Ghana’s oil production declined by 6% in 2022; New upstream investment and development expected to increase future oil production
Ghana’s crude oil production has been on a successive decline since the country recorded its highest oil production of 72.1 million barrels (bbls) in 2019. Recent data on upstream oil production volumes from the Petroleum Commission of Ghana has shown that total oil production from the three oil fields—Jubilee, Sankofa Gye Nyame (SGN) and Tweneboa Enyenra Ntomme (TEN)—in 2022 accumulated to 51.8 million bbls. This represents a 6% reduction in the country’s oil production compared to the previous year’s production of 55.05 million bbls and 11% below the 2022 projected crude oil benchmark output of 58.0 million bbls. This recent decline implies that oil production has dropped by 28.2% since 2019.
Data source: Petroleum Commission
The decline in production in 2022 has been as a result of the drop in production at the SGN and TEN oil fields. Annual oil production at TEN declined by 28% year-on-year to 8.6 million bbls whilst SGN also recorded a 20% decline year-on-year to 12.6 million bbls in 2022. The Jubilee oil field however increased its production by 12% from 27.4 million bbls in 2021 to 30.5 million bbls in 2022. This was due to the four new wells (one new producer, two new water injectors and a previously drilled water injector) brought onstream in 2022.
Data Source: Petroleum Commission, 2022
Crude Oil Lifting and Proceeds
Out of the total crude oil produced in 2022, a total of 51.28 million bbls were lifted. The Ghana National Petroleum Corporation (GNPC) on behalf of the State undertook ten liftings across the three oil fields amounting to 9.40 million bbls, which represents 18.3% of the total liftings and a 10% increase compared to the 8.53 million bbls lifted in 2021. Ghana’s liftings comprised of 5.65 million bbls from Jubilee, 2.76 million bbls from SGN and 0.99 million bbls from TEN.
Available data from the Bank of Ghana’s Petroleum funds semi-annual report for H1 2022 and H2 2022 indicate that for nine out of the ten liftings, a total of US$ 895.4 million were received into the Petroleum Holding Fund (PHF) before the end of 2022. The Bank of Ghana’s summary of economic and financial data reveal that crude oil export receipts in 2022 increased year-on-year by 38% to US$ 5.43 billion due to the oil price hikes. Oil imports also rose sharply to US$ 4.70 billion in 2022 from US$ 2.72 billion in 2021. The difference between the oil exports and imports resulted in a positive trade balance of about US$ 0.73 billion.
Gas production in 2022 across the three oil fields also decreased marginally by 1.1% year-on-year to 253,555.1 mmscf from 256,262.04 mmscf recorded in 2021. SGN produced the highest volume of gas with a total of 129,394.7 mmscf made up of 58,246.78 mmscf associated gas and 71,147.88 mmscf non-associated gas. Jubilee and TEN recorded a slight decrease in gas production with 68,481.76 mmscf and 55,678.63 mmscf of gas produced respectively.
Upstream Development and Future Oil Production
New investment and development by Tullow Oil in the Jubilee and TEN oil fields is expected to increase Ghana’s oil production in the near future. This was revealed in the company’s statement and operational update to investors in January. An amount of US$ 300 million is earmarked to be invested in 2023 by the company. Capital investment in 2023 is expected to support production growth through to 2025 and free cash flow generation of $700-800 million for the two years 2024 and 2025 at $80/bbl.
Oil production at the Jubilee field in 2023 is expected to average c.95 kbopd (c.37 kbopd net) with about six new wells expected to come online in the middle of the year. Gross oil production from the Jubilee field is expected to exceed 100 kbopd after the new wells come online. Rahul Dhir, Chief Executive Officer of Tullow Oil plc commenting on their 2022 performance and outlook for 2023 commented:
“Strong operational delivery, rigorous focus on costs and capital discipline, the increased equity in our key operated fields in Ghana and higher oil prices drove material, expectation-beating free cash flow generation in 2022, accelerating the Group’s deleveraging towards a net debt to EBITDAX ratio of 1.3 times by the year-end. In 2023, we expect Jubilee production to exceed 100 kbopd once the new wells drilled in the southeast of the field are brought on stream. Our capital investment this year, in particular in Ghana, is expected to support production growth through to 2025 and material free cash flow generation.”
In 2023, Tullow expects production at the TEN field to average c.20 kbopd (c.11 kbopd net), including the planned two-week maintenance shutdown. A water injection well (En16) which came online in December 2022 is expected to provide pressure support for production from Enyenra in 2023. No new wells are expected at the TEN field this year.
The 110,000 b/d Pecan Field Development when completed presumably in 2024 is expected to also increase the country’s oil production in the future. The Pecan field with estimated reserves of 334mn boe is part of the Deepwater Tano Cape Three Points licence block and is operated by Aker Energy with 50% stake, Russian-based Lukoil (38%), GNPC (10%) and Fueltrade (2%). However, the Pecan field development has stalled due to the dispute over Lukoil’s participation after the invasion of Russia in Ukraine.
The benchmark crude oil output for the year as indicated in the 2023 government budget is estimated at 52.61 million bbls equivalent to 144,145 b/d and the benchmark gas output is estimated at 107.55 trillion Btu.