Ghana - West Africa's Oil & Gas Hub?

Any discussion on oil and gas in Africa has historically been dominated by the activities in the Nigerian oil and gas sector. Hydrocarbon discoveries in countries neighbouring Nigeria have to some extent changed the focus of discussions in the last few years and that trend is set to continue. Undoubtedly in terms of production numbers, Nigeria remains the leading oil and gas country in the region. However, Ghana is certainly taking the initiative to make itself the oil and gas hub in the region. We examine below some of the developments in the supply chain of the oil and gas industry in Ghana.

Ghana's Petroleum Act 2016

With the discovery of larger commercial quantities of oil and gas in deepwater offshore Ghana, there has been the need for an update to its legislation. Historically two main statutes provided the framework for regulation of the upstream sector in Ghana, namely: the Ghana National Petroleum Corporation Act, 1983 ("PNDCL 64") and the Petroleum (Exploration and the Production) Act 1984 ("PNDCL 84"). PNDCL 64 established Ghana National Petroleum Corporation with the mandate to undertake the exploration, development, production and disposal of petroleum in Ghana. The PNDCL 84, under which ownership in all petroleum within the jurisdiction of Ghana is vested in the Republic of Ghana, provided the framework for the actual activities undertaken in the oil and gas sector.

It was widely accepted that the existing legislative framework could not adequately address the challenges, including fiscal, environmental and issues of local content that arise from actual development, production and utilisation of the country's oil and gas resources. As a consequence, the Ghanaian Parliament passed the long awaited Petroleum (Exploration and Production) Bill into law on 5 August 2016 (the "Act"). With its passage, the Act repeals the PNDCL 84, although it makes clear that regulations, rules and directives arising under the previous act and immediately in force prior to the enactment of the Act would remain in effect until revocation or termination.

Some key highlights of the Act include:

Transparency

The Act creates an attractive environment for potential investors to participate in the sector by providing certainty and transparency in the ground rules for operations. Open, transparent and competitive public tender processes have been introduced to precede the entry into a petroleum agreement In a bid to further improve transparency, the...