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Ghana’s Oil Decline Deepens: 2023 Output Drops to Lowest Since 2019

The report also revealed that, for the second consecutive year, the $70.5 million proceeds from Jubilee Oil Holdings Limited (JOHL) liftings in 2023 were not paid into the Petroleum Holding Fund (PHF).

The Public Interest and Accountability Committee (PIAC) has released its 2023 annual report on the collection, management, and utilization of Ghana’s petroleum revenues. The report highlights a significant decline in crude oil production, marking the fourth consecutive year of reduced output.

According to the report, the country’s crude oil production dropped from a peak of 71.44 million barrels in 2019 to 48.25 million barrels in 2023.

“Crude oil production declined for the fourth consecutive year in 2023. Production dropped from a high of 71.44 million barrels in 2019 to 48.25 million barrels in 2023 representing an annual average decline of 9.2 percent,” portions of the statement reads.

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This represents an annual average decline rate of 9.2 percent over the four years (and also about 7 percent lower than the 2022 figure of 51.7 million barrels). The decline is particularly concerning, given the country’s reliance on oil revenue for economic stability.

The production from Ghana’s three major oil fields—Jubilee, Tweneboa-Enyenra-Ntomme
(TEN), and Sankofa Gye Nyame (SGN)—contributed to the total output. The Jubilee Field led the charge, producing 30,444,217 barrels (63 percent of the total production). The TEN Field contributed 6,716,278 barrels (14 percent), while the SGN Field produced 11,086,541.61 barrels (23 percent).

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Raw gas production also showed substantial figures, totalling 255,171.97 million standard cubic feet (MMSCF) in 2023. The SGN Field was the largest contributor, accounting for 50 percent of the total raw gas output. The Jubilee Field produced 30 percent, and the TEN Field contributed 20 percent.

The failure to deposit proceeds from JOHL liftings into the PHF has resulted in an outstanding debt of $343.1 million as of December 31, 2023.

The decline in oil production has prompted PIAC to urge the government and regulatory bodies to take decisive action to revitalize the industry and encourage the exploration of untapped resources.

Despite the decline in production, the average achieved price for crude oil by the Ghana Group from all three fields remained robust, averaging at US$78.067 per barrel for the year 2023. The report underscores the pressing need for strategic interventions and investments in Ghana’s oil sector to stabilize and potentially reverse the downward trend.
It also highlights that the country has yet to sign any new Petroleum Agreement (PA) since 2018.

In terms of revenue, the total amount paid into the Petroleum Holding Fund (PHF) during the period under review was US$1,062,323,419.12. However, this represents a 25.65 percent decrease from the previous year (2022).

The breakdown of revenue sources includes Carried and Participating Interest (CAPI) as the
biggest contributor (44.31 percent), followed by Corporate Income Tax (CIT) and Royalties
(34.38 percent and 20.67 percent, respectively).

Notably, the report highlights that the proceeds from Jubilee Oil Holdings Limited (JOHL)
liftings in 2023—amounting to US$70.4 million—were not paid into the PHF for the second
consecutive year. This brings the cumulative unpaid revenue into the PHF by JOHL to US$343.1 million as of the end of 2023.

PIAC maintains its position that proceeds from JOHL and other subsidiaries of Ghana
National Petroleum Corporation (GNPC) constitute petroleum revenues and must be paid into the PHF, in accordance with relevant legislation.

The report also emphasizes the need for a long-term national development plan approved by Parliament to guide the selection of Annual Budget Funding Amount (ABFA) priority areas.

Given this situation, GNPC has been cautioned to desist from granting loans and guarantees until substantial recoveries are made regarding outstanding debts.

“GNPC needs to intensify its efforts to recover these loans and desist from issuing guarantees to SOEs. The Committee reiterates that the government should desist from taking loans from the Corporation,” part of the report read.

In summary, Ghana faces critical challenges in its oil sector, necessitating strategic actions to reverse the production decline and ensure sustainable revenue management.

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