Ghana: Oil Exploration or Exploitation?


Accra — The news is that Ghana has hit oil in commercial quantities. Like a Tsunami, the news has taken center stage on major international media networks. As a Ghanaian, I have been inundated with questions about the latest development, many of which I could not provide answers to.

Last Monday, Kosmos Energy, Anadarko Petroleum, and Tullow Ghana Limited, a consortium engaged in oil exploration, simultaneously announced the discovery of oil in commercial quantities west of Cape Three Points. Industry sources said its size suggested the field is now likely to contain at least 300 million-400 million barrels of oil.

The announcement has brought variegated levels of excitement among Ghanaians. "Oil is money!" is how the President of the Republic, Mr. Kufour describes the good news. In fact, I can't think of any better expression than what His Excellency used. Unable to hide his apparent joy at the potential economic benefits the oil can bring to a country, and in this case, to a developing country, the President was heard on the BBC's Focus on Africa Program, saying that "my joy is that I'll go down in history as the president under whose watch oil was found to turn the economy of Ghana around for the better." Of course who could begrudge the President, knowing very well what this great discovery will contribute to the country's economy? Oil is economics, politics, and power! Simple!

Never mind the political undertone of the President's statement, but this is good news-of course, it needs to "flow" (to use Mr. Adda's word) first-because, according to the Minister of Information and National Orientation, Mr. Kwamena Bartels, the country spends "over two hundred million dollars a year on the importation of oil, and with the energy crisis now, it's even gone up." Thus, if the oil should finally "flow", it should make a significant impact on the economy of the country, and on the quality of life of the ordinary Ghanaian. Oil has the potential of turning the economic fortunes of a country around, increasing investment, and improving the lives of the ordinary people in a country. Beyond these internal benefits, it gives a nation an international clout, especially in a world order in which oil has been used as bait for economic and political diplomacy and to ward off attacks from militarily powerful nations.

Unfortunately, however, even though oil which has long been associated with economic wealth and power, it has been known to provide less benefits to the ordinary people, as the chunk of the benefits go to a few people who run the political show of a country. The citizenry is bugged with refrains like "oil means money" but the more some benefits accrue from oil, the poorer the people get. Oil, in most parts of the world has brought untold misery, poverty, pain, and drudgery to the people, instead of making any meaningful impact on their lives.

As the saying goes, if you want to know how your wife will look like in her 40s and 50s, look at your mother-in-law. The case of Nigeria, Gabon, Congo, Sudan, Venezuela, and many others are there for us to use as referent point. "Oil discoveries in certain cases have not brought the anticipated blessings. In certain cases they have turned out to be curses, they have only succeeded in establishing a new group of thieves, robbers and raising corruption to higher levels, and then making sudden billionaires out of people ." (JOYFM). Many African countries that are rich in natural resources are often poor because governments of these countries often make the argument that they don't have the equipment to process the raw materials of the country, in which case multinational companies from the west exploit them. Also, it is the case that for most countries with natural resources, exploiting these resources for personal, whimsical, and idiosyncratic interests takes precedence over good government. Competing oil and mining companies, backed by their governments, have often been willing to deal with anyone who could assure them of a concession or what in our local parlance is called "kickbacks."

According to the US Government, for instance, Nigeria is the largest oil producer in Africa and 11th largest in the world. It is an increasingly major supplier to the US, averaging 1.1 million barrels per day (bbl/d) in 2004, compared with 589,000 bbl/d in 2002. Crude oil production in 2004 was 2.5 million bbl/d. Oil export revenue is estimated at $20.9 billion for 2003 and forecast to be $27 billion for 2004, an increase of over 22%. (Climate Justice). The country has significant oil, and even more, gas reserves. Unfortunately, despite its oil and gas, Nigeria is now one of the poorest countries in the world, with its people among the worst poverty cases on the continent-and, of course, in the world. It is so unfortunate that for the many people in the Delta area of Nigeria, all the benefits they enjoy are the daily drudgery, poverty, and health problems due to the heavy industrial activities in the area. Nigeria's oil money has lined the pockets of military dictators and corrupt officials instead.

Should the ordinary people fail to benefit from this potential economic breakthrough, Ghana will make a mockery of itself. Ghana will, then, be no different from the likes of Nigeria and Angola. Let me say, unequivocally, though, that a statement President Kufuor made gives me some ray of hope. "Oil is money, and we need money to do the schools, the roads, the hospitals. If you find oil, you manage it well, can you complain about that?" "Some are doing it well and I assure you if others failed, Ghana will succeed because this is our destiny to set the good pace for where we are. So we're going to use it well," President Kufour said. History, it is said, should guide us and not take us to the point of retrogression. The President cannot leave any better legacy than to manage the oil well, if it finally comes.

Yet, another major problem which has characterized Africa's growth and development is the exploitation it constantly suffers from multinational companies, mostly from the west. Africa has the natural resources but it does not have the equipment or even the financial commitment to turn raw materials into finished products, which is why, in our case, government had to engage foreign firms to do the exploration. African countries have not yet decided to develop the technology themselves to identify all the resources they have and tap into these resources for their own welfare. This is where my greatest fear is! Some multinational companies have been the bane of Africa's development. For the most part, the main beneficiaries of the oil sector are foreign oil companies and a few individuals who lick the boots of these companies.

Therefore-at least, for now-there isn't much reason to be excited because without a process for transparency and accountability, the benefits accruing from the exploration will not be enjoyed by government, let alone reach the ordinary Ghanaian. Because of Africa's financial incapacitation, multinational companies come and discover oil right under our roof-a mineral resource our leaders didn't know existed and certainly can't confirm whether indeed the quantity they claim they discovered is even accurate. What is worse, multinational companies write the contracts and make sure they seize the lion's share, and our leaders can't even demand that at least the exploration process provides jobs for a number of their people. And why would they do so? They are scared that they will be asking too much.

In our case, even before the discovery was made, the contract had already been signed. We are told Kosmos holds a 30-percent stake in the project, with independent oil and gas giant Anadarko Petroleum also holding 30-percent, GNPC holds 10-percent, while British firm Tullow Oil holds a 20-percent stake. Local company E O Group has a 3.5-percent interest in the block. The government's agreement asks for so little a percentage, and the excuse is "we don't have the equipment to drill." Any reason why our percentage is so small?

Africa needs to do proper business without selling its birthright. A proper mechanism needs to be put in place to ensure that Ghana benefits from the exploration, which will also trickle down to the ordinary Ghanaian. There is nothing so shameful as to have a nation of natural resources with poor people. For me, that has been the African story. The stories of other African countries-which are oil rich yet are still so poor-should not be told in Ghana.

However, maybe our government knows the trick. According to Mr. Kwamena Bartels, "we have to learn the lessons from these African countries. What did they do wrong? We are already putting together about six different teams to go three Africa countries and three others, which has oil and to find out from them, what did they do wrong, and what did they do right, so that we don't fall into the same pit. We need to learn the lessons that others learn bitterly," he pointed out. For now, let me keep my mouth shut. Thanks, Mr. Speaker! Part two of "The "Aburokyire" Craze" returns next week.

Godwin Yaw Agboka is a Ghanaian Based in the U.S.

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