Ghana’s crude oil; revenues anticipated to reach $885 million this year

Some $885 million is expected to be accrued to government in revenues from crude oil production this year.

The expected $885 million is a significant recovery from the $666.4 million (GH¢3.8 billion) petroleum revenue received by government at end-December 2020 due to the impact of the Covid pandemic.

Anticipated increment in petroleum revenue is expected to come from increased royalties (US$201 million), Carried and participating interest (US$524.9 million), Corporate Income Tax (US$158.5 million), and Surface Rentals (US$1.30 million).

Increment in revenue will also be supported by an increased price projection of US$54.75/bbl for this year,  up from the revised US$39.11/bbl for 2020.

Gas price for 2021 is also projected at US$5.29 MMBtu, up from the 2020 projection of $4.31 per MMBtu.

“The 2021 Benchmark Revenue (BR) crude oil output is 64.86 million barrels (177,701.66 bbls/day), based on a three year supply average of each producing field’s actual and projected outputs. Similarly, the BR gas output, has been estimated at 78.34 trillion Btu for 2021,” notes PIAC in its 2020 annual report.

The year 2020 marked a reduction in crude oil production volumes in Ghana after three years of consecutive increases. Production of crude declined by 6.3 percent compared to the 2019 figure.

Conversely, gas output soared, recording a 40 percent increase. The Sankofa field produced the highest volume of combined gas among the three operational fields.  It increased output by 60 percent during the period.

The Sankofa field delivered to the Onshore Receiving Facility (ORF), more than nearly a half (49.3%) of raw gas produced in 2019 during the year under review. Gas export rose marginally by 3.1 percent over 46.19 percent recorded in 2019.

Earnings from the three oil fields contracted by 33.5 percent sliding to US$42.211 billion from US$63.496 billion recorded in 2019 as a result of Covid19 pandemic.

Revenue dwindled due to the combination of lower production volumes and low crude prices, aggravated by the Covid-19 pandemic.

CAPL declined by 40.5 percent, Surface Rentals by 37 percent, CIT by 21 percent and Royalties was in arrears of US$2,110, 212.23 in 2020, representing a 34.71 percent increase over 2019 figure of US$1,566,463.12

Ghana’s crude oil production is estimated to reduce from 66.93 million barrels in 2020 to 57.30 million barrels this year, representing a fall in the production of some 9.6 million barrels of oil.

The projected fall in production, follows an already declined production of some 4.5 million barrels of oil from the 2019 total oil production of 71.4 million barrels.