Ghana shares many commonalities with us, not the least being our countries’ names are so similar few Guyanese identifying themselves abroad have not been asked, “Where? Ghana?” In Africa?” and forced to explain our existence on this promontory of South America. But our commonalities go way back – in fact before even men or even dinosaurs walked the Earth – to a time when Africa and South America were physically joined and them slowly drifted apart to form the Southern Atlantic Ocean.
That common geological origin between modern Ghana and the Guianas was brought to mind when oil was struck off Ghana in 2007 – the Jubilee year of its independence from Britain. Tullow Oil, the developer, rushed to bring that oil to market and did so in 2011 when oil had jumped from US/Bl to US1/Bl. But they also took a gamble to test the old geological premises by drilling off French Guiana and immediately struck oil in 2011. While they did not have much success with subsequent wells, it appears to have persuaded ExxonMobil to renew drilling concessions they had obtained off Essequibo, as far back as 1999. Exxon, of course, hit pay-dirt last year, the year before our Jubilee, and we are now working out the modalities of oil production that Ghana did between 2007 and 2011.
For reasons best known to themselves, the Government chose to be guided by the experience of landlocked Uganda, which discovered oil in its Lake Albert in 2006, but only gave out its first production licence in 2013 and does not expect to begin shipping oil by 2021. The major cause of this delay is Uganda’s need to create the infrastructure to transport the crude oil to ports, and their decision to build a refinery for a portion of their production. None of these factors are applicable to our situation where our oil is in deepwater like Ghana’s and ExxonMobil will be utilising a Floating Production Storage and Offloading (FPSO) vessel to extract, process and transport our oil directly to tankers, also like Ghana’s.
Like Guyana, however, the Government of Ghana created huge expectations of oil delivering the “good life” in the near term. As with Natural Resources Minister Raphael Trotman, the Ghanaian authorities claimed to have learnt from the mistakes of other oil-producing nations and introduced all sorts of legislation to keep them on the straight and narrow. They would “save for future generations by building infrastructure”.
Yet six years after oil started flowing, the public debt of Ghana has doubled, their currency is beleaguered and the International Monetary Fund (IMF) had to be called in to bail them out? Shouldn’t the Guyanese Government want to know why Ghana’s dream became a nightmare – without even having the opportunity to neglect other industries and develop the dreaded “Dutch Disease”. What happened is – like this People’s National Congress (PNC)-led Government shows all signs of repeating – the Government of Ghana was a victim of its own rhetoric and the imperatives of democratic elections. They had to deliver the promised “good life” to their supporters or face electoral defeat.
In their case, they hit a double whammy – willing lenders plied them with loans and investors bought Eurobonds right after oil was discovered and then oil prices collapsed in 2014. From the loans – which ex-PNC MP Sherwood Lowe recently advised the PNC-led Government to also take here – spending rose massively with for instance, the salaries of their massive Ghanaian Public Service doubling. The plunging oil prices created huge budget deficits as debt repayments absorbed one-quarter of expenditures.
To cap it all, Tullow was never able to reach the optimistic 200,000 barrels per day projected in 2008 and today the Jubilee Field delivers less than half of that. Technical problems with their FPSO Kwame Nkrumah, which our Government never seems to factor in, also contributed the lag in production.
Against this background, the Ghanaian Government was voted out of office last month.
