Thursday, June 21, 2007

Excitement and cynicism in the air in Ghana as oil is found

The government of Ghana Monday announced that it has discovered crude oil in commercial quantity at a district in its western region. Tullow Oil Plc, a UK oil and gas exploration company reportedly made the discovery last Friday.
A statement from the country’s presidency confirming the discovery in Accra, said further testing would be required to establish the number of barrels that can be produced from the well in a day. As Ghana’s president, John Kufuor, was said to be ‘excited,’ a cynics have dismissed the news as a political gimmick hatched by the ruling party to induce unnecessary excitement at a time when Ghana’s energy crisis is biting hard.
Some environmentalists have expressed worry at the discovery describing oil exploration in Ghana as a recipe for future conflict and environmental degradation: “I would only say we should be careful. I don’t think beyond the monetary gains which often fuel colossal corruption, that oil has really helped any African country develop. Look at Nigeria’s Niger Delta region. I just wouldn’t want our eco-system and peace sacrificed for anything,” said Akua Mensah, an Accra-based environmentalist.
Mr Tsatsu Tsikata, a former Chief Executive of Ghana National Petroleum Company has described the announcement as ”fantastic news for the country,” believing that the discovery of the ‘black gold’ signals a significant turning point for the economy of Ghana:
“God has done it for Ghana. The discovery is one way that the Supreme Being has shown that he is with us at this time of our golden jubilee. It is a wonderful gift at 50,” said an excited Kojo Otteng, glossery shop owner in Tema, Ghana’s main port city. Local industry sources said the size of the discovered oil field suggested it is now likely to contain at least 300 million-400 million barrels of oil.
"The discovery of oil in the Mahogany well represents a major event for the Republic of Ghana. Based on evidence to date, ultimate reserves are likely to be materially in excess of previous estimates," said Aidan Heavey, Chief Executive of Tullow Oil.

Oil company's shared have increased

The company said it found light oil at its deep offshore Mahogany-1 exploration well off the coast of Ghana, Tullow's largest oil discovery to date. Tullow Oil owns a 22.9 per cent interest in the West Cape Three Points license and a 49.95 per cent interest in the Deepwater Tano license. The company previously said it expected to find reserves of 250 million barrels of oil equivalent at the Mahogany field, but the potential reserves now look "somewhat larger."
"Based on evidence to date, ultimate reserves are likely to be materially in excess of previous estimates, with some high-potential zones still to be drilled," said Heavey. The Tullow Oil boss said the field's upper-range estimate of 600 million barrels of gross recoverable oil "remains entirely credible."
Agency reports say the company’s share in London jumped by about 10 per cent after the discovery was announced. Tullow will provide a further update on the Mahogany field at its pre-close first-half trading update on July 11. The company hopes to start appraising the commercial prospects of the Mahogany field in 2008.
The West Cape Three Points, where the discovery was made, is operated by Kosmos Energy LLC, which owns a 30.875 per cent interest in the project. Other stake holders include Anadarko WCTP Company, an affiliate of Anadarko Petroleum Corporation (APC) with a 30.875 per cent interest; Tullow Ghana Limited, an affiliate of Tullow Oil PLC, with a 22.896 per cent interest; state-owned Ghana National Petroleum Corp with a 10 per cent stake; The E.O. Group, a Ghanaian oil and gas company, with a 3.5 per cent interest; and Sabre Oil and Gas Limited with a 1.854 per cent interest in the block.
Cocoa and gold remains Ghana’s leading export commodities. However, very little of the gold revenues stay in the country while damage to the physical environment by both large and small-scale mining is inflicting an incalculable cost to the economy with vast tracts of farming land permanently ruined, forests destroyed and water resources diverted and polluted.

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