Invest in West Africa’s lucrative oil and gas industry – Prempeh woos US companies

Ghana’s Energy Minister Dr. Matthew Opoku Prempeh has called on the United States to take advantage and invest in the oil and gas industry in West Africa for the mutual benefit of American companies and West African countries.

Dr. Prempeh said this on Wednesday, 18 August 2021 in his keynote address at the West African Oil and Gas Forum on the theme: “US-West Africa: Sharing Prosperity in Oil & Gas Resources”, at the sidelines of the ongoing 2021 Offshore Technology Conference (OTC) in Houston, Texas, USA.

The forum is aimed at exploring ways for West Africa and the US to best leverage on each other to partake in the prosperity and opportunities that the oil and gas industry brings.

Dr. Prempeh noted that the Africa continent is blessed with abundant natural resources including oil and gas and that nearly half of the countries in West Africa including Nigeria, Ghana, Gabon, Guinea, and Senegal are producing oil and gas, making the sub-region an important hub of this critical sector.

He bemoaned, however, that a lot of the countries in the West African sub-region do not have the capacity to exploit these resources by themselves and have had to rely on foreign companies over the years.

He recalled that: “In Ghana, for instance, our first oil field (the Saltpond field) was discovered by an American company called Signal-Amoco Consortium in the 1970s and several years later, two American Companies (Kosmos Energy and Anadarko) and their partners discovered Ghana’s most prolific oil fields (Jubilee Field) and subsequently the TEN Field in a separate contract area.”

Touching on the importance of US companies in the exploration of oil and gas in the sub-region, Dr. Prempeh noted “US companies remain strategic partners in oil and gas exploration in West Africa, with huge investments. Several million barrels of oil and million standard cubic feet of gas are produced on daily basis in West Africa and Africa as a whole owing to the efforts of these foreign partners, including Chevron, ExxonMobil, Hess, and others.

“It is, therefore, important to look at ways in which both sides – those in whose territories these precious resources sit and those with the finances and the technology to exploit them can derive mutual benefits from their collaboration in order to benefit the citizens of those countries and the shareholders of the oil companies.”

To do this, Dr. Bawumia said “we must examine in turn how each side could benefit from our contractual arrangements. One unfortunate reality in several West African countries particularly in the resource-rich areas is the fact that the standard of living of the people is normally not commensurate with the wealth of resources leading to social and political agitation in several instances.”

“To address this, in Ghana, there are established programs and plans to have E&P companies give back to society through Corporate Social Responsibility programs and direct employment of indigenes to improve on their economic conditions,” he stated.

He added that E&P companies are also expected to train and transfer knowledge to indigenes and offer significant contracts to local firms to render services pertaining to petroleum operations.

“This must be beyond peripheral areas such as security, transport, and catering and look at areas that are core to the oil and gas industry. These are all mechanisms of empowering indigenes economically as the E&P companies grow in their operations and finances,” he said.

According to Dr. Prempeh, this does not relieve central governments of their responsibility to ensure efficient, fair, and stable resource revenue sharing among their citizens.

He said clear objectives should be established for use of the revenue coming from oil and gas and must be strictly adhered to adding that it is only through these measures that all can benefit from the oil and gas resources.

In Ghana, for, instance, the Manhyia South MP noted that the Petroleum Revenue Management Act determines how revenue from petroleum should be disbursed.

He said: “The Act does not only prescribe the use of petroleum revenues for the development of other sectors of the economy but also insists on the reservation of such revenues for future generations.

“Again in the area of skills training, it is important for governments to make the necessary investments, particularly in the youth to ensure that they possess the necessary skills to meet the demands of the highly specialized labor force that the oil companies require to ensure smooth operations. Africa has a young, dynamic and energetic population, and technical, vocational, education and training is a huge driver in industrialization, economic empowerment, and job creation.”

The Ghanaian minister further detailed that oil and gas exploration remains “a key component of our economic mix in the short-to-medium term and Africa needs more, not less exploration, for which reason we are open for business and will continue to push for investments in our sub-region.”

Touching on how oil-rich West African countries can attract investors Dr. Prempeh said: “First, I believe West African countries should be ready to make available adequate and quality data on oil blocks to improve the length of time between exploration and discovery. This is particularly important in attracting investment into the sector in the sense that, the oil companies have reduced workload in conducting exploratory activities which saves them a lot of costs.

“Secondly, for any investor to have the confidence to head to a particular destination, there should be the confidence that there is a robust and supportive framework in place to ensure that its assets and interest will not be threatened. This means the country must be stable, its legal systems must be robust enough to deliver justice in the event of a dispute, and that its regulatory and fiscal regimes are competitive transparent, and predictable.”

“Further, we must also find ways to align petroleum activities with the current trends in modern technology. For instance, promotion of licensing rounds in virtual format to ensure wide publicity without large congregations of people, which obviously in this pandemic era is not advisable. It should also be possible for foreign companies to assess data from Africa in their offices through virtual data rooms. These approaches will not only reduce cost but also save time and improve efficiencies,” he added.