Bank of Ghana releases half year report on country's oil industry

Oil production in Ghana dropped from 2.11 million bbls for the month of January 2012 to 1.80 million bbls in April 2012 ending the half year at 1.77 million bbls. The drop in production was due to a temporary shut-down of some wells for acid stimulation activity. Jubilee field production is expected to average between 70,000 and 80,000 bopd gross in 2012 stemming from the successful acidisation programme. In the first half of 2012, Jubilee field production averaged 62,985.44 bopd gross with 11.75 million bbls produced for the half year. The field is expected to exit 2012 with a gross production rate in excess of 90,000 bopd as it ramps up to plateau production in 2013. This figures were contain in a semi-annual report issued by the Bank of Ghana on the Ghana Petroleum Holding Fund and the Ghana Petroleum Funds from January 1 to June 30, 2012. The Petroleum Holding Fund (PHF) and the Ghana Petroleum Funds (GPFs) were established by the Petroleum Revenue Management Act (PRMA) 2011, (Act 815). In accordance with the PRMA Section 28(a) and (b) the Bank of Ghana reports on the performance and activities of the PHF, and GPFs for the half year ended June 30, 2012. According to the report during the period under review there were 12 liftings by the Jubilee Field lifting partners producing a total of 11.75 million bbls. Tullow Ghana Limited received the highest of four (4) liftings totaling 3.93 million bbls, followed by the Ghana Group (represented by the GNPC) with three (3) liftings totaling 2.99 million bbls. Anadarko and Sabre Oil & Gas Limited group also received three (3) liftings totaling 2.9 million bbls. Kosmos received two (2) liftings totaling 1.92 million bbls. New discoveries made during the period included the Tweneboa, Enyenra, Ntomme (TEN) in the Deepwater Tano block as well as other clusters such as Mahogany, Teak, Akasa and Banda (MTAB). Development works on the TEN fields which include the FPSO design competition; subsea feed and associated tendering remains on track for the plan of development. The Ntomme 2A appraisal well was successfully completed with flow tests in both upper and lower reservoirs registering a combined rate of approximately 20,000 bopd. Commerciality declaration and development will be confirmed in the third quarter of 2012. 2012 Lifting and Allocation During the period under review, the Ghana Group (Ghana National Petroleum Corporation (GNPC) lifting on behalf of Government of Ghana) lifted three crude oil parcels (5th, 6th & 7th liftings) on January 4 2012, April 3 2012 and June 27, 2012 with total cargo value of US$326,620,009.43. The proceeds of the liftings in half one 2012 was allocated as follows: in support of the 2012 budget, the Annual Budget Fund Amount (ABFA) received US$131,905,535.44. GNPC received US$104,850,636.58 for equity finance and its 40 per cent share of the Carried and Participating Interest (CAPI). The proceeds of the seventh lift were not allocated at the time of this report. SURFACE RENTALS AND ROYALTIES In the first half of 2012, a total of US$448,224.60 and US$104,193.12 were received in the GHAPET account as Surface Rental and Royalties respectively. PORTFOLIO PERFORMANCE From January 1 to June 30, 2012, the European debt crisis continued to inject uncertainty into the financial markets. Average Eurozone credit default swaps (CDS) – a measure of an issuer’s default risk, rose 30% from US$250.06 on January 27, 2012 to US$325.50 on June 29, 2012, the rise impacted strongly by Spain and Italy. Eurozone sovereign bond yields moved in tandem with CDS showing higher yields along the curve in Portugal, Ireland, Italy, Greece and Spain, and lower levels in core Europe. Amidst the volatility in the markets, the Ghana Petroleum Funds continued to deliver positive returns on investment (ROI). Over the half year, ROI was 0.18 per cent for GSF and 0.29 per cent for GHF. Net total ROI of the GPFs was US$141,009.81, with GSF contributing US$98,835.50 and GHF, US$42,174.31. PETROLEUM HOLDING FUND The Petroleum Holding Fund held a balance of US$ 599,114.82 (see Schedule 1 below) as at June 30 2012. This amount comprised interest earned since inception amounting to US$46,697.09 and US$552,417.73 representing Surface Rentals and Royalties. Petroleum Revenue Management Regulations In accordance to PRMA Section 60 (1) Sub-committees have been established by the Minister of Finance and Economic Planning to develop the Petroleum Revenue Management Regulations. Audit of the Ghana Petroleum Fund and the Ghana Petroleum Funds In compliance with the PRMA Section 44 (1) the internal Audit Department of the Bank of Ghana had performed an audit on the GPFs and the PHF for the period ended December 31, 2011. During the half year period ended June 30, 2012, crude oil prices dropped and lost gains made at the beginning of the half year. The fall in prices was primarily due to weakening global growth and heightened uncertainty in the financial markets that saw major central banks cut key interest rates and the International Monetary Fund revising downwards the global economy growth estimates by 0.1 percentage points to 3.5 per cent. The Ghana Petroleum Funds did not lose capital. The value of the Ghana Stabilisation Fund increased by US$0.098 million to US$54.90 million, and the Ghana Heritage Fund increased by US$ 0.042 million to US$14.44 million. We are of the opinion that additional allocations to the Ghana Petroleum Funds will enhance returns on investment. Again during the period under review the Petroleum Commission established under the Petroleum Commission Act 2011 (Act 821) to regulate and monitor the management and the utilization of petroleum resources assumed its regulatory functions in Ghana’s oil and gas industry in May 2012. The work on the US$850 million gas infrastructure project at Atuabo in the Western Region is expected to be completed in November 2012. The project will enable Ghana transport natural gas from the Jubilee fields for processing and the generation of power at the Aboadze Thermal Plant.