Ghana standa to become a model in oil development

Ghana is said to be in a good position to become a model for oil development in Africa. With a better political climate and regulation framework coupled with an active press, the new sector in Ghana could develop into something big.

However, the country must be cautious in order not to neglect other sectors because they are equally important.

The Senior Advisor to the Norwegian Agency for Development Cooperation (NORAD), Energy Department, Oil for Development (OfD), Mr. Svein Heglund, who made the observation, also praised the country for taking the steps to enact the right legislation to govern the oil sector.

He said there was a marked difference in Ghana's approach as compared to the manner in which the mineral sector was tackled. He appreciated the challenges of that era saying that Ghana had little control over the minerals.

He believed that Ghana has a strong Ministry of Finance and Economic Planning (MOFEP) and that was necessary to ensure that existing funds go through the MOFEP and not any other institutions.

"Ghana has a national pride; the citizenry talks about the nation more than any State. It has a tradition and history of democratic institutions than many other nations in Africa.
Therefore, if there is any nation that is going to succeed, then it should be Ghana."

The Norwegian government's OfD initiative focuses on resource management, revenue management and environmental management. It mainly builds capacity within government institutions, because it believes that a competent public sector is crucial to ensure good governance of the petroleum sector.

However, it also supports civil society and media to be strong to be able to monitor their governments. Ghana is the latest addition to the list of countries (10) that have core cooperation for OfD. This cooperation between Norwegian government institutions and institutions in developing countries on petroleum governance is based on request from the developing countries.

Mr. Heglund said his organization was happy to work with a country like Ghana because it is a country starting on a high public-spirited note and is determined to pre-empt the so-called resource curse.

He noted that Ghana has its own model, with good and bad experiences in mining as well as lots of environment issues serving as a guide, but then developing such a huge model is new to the country.

According to him, there was lot of work to be done by many institutions and that Norway was assisting Ghana to develop its local content which would allow Ghanaian companies to participate in the oil industry.

"Even though we advise on government working in the area there is also the need for private participation. Our country has benefited from so many people working in the sector".

He recalled that Ghana discovered her main field, Jubilee Field two years ago with good possibilities of finding more fields around it and a lot of associated gas that could produce enough power, but then lacked the expertise to manage the sector.

He said the Ghana National Petroleum Company (GNPC) which over the years had been working downstream on petroleum distribution and supervised all licenses, was now upstream focusing on exploration.

Mr. Heglund disclosed that Norway's assistance to Ghana began two years ago with cooperating institutions namely, the Office of the President, Ministries of Environment and Energy and Environmental Protection Agency (EPA).

He announced that a five year MOU had been signed between Ghana's Ministry of Energy and Norwegian Ministry of Foreign Affairs. Project period is between March 2008 and March 2013 with a 2009 budgetary support of 14.5 million Norwegian Kroner (about 2,644,872.91US dollars).

Activities to be conducted include continuous review of the draft field development plan, workshops covering transfer of Norwegian experience, regulation development, auditing inspection, gas utilization and commercial issues among others.

He admits that Norway has tried different models of which some have worked while others have failed. He said because Norway is an industrialized country there are lots of advantages in the oil sector.

Ms Dagny Mjos, Adviser, Africa Section of the Norwegian Ministry of Foreign Affairs (NMFA), said that historically, Norway had helped Ghana through multilateral channels, and development cooperation had been well structured. She said this relationship had been extended to the oil sector following the discovery of Ghana's oil, a sector which Norway is supporting with six million Norwegian kroner (1,057,949.17 US dollars) in aid.

She shared the position of Mr. Heglund that since Ghana was at a starting point, she was in a good position to put up systems that would ensure that she avoided the resource curse. "It is a crucial moment for Ghana to work on these things to avoid the sad story about oil in some parts of the world," she stated.

Assistant Director General for Southern and West Africa Section at the NMFA, Ms Tove Stub, said although there had been long-term development cooperation between Norway and Eastern and Northern Africa, and South Africa after apartheid, West Africa had become now an important player on the international scene as oil producer and a subregion out of conflict.She said now her country's relationship with Africa was getting broader.

"Now Climate Change is on board and is also in our interest that Africa gets peaceful and better livelihoods. Norway has increased its development budget, social sectors, bilateral and multilateral initiatives."

She noted that although each country devised its own model there were good points the two countries could learn from each other. She added, the media and civil society had crucial roles, to monitor how the government was using the oil money.

Norway's oil industry did not develop in a vacuum in terms of its policy, administration or economy. It has a long tradition of dealing with foreign capital in relation to hydropower and developing effective political structures to support development.

Of course, in the late 1960s and early 1970s, with the discovery of oil in the North Sea, there were more foreign investments which have been very beneficial to the country, in terms of revenues and the creation of interesting new jobs in specialized fields.

At the same time, Norway is said to have been careful to guard against domination by the oil sector. Of course, the country knows that oil reserves will not last forever, and is developing other aspects of its economy for the future.

It has made considerable investments in infrastructure and education. As at January this year, Norway had 6.7 billion barrels of proven oil reserves, making it the largest oil reserves in Western Europe, according to the Oil and Gas Journal.

Norway is the largest oil producer in Europe and produced 2.7 million barrels a day in 2008. It is believed that with the country's efficient management of its oil resources, Norway could be a good source of help for Ghana.