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Energy,
Oil and Gas:
Powering the Nation
Introduction
The energy sector, con-
sisting of electricity, biomass
energy and petroleum prod-
ucts is one of the key sectors
of the Ghanaian economy.
Energy is useful for domestic,
agricultural, mining and
industrial processes. Access
to modern, reliable and cost
effective energy is a key to
provision of basic social
services and a pre-requisite
for growth and dynamism of
the economy.
Ghana depends on mainly
three sources of energy, namely
wood fuel, electricity and petro-
leum. The bulk of the country’s
energy needs are met by wood
fuel which accounts for 65%
of the total energy consumed.
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Petroleum and electricity
currently account for only
23% and 12% respectively.
Although Ghana is well
endowed with a variety of
energy resources as hydro-
power, biomass, hydro-car-
bons and solar, the country
is stretching to meet the grow-
ing demand. Furthermore,
power supply interruptions
that occur as a result of inad-
equate generation reserve
margin, excessive transmis-
sion network constraints and
poor voltage support have
become the order of the day.
With regards to the petro-
leum sector, Ghana is an
emerging oil giant with sub-
stantial discovery off-shore.
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Ghana’s oil fields, which is
expected to pour its first oil
in the last quarter of 2010, con-
tinue to attract a lot of offshore
investors and is receiving a
great deal of attention from
the international community.
The discovery in the area
called the Jubilee Field also
contains significant quantities
of natural gas, which can
provide substantial oppor-
tunities to address the shortage
of power in the country.
Undoubtedly, oil discovery
can become a catalyst to
stimulate national economic
growth and transform Ghana
from a net oil importer to
exporter. It is estimated that
Ghana’s oil exports will earn
about US$ 3.5 billion by 2013.
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This will make oil Ghana’s
greatest foreign currency
earner, outpacing exports of
cocoa and gold.
The Energy Sector Vision
and Goals
The vision of the energy
sector is to assure universal
access and choice of modern
energy forms to all Ghanaians
without exception by 2020.
The Government also envi-
sions a sector which will
contribute significantly to
national revenue and eco-
nomic growth by becoming
a net exporter of oil and power
by 2012 and 2013 respectively.
The objective of the Gov-
ernment is also to achieve a
target of 5,000 MW of installed
power generation capacity by
2015. This level of capacity
will enable Ghana to supply
adequate electric power to
meet the growth in national
electricity demand and also
for export to the neighbour-
ing countries.
However, this raises a
number of challenges:
• Development of infrastruc-
ture for the production and
supply of adequate petroleum
products and energy services
to meet national requirement
and for export;
• Development of the requisite
infrastructure to ensure uni-
versal access to electricity
as well as the efficient and
reliable supply of energy
services;
• Ensuring that energy is
produced and supplied in a
form that has no adverse
health and environmental
impact;
• Ensuring efficient use of
energy; and
• Ensuring that oil revenue
is managed in a manner
that will benefit current and
future generations.
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Electricity
Volta River Authority
(VRA) dominates the energy
sector. VRA is responsible for
the generation, transmission
and distribution throughout
the Northern part of Ghana
of electricity and supplies
electricity in bulk to Elec-
tricity Company of Ghana
(ECG), which is responsible
for distribution of electricity
throughout the southern
part of the country.
Currently, the total installed
power generation capacity
of the country is said to be
around 1,920 MW. Out of the
total, 1,020 MW is generated
from the Akosombo Hydro-
electric Power Plant, which
recently underwent retro-
fitting involving the replace-
ment of some of its old turbine
runners with new ones as
well as mechanical works to
improve its power output.
The Kpong hydroelectric
Power Plant has a capacity
of 160 MW. The rest comes
from the Takoradi Thermal
Power Complex, 550 MW;
The Mines Reserve Plant,
80 MW; and 110 MW from
the Tema Diesel Power Plant.
Ghana has also a 125MW
power barge called Osagyefo
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Power Barge (OPB) to gener-
ate power from natural gas.
The barge has been leased
to Balkan Energy under an
agreement signed between
the Government and Balkan
Energy.
However, the current aver-
age annual increase of 7%
in electricity demand without
a corresponding addition of
power generation has resulted
in a tight demand-supply bal-
ance with no reserve margin,
leading to periodic blackouts
throughout the country.
Furthermore, the heavy
reliance on hydro power,
which represents 69% of the
generation mix, creates untold
hardship to consumers when
droughts lead to dangerously
low levels in the Volta Lake.
The first such pronounced
difficulty was experienced in
1983 with the latest in 2007.
Beyond the existing plants,
a total of 1,611.5 MW of
capacity is currently under
construction by the Govern-
ment and Independent Power
Producers while other plans
have been initiated to increase
power generation capacity
in the country.
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Latest Developments
• The Asogli Power Plant, a
full private sector financed
power plant of 200MW capac-
ity, has been completed and
awaiting the availability of
natural gas from Nigeria under
the West Africa Gas Project
to commence operation.
• A Memorandum of Under-
standing has been concluded
with TAQA of Abu Dhabi to
carry out the expansion of
the Takoradi International
Company (TICO) power plant
from 220 MW single-cycle
plant to a combined-cycle
plant of 330 MW.
• Financing of the Kpone
Thermal Power Plant of 220
MW, which is under con-
struction, will be restructured
to allow for the participation
of strategic private investors
in order to secure adequate
funding for the speedy com-
pletion of the project.
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• VRA has concluded an agree-
ment with Tema Osonor Power
Company, an Independent
Power Producer (IPP), to
expand the Tema Thermal
Power Plant by 126 MW and
ultimately into a combined-
cycle facility with a total
capacity of about 330 MW.
• The construction of the 400
MW Bui Hydropower plant
is in progress. The first unit
of 133MW is scheduled for
commissioning by the end
of 2011. The total installed
capacity of 400MW will be
commissioned by 2012.
• There are a number of major
hydro-power sites within
Ghana that have not yet
been developed. The total
potential of these sites is in
the order of 1,240 MW, with
a corresponding average
annual energy generation
potential exceeding 4,500
GWh/year.
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Rural Electrification
The energy policy focus
is to ensure universal access
to electricity particularly for
the rural communities by
2020. Universal access to elec-
tricity will enhance growth
and prosperity as well as spur
development and poverty
reduction in the rural areas.
Government has secured
over US$169 million under the
Ghana Energy Development
and Access Project (GEDAP)
to improve distribution infra-
structure and increase access
of electricity to selected com-
munities. In addition, the US
Exim Bank has granted Gov-
ernment a US$350 million
loan facility to extend elec-
tricity to rural communities
throughout the country. Other
electrification projects are
targeted at extending elec-
tricity to over 1,000 commu-
nities throughout the country.
Petroleum
Management
The overall responsibility
for the control of Ghana’s
oil industry is vested in the
Ministry of Energy. The Ghana
National Petroleum Corpo-
ration (GNPC) oversees the
upstream petroleum industry
(exploration, development,
production and disposal of
petroleum) while the National
Petroleum Authority (NPA)
oversees the downstream
petroleum industry (refining/
processing, storage and distri-
bution of petroleum products).
Upstream
Ghana’s oil and gas re-
sources stretch across the shore-
line from the west (Cape Three
Points) to the east (Keta).
Similarly, the Voltain Basin
inland, which covers over
40% of the country’s land
mass, is believed to have oil
and gas reserves.
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Recent discoveries and
appraisals in the Jubilee
field, which is made up of
two blocs, show that the field
contains recoverable reserves
of about 800 million barrels
of light crude oil, with an
upside potential of about 3
billion barrels.
The extraction of oil is
expected to commence late
2010. During the first phase
which is to be completed by
2010, the daily production
would be about 120,000 bar-
rels of oil and about 120 mil-
lion cubic feet of gas. The
second phase will be carried
out between 2010 and 2012
and will lead to a daily pro-
duction of 250,000 barrels and
250 million cubic feet of gas.
Oil experts also have con-
firmed that, recent discov-
eries and appraisals in the
Jubilee field, which is made
up of two blocs, show that
the field contains recoverable
reserves of about 800 million
barrels of light crude oil, with
an upside potential of about
3 billion barrels.
As part of the moves to
make the country a major
oil player, the government
decided to extend its conti-
nental shelf. Accordingly,
Ghana made its submissions
to seek approval to extend
the continental shelf under
the United Nation’s Conven-
tion on the Law of the Sea
(UNCLOS). Furthermore,
the Government intends to
accelerate the process of
acquisition of blocks in the
Ghana sedimentary basins
in order to fully and speedily
delineate the country’s oil
and gas potential.
There are currently 11
Petroleum Agreements oper-
ating in the country at dif-
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ferent stages of exploration
or development, according
to the Ministry of Energy.
The major actors in Ghana’s
oil sector are Tullow Oil,
Kosmos Energy, Anardarko
Petroleum, Sabre Oil & Gas,
EO Group and GNPC.
There are several other
companies active in the
Jubilee Field. These include
Vanco Energy (US) and LukOil
(Russia) in the Deep Water
Cape Three Points Block;
Sfren (UK) in the Keta Block
in the east, Amerrada Hess
(US) in the Deep water West
Cape Three Points Block;
Vitol/Meliconia in the Cape
Three Points Shallow/Deep
Block; Gasop, a subsidiary of
Nigerian OMEL in the Salt-
pond basin; and the Saltpond
Offshore Producing Com-
pany, a partnership between
GNPC and the Houston-
based Lushann Eternit in the
Saltpond Field.
Midstream
In order to secure a sus-
tainable and cost-competitive
fuel source, Ghana is involved
in the West African Gas Pipe-
line (WAGP) project for power
generation. The WAGP project
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is a natural gas pipeline of
678 km to supply gas from
Nigeria to Benin, Togo and
Ghana. The U$1 billion WAGP,
which was completed in
January 2010, is expected to
supply gas to the Takoradi
Thermal Power Complex by
March 2010.
The Government also
plans to reduce the cost of
power generation by building
two natural gas pipelines
from the Jubilee Field to the
Osagyefo Power Barge and
the Takoradi Thermal Power
Complex. The cost of infra-
structure to commercialise
the natural gas from the
Jubilee Filed is estimated at
over US$ 1 billion.
The speedy development
of the infrastructure is critical
for the reliable supply of
natural gas to operate some
of the thermal power plants.
Downstream
It is Government’s inten-
tion to ensure increased local
refining capacity to meet
both domestic demand and
exports. Currently, about 60%
of domestic demand can be
met by the sole oil refinery,
the state-owned Tema Oil
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Refinery (TOR). To bring refin-

ing capacity to acceptable
levels, there is the need to
expand the capacity of TOR
and also improve its opera-
tions. About US$300 million
is going to be invested in TOR
to increase its capacity by
about 100,000 barrels per
stream day from its current
level of 45,000 barrels per
stream day.

About US$683.5 million

is to be injected into the
operations of the Bulk Oil
Storage and Transportation
Company Limited (BOST),
in the medium term period
up to 2015, to improve bulk
transportation of petroleum
products especially to the
northern parts of the country.

Challenges
• In a country of almost 23
million people, barely 15 %
of the population is connected
to the national power grid,
and in rural areas only 5%
of the population has access
to grid electricity.
• Less than 35 % of the total
energy consumption in Ghana
is today from commercial
energy sources.
• Raising investment capital
to develop the energy sector
is a major challenge. It is esti-
mated that, about US$ 9 bil-
lion is required in the next five
years to finance the numer-
ous initiatives in the energy
sector, including oil and gas
activities which alone require
over US$ 5.5 billion.
• A major cost of being a
player in the crude oil indus-
try is the high safety stan-
dards that require vigilance
in monitoring operators in
order to protect the environ-
ment and the people whose
lives can be affected directly.
• The local capacity, special-
ized knowledge and human
resource skills needed to take
advantage of the oil boom
are lacking.
• No petrochemical industry
exists yet to create value-
added products from crude
oil to avoid the practice of
exporting raw materials like
cocoa, timber and gold.
• The high cost of the tech-
nology to generate renewable
energy sources (e.g. wind,
solar and waste energy) poses
a major challenge.
• Deforestation rates in Ghana
are amongst the highest in
Africa, with current levels of
wood-fuel consumption far
exceeding forest growth. The
challenges are therefore to
reverse the decline of the
wood-fuel resource base of
the country by encouraging
wood-fuel forestry and pro-
moting the use of alternative
fuels such as LPG as substi-
tute for wood-fuel.
Conclusion
After decades of casting
jealous looks at its oil rich
neighbours, the taps of Gha-
na’s very own oil boom are
about to open. If carefully
managed, the prospective
oil revenue will bring signif-
icant transformation to the
national economy in terms
of growth, job creation and
living standards.
While the doubts and
worries persist, both inside
and outside the country, the
Government is determined
not to make the oil discovery
a curse but a blessing.
However, Ghanaians
should draw lessons from the
experience of other countries
that have had bitter experi-
ences from oil production.
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