Oil discovery rouses joy and apprehension: a 600mn barrel oil reserve may have been located off Ghana's west coast, but Emmanuel Yartey explains, steps are already being taken to make sure the "oil curse" does not strike here.

IN THE NOT too distant future Ghana could well be listed amongst the important oil-producing countries of the world. On June 16 the government announced that oil in commercial quantities had been discovered west of Cape Three Points in the Western Region of the country.

It has taken 20 years of perseverance in the successful search for the country's reserves. The light oil which was located 3,426 metres down in the Mahogany well is projected to be a 600mn barrel deposit. Experts have already made comparisons of Ghana's deposits to the vast reserves in Nigeria and Angola.

Kosmos Energy of the US with partners including Anadarko, Tullow Ghana Ltd and Ghana National Petroleum Co (GNPC) made the discovery.

The Chairman and CEO of Kosmos Energy, Mr Jim Muselman, made the news known to Ghana's president, John Kufuor. He indicated that he was optimistic about the find but pleaded with the public to keep on waiting till the work was finished, considering the fact that there was the need to do further work and adding that "We are pleased that the first well in our multi-well West African exploration drilling programme is a success."

Having signed the agreement for oil exploration with Kosmos Energy, the GNPC and the E.O. Group of companies in July 2004, the government was able to finalise the agreement within an appreciable period of three months, based upon previous seismic data provided by the GNPC valued at US$30mn as an initial amount, and drilling started on 28 May 2007.

The curse of oil

However, as Ghanaians have welcomed the good news, they are at the same time making comments about the curses that oil discoveries in fellow African countries have brought to their peoples instead of helping to make their living conditions better. They say in most cases a very large chunk of the oil proceeds find their way into the pockets of the powers-that-be and agents of the powerful industrialised nations, leaving the majority of the people in abject poverty.

And as reported by a privately-owned daily newspaper The Insight: "West African watchers say that the discovery of oil will not automatically lead to improvements in the living conditions of the people of Ghana. They point out that the discovery of large quantities of oil and gas in Nigeria did not bring about improvements in the living conditions of Nigerians.

"It rather led to the widening of the yawning gap between the very poor and the vulgarly rich. It will take prudent management measures and sound policies to ensure that the discovery directly impacts on the lives of the people of Ghana."

But President Kufuor said he had listenend to the concerns of the people about Ghana's oil discovery, and assured them, including the donor partners, that pragmatic and human-faced policies would be implemented to ensure that society became the winner. He added, "When I am out, my successor will use the measures, which will include institutional, to the benefit of the entire country."

Even though Nigeria, Gabon, Angola and Equatorial Guinea have some of the richest oil fields in Africa, their people are categorised among the world's poorest. The former Chief Executive of GNPC, Mr Tsatsu Tsikata told Ghana's Business and Financial Times that Ghana had already discovered 15mn barrels of oil in the Tano Basin in the Western Region, with a further 200bn cubic feet of natural gas. This is as a result of exploration work conducted by GNPC in the basin since the early 1990s.

According to Mr Tsikata, on the basis of further technical appraisal work, commercial production of the 15mn barrels of oil could begin immediately. "This is small in comparison to Saudi Arabia's, Venezuela's and the other major producing countries, but we must start from somewhere and as we continue, there is the high chance of making major discoveries. In fact, most of the current major oil producers began very small" he said.

RELATED ARTICLE: Huge rail and inland port developments

A MAJOR REVAMP of Ghana's freight transport situation was announced mid-August. The plans are the biggest to be announced since Independence in 1960, and if completed as reported will bring in a national development project on the scale of the Akosombo dam. First, the existing standard-gauge Western Rail Line from Takoradi to Awaso is to be extended up via Sunyani to the far north west, to Wa and eventually Hamile. The purpose of this largely brand-new line which will follow loosely the course of the Black Volta River is to open up solid mineral resources in the under-developed Upper West Region. Existing roads are quite unsuited to the transport of unbeneficiated material. Hopefully this new line will be completed by late 2011 if construction starts at the end of this year as planned.

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Second, the existing 1067mm-gauge line from the western port to Kumasi is to be completely rehabilitated to modern standards under the terms of an 18-month contract. This university-cum-industrial town already has an independent rail link with the eastern port of Tema. Part of the thinking behind the whole combined plan is to relieve congestion at Ghana's two main seaports. So a customs-processing 'inland port'--along the lines of Kenya's successful Nairobi railfreight handling facility--is to be built on a greenfield site at Boankra on the outskirts of Kumasi.

A multinational consortium headed by Kampac Oil Co of Dubai proposed the ambitious linked schemes to Ghana's Ports, Railways & Harbours Ministry and to the struggling Railway Corp. According to press reports from the Middle East a contract was signed on 17 August covering complete BOT services. At least three UAE-based companies are known to be involved in this consortium as well as engineering companies from China, Germany and Turkey, amongst others.