ten years on, the expectations are still high; people are still expecting the magic of oil money, which has been scattered everywhere in Ghana of which some of the projects cannot even be traced, cost are highly inflated to benefit few.

Ghana like other countries has high prospects in redefining the direction of the oil resource management in West Africa by making sure that in the next 10 years, skills development, Ghanaian ownership and openness of oil contracts among others takes precedent over self and political interest.

Areas reserved for Ghanaian companies should be enforced and the Petroleum Commission should be stronger in enforcing, promoting and ensuring that healthy partnerships are formed.

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