Ghana is set to construct a $60 billion petroleum hub
The first integrated oil and gas infrastructure in West Africa will be built on a 20,000-acre
plot of land in the Jomoro Municipality, Western Region.
At its peak, it can house three refineries with a minimum capacity of 300,000 bpsd each,
five petrochemical plants, jetties and port infrastructure, ten million cubic meters of
storage tanks, gas infrastructure, and ancillary infrastructure.
Ghana's President, H.E.
Nana Addo Dankwa Akufo-Addo, and Energy Minister, H.E.
Dr. Mathew Opuko Prempeh, have both expressed their belief in the establishment of a petroleum
hub and its ability to propel the country's petrochemical sector.
“The Petroleum Hub is going to be a major development in terms of the economic impact
that it’s going to have in the areas of job creation and the development of our petroleum
industry,” the President noted, adding, “the goals of the hub are massive, including
but not limited to our GDP, increasing the volume of taxes from our hub, revenue for
the state, and all these will major for the economy.”
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Mr. Peter John Amewu, then Ministry for Energy, received approval from Cabinet at its 48th
meeting on 14th February 2019 to commence the implementation of the masterplan for the
development of a petroleum hub in the Western Region.
The Petroleum Hub Development Corporation Bill was passed by Parliament in 2020 in a
strategic effort to stimulate socioeconomic growth by advancing Ghana's position as a
hub for the petrochemical industry in the West African region and globally.
The Bill also includes a memorandum stating that the hub would supply petroleum and petrochemical
products to meet domestic and regional demand, with President Akufo-Addo stating that the
project's goals are consistent with the African Continental Free Trade Area project, a strategic
framework aimed at accelerating intra-African trade.
The hub will utilize 20,000 acres of land, made available by Paramount Chief of the Western
Nzema Traditional Area and Board Chairman of the PHDC, Awulae Annor Adjei III, and will
feature three refineries, each with a minimum production capacity of 300,000 barrels per
day, five petrochemical plants, industrial infrastructure, and 10 million cubic meters
of storage capability and is expected to cost $60 billion.
Out of this amount, the Government of Ghana is expected to contribute US$6 billion representing
10% of the total investment cost.
The entire multi-billion project, though facilitated by Government, is designed to be purely private
sector funding, attracting investors across the petroleum value chain.
The government intends to leverage on private capital to finance the remaining ninety percent
funding requirements.
The contribution of the government Ghana would be targeted at providing the initial basic
infrastructure including land acquisition, payment of compensation, construction of road
and railway networks, and extension of the area, social amenities, such as water and
electricity.
Aside from establishing the institution to drive the project, the government's role is
to provide land, offsite infrastructure, tax breaks, and other benefits to the project.
Over the next decade, the project will be implemented in three stages.
The Chief Executive of the National Petroleum Authority, (NPA), Dr. Mustapha Abdul-Hamid
says Ghana is best placed to attract investments into its Petroleum Hub because of political
stability, geographical location, robust downstream sector, and its high quality crude oil.
Speaking during the official ribbon cutting ceremony at the Ghana delegation pavilion
at this year’s Offshore Technology Conference, (OTC) in Houston, Texas, Dr. Abdul-Hamid said
the NPA will vigorously support the establishment of the Petroleum Hub by undertaking strong
engagements with investor communities to be able to attract investments into the country.
He continued, saying, the authority will ensure it plays its regulatory role by providing
licences and permits for the establishment of the refineries, distribution and transportation
infrastructure, storage facilities, among others.
“It will also monitor the quality of petroleum products to ensure they meet specified standards”,
he stressed.
The proposed Petroleum Hub, which is estimated to be $60 billion has four key infrastructure:
refineries, petrol chemical plants, storage facilities and jettys.
The OTC is an annual event that brings together energy professionals from around the world
to exchange ideas and opinions in order to advance scientific and technical knowledge
of offshore resources and environmental issues.
With a location selected and feasibility studies underway, industry analysts believe that the
hub should not only create jobs, but also establish a sustainable means of refining
local crude, foster public-private synergies, and unify all three spheres of the petroleum
industry: upstream, midstream, and downstream.
The government has outlined a bold vision to make Ghana a hub for refined petroleum
products of West Africa.
The hub, which will be located at Bonyere in the Western region, targets very large
and ultra-large crude carriers (VLCCS and ULCCS) traversing the West African coast,
a popular route for European vessels.
Currently, the total refinery capacity (four refineries) in the region is estimated at
500,000 barrels per day, leaving a shortfall gap of 350,000 barrels which is closed by
import of refined products from Antwerp-Rotterdam Amsterdam (ARA) region by oil trading majors
such as Trafigura, Glencore and Vitol.
The proposed petroleum hub is meant to close this importation gap.
The development of the hub will include construction of key infrastructure such as jetties, storage
tanks, refineries, an LNG facility, power plants, and infrastructure for offshore activities.
The project is expected to contribute enormously to economic growth through value addition
to petroleum resources and job creation and also to accelerate the growth of Ghana's downstream
petroleum sector and make the country a major player in Africa's oil and gas industry.
Government is targeting US$1.56bn in export tax revenue through the project, which is
projected to create about 780,000 jobs and increase GDP by more than half by 2030.
"We expect to serve the VLCCS and ULCCS, and also explore the market opportunities in the
sub region," Dr. Yeboah said after a stakeholder engagement with residents of Bonyere over
the weekend.
An estimated US$12bn is needed to fund the first phase of the three-phase project.
The first phase comprises land valuation and compensation, followed by development of petrochemical
plants, a refinery and tank farms.
Completion of phase one will make available a projected crude refinery capacity of 350,000
bpd and storage capacity of one million, with ancillary facilities and services scheduled
for the second and third stages respectively.
"Surveyors have already started work, and we are in talks with the communities on compensations
and settlements," Dr. Yeboah added.
Although the project had been designed to ensure minimal displacement, some communities
and farmlands will be affected.
However, residents are upbeat about the project, banking their hopes for youth employment and
Infrastructural development on the creation of the hub.
"The project will help Jomoro District, and our kids will get jobs too, Samuel Cudjoe,
a resident of Bonyere, told Business24.
The Energy Ministry has asked for 20 competent youth from each community within the enclave
for vocational services training to position them for employment when the project takes
off next year.
"The communities will engage us through their consultants on land valuations and appropriate
compensations to ensure they are not shortchanged," the project's technical advisor said.
The committee stated that the establishment of the hub would contribute significantly
to the country's economic growth by adding value to the country's petroleum resources
and creating jobs.
The committee also stated in its report on the Petroleum Hub Development Bill that the
hub would increase the country's GDP by 130% by injecting US$60 billion into the economy
by 2030.
“In addition, it will also provide the country with liquefied natural gas (LNG) facilities
for power production and drive the growth of various industries, including petrochemicals.
This is expected to create 780,000 direct and indirect jobs in the country.
“Tax receipts from the downstream value chain operations will also boost the government’s
revenue to undertake development interventions.
The hub also comes with basic social amenities such as schools, health facilities and leisure
parks expected to improve the social well-being of the people,” the committee noted in its
report.
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