As Ghana pumps first oil country has no petroleum law

Today Wednesday December 15, 2010 Ghana makes history as the country joins the world’s oil producers.

The country will officially pump its first commercial oil from the largest oil field in West Africa, the Jubilee field. And Tullow Oil describes the development as “the fastest ever full-scale comprehensive deep water development.”

The discovery of oil in Ghana in commercial quantities was announced in June 2007. The Jubilee oil field according to Tullow Oil, the major stakeholders in the field contains 1.5 billion barrels of oil.

Oil first flowed into the FPSO on Sunday November 28, 2010 and this oil has been used to commission the facilities. The oil production rate will initially increase to 55,000 barrels of oil per day and then to 120,000 barrels per day, as new wells are completed over the next three to six months. The first tanker of oil from the Jubilee field is expected to be exported in January 2011, Tullow Oil said this morning.

There is euphoria in the country and even propaganda. The government’s propaganda machinery is in full gear trumpeting economic salvation to the people. Indeed, the Minister of Finance, Dr. Kwabena Duffuor when he presented the 2011 budget to Parliament made projections using expected oil revenue.

But the country has no oil law to guide the development of the sensitive sector, despite its inexperience in oil production. The Petroleum Bill is still being debated in Parliament. Parliament has however, hastily amended and passed Clause 5 of the Petroleum Bill which would allow the country to use the oil revenue as collateral for loans.

Economists and analysts have warned of the dangers of the phenomenon known as the ‘Dutch Disease’, but it does not appear that the country’s leaders are taking note.

According to the Think Tank, the Centre for Economic Policy Analysis (CEPA), as Ghana enters the oil era, an exchange rate effect symptomatic of the Dutch Disease is expected.

It adds, “The Dutch Disease is so named because of the destructive effect such as choking off the growth and employment potentials in non-oil sectors on the Dutch economy of the discovery of substantial gas reserves in the 1960s.”

The concern of most analysts and observers of the Ghanaian economy is that, the country’s leaders must not make the mistakes of other oil producing countries in Africa, particularly Nigeria. The oil, most people hope would be a blessing to the country.

By Emmanuel K. Dogbevi