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The short to medium-term outlook of Ghana’s oil and gas industry considering: government policy, existing legislation, and scheduled or anticipated legislation


Ghana has emerged as a notable player in Africa’s oil and gas sector, making substantial strides in exploration and production over the years. The nation’s hydrocarbon resources have not only generated economic growth and foreign investment but also presented a unique set of challenges and opportunities.

This article will delve into the short to medium-term outlook for Ghana’s oil and gas industry, analysing key factors which will shape its trajectory. From regulatory frameworks and market dynamics to global concerns and technological advancements, a comprehensive understanding of these elements is crucial for stakeholders navigating the complex nature of the industry.

Regulatory framework

The regulatory structure of Ghana’s oil and gas industry comprises three main components: the constitutional framework, the statutory and organisational framework, and the contractual framework.

Constitutional framework

The Ghana’s Constitution vests the parliament with a significant role concerning the ratification of agreements linked to the utilisation of natural resources.

Organisational and statutory framework

The Ministry of Energy serves as the central institution responsible for exercising Ghana’s sovereignty over its natural resources. Various other government entities are also involved in regulating different facets of the oil and gas sector:

  • The Energy Commission (EC) assumes a supervisory and regulatory role. It regulates the technical operations of service providers in the electricity and natural gas supply industries.
  • The Petroleum Commission (PC) is tasked with the regulation and management of petroleum resources. It also coordinates policies relating to these resources to ensure effective use.
  • The National Petroleum Authority (NPA) is responsible for supervising downstream operations in the natural gas sector, including activities from processing and storage to transmission and distribution.
  • The Ghana National Petroleum Corporation (GNPC) serves as the entity through which the government holds interests in petroleum operations within Ghana. The GNPC enters into petroleum agreements on behalf of the government and functions as the national aggregator of natural gas from upstream operators to meet local market demands.

Contractual framework

Ghana’s contractual framework for the upstream sector has been largely manifested in a Model Petroleum Agreement (MPA) which has been used as a template for negotiating with oil companies to cover gaps in the law and practice. There have been additions, modifications, and enhancements made over time, and currently the model in use is a synthesis of mainly the previous MPA and the Petroleum (Exploration and Production) Act 2016 (Act 919) (the E&P Act).

Short-term outlook for the oil and gas industry

Ghana’s oil industry has a promising outlook for 2023 to 2035. This is driven by several projects due to commence during this period. This surge in activity positions Ghana as one of Africa’s rapidly-growing hydrocarbon producers. Notable ongoing operations include Phase 1 of the Pecan Conventional Oilfield, as well as the development of the Jubilee Southeast field and the Ntomme Far West Development.

The Midstream is expecting to see some expansion. Plans are underway to develop the Tema Floating Liquefied Natural Gas (FLNG) plant, the Tema VI Liquids storage Terminal, the Dixcove Oil Storage Facility, the Wa Oil Storage Facility and the Tema-Akosombo II and Tema Pipelines between 2023 and 2027.

Downstream, a new $1.98 billion oil refinery has been commissioned in Tema which is set to produce five million tonnes of petroleum production and due to undergo expansion by 2025. Additionally, a Ghanaian-owned refinery, has proposed the construction of two refineries in the Ningo Prampram district with a capacity of five million barrels per day (BpD).

Ghana introduced its Gold for Oil Policy in 2022. This is a strategy to address escalating economic pressures, especially pertaining to the strain on foreign exchange reserves. By leveraging its vast gold resources, Ghana envisages a buffer against volatile petroleum product prices.

The Gold for Oil Policy: a pioneering move?

The Government of Ghana took a step to address both the strain on foreign exchange reserves and regulate prices of petroleum products in the downstream sector by introducing the Gold for Oil Policy. The Policy’s core concept involves leveraging Ghana’s gold reserves to obtain oil and other petroleum products.

The Policy represents a significant effort in tackling the economic challenges faced by Ghana, particularly those concerning fluctuating petroleum product prices and the strain such fluctuations place on the nation’s foreign exchange reserves. The introductory chapter of the Policy’s framework clarifies its fundamental goal is to ease pressure on foreign exchange reserves by alleviating the strain on the demand for forex on the Bank of Ghana (BoG) and the banking sector, while ensuring fuel prices remain competitive.

The institutions pioneering the implementation of the Policy are the NPA, Bulk Oil Storage and Transport Company Ltd (BOST), BoG and the Precious Minerals Marketing Company (PMMC) through the Domestic Gold Purchase Programme (DGP).

In the Policy’s full implementation document, as issued by the NPA, the Policy is to leverage on the addition to gold reserves obtained from the DGP to provide foreign currency for the importation of petroleum products. The payment for the oil supplied is to be made via two channels: by way of a barter trade where gold is exchanged for oil; or through a broker channel where gold is valued and converted into cash which is then paid to the oil’s supplier. Under the Policy, the role of the NPA will be in collaboration with BOST in negotiating prices with international oil traders ensuring that the landed cost of products obtained through the Policy are competitive. The NPA will also approve the price at which BOST will sell the products to bulk import distribution and export companies, ensuring that oil marketing companies who act as offtakers of the products under the Policy will be sold at prices determined by the NPA.

The implementation of the Policy has sparked debate among stakeholdersTop of Form. The reviews from stakeholders in the industry, legislation and tax analysts stem from what seems to be an exemption of large-scale mining companies, in this context, the PMMC, from mandatory VAT payment. VAT is applicable to all taxable activities in Ghana, including mining. However, gold trade is subject to exemption only approved of by the parliament of Ghana. The major concern with these reviews is whether mining companies who supply at least 20 per cent of their stock to PMMC/BoG are exempt from VAT due to a loophole under the new policy. Mining companies are required to charge VAT and the incidence of tax under the Policy lies with the recipient of the gold supply.

The pertinent question then becomes can the government exempt the supply of gold from VAT under the Policy without parliamentary approval? Like many nations, in Ghana the exclusive authority to waive taxation rests with the legislature, and this is clearly provided for in Article 174 of the 1992 Constitution of Ghana. It is therefore clear that the government has no power to waive taxes on the sale of gold under the Policy and that consequently, mining companies should charge VAT for supplies made to the Bank of Ghana/PMMC or any other government agency under the Gold for Oil Policy.

Further issues arise from the possibility that consistently implementing this Policy could negatively affect downstream activities. This could lead to a situation where International Oil Companies are discouraged from supplying their products to Ghana, potentially causing a scarcity of petroleum products for long-term consumption. In its review of the Policy, the Ghana Chamber of Bulk Oil Distributors (GCBOD) also raised concerns about the preferential treatment of BOST under the Policy, as other bulk oil distributors are currently not allowed to compete fairly for the products supplied under the Policy.

The Gold for Oil Policy’s immediate impact has led to a short-lived stabilisation of fuel retail prices. Nevertheless, the future of the policy appears uncertain, given that the IMF has urged the government to reconsider due to its associated shortcomings and risks to the central bank.

The medium-term outlook, considering anticipated legislation


The NPA has proposed a localisation policy for the downstream sector which hints at a transformative shift. If realised, foreign-owned bulk distribution companies and oil marketing companies could see a mandate to cease their operations in Ghana.

The NPA has unveiled plans to execute the localisation of the downstream sector in several phases, aiming at minimising any adverse effects on existing stakeholders. However, the CEO of the NPA has emphasised that the policy is not structured to exclude foreign investors entirely from Ghana’s downstream industry. Instead, these international investors could engage in infrastructure-focused downstream initiatives, such as refineries, through cooperation with domestic investors in a minority partnership capacity.


The Petroleum Commission has put forward proposed amendments to the Petroleum (Local Content and Local Participation) Regulations, 2013 (L.I 2204) through the Petroleum (Local Content and Local Participation (Amendment) Regulations, 2021(L.I 2435), explaining that despite an improvement in local content and participation, an analysis of the petroleum upstream sector shows a shortage of essential skills and capabilities among local companies. Foreign firms dominate critical parts of the value chain. To address this, the Commission wants to encourage deeper involvement of Ghanaian companies through channel partnerships or strategic alliances. This approach intends to facilitate active participation and technology transfer, rather than indigenous companies being passive minority shareholders in joint ventures.

Energy transition

Despite Ghana’s efforts to develop its oil and gas industry, it is also embracing the global trend of transitioning to cleaner energy sources to combat climate change. This shift is significant as it aligns with the worldwide commitment towards reducing carbon emissions.

Ghana is seeing a rise its imports of full plug-in electric vehicles as a cleaner alternative to diesel engines. To regulate and boost this trend, the Energy Commission has proposed new regulations. These aim at stimulating the electric vehicle sector’s growth, lowering carbon emissions in transport, and establishing construction, operation, and safety standards for electric vehicles and charging infrastructure. They may also involve incentives such as reduced import tariffs, government subsidies for electric vehicle purchases, and reduced vehicle registration fees.


The projects underway from upstream to downstream of the oil and gas industry are indicative of bright prospects for the industry in the short term, this is perhaps attributed to the current machinery in place ensuring investor-friendly terms. The major focus should be an action plan to ensure sustainability in the industry. The aforementioned anticipated legislations concerning the upstream, downstream and legislation on energy transition may not be sufficient but is definitely a step in the right direction.


The topic of climate change and global energy transition from fossil fuels is nearer than predicted. Ghana must speed up efforts to counteract the effects this may have on the oil and gas industry.

What is recommended is that efforts to strengthen the capabilities of the GNPC ExplorCo to attain independent operatorship should be fast-tracked. Additionally, sector-specific regulations must be put in place by stakeholders to monitor aspects of the industry, this will become crucial given recent developments in the Volta Tano Basin and the emergence of privately-owned oil refineries.

Lucie Ekeleba Blay
Blay & Associates, Accra

Edwin Hoffman
Blay & Associates, Accra

Source: ibanet.org

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