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Oil and Gas Exploration in Voltaian Basin URGENT NEED FOR NATIONAL CONSENSUS

botchway August 22, 2019

By Dr. Kwabena Donkor, former Minister for Power and MP for Pru East

In the last couple of years, this House has approved various plans of work of the Ghana National Petroleum Corporation (GNPC) in accordance with applicable statutes. [1]This has included preparatory work on the Voltaian Basin.

The Voltaian Basin is a foreland basin formed by sediments filling a flexural depression at the margin of the West African Craton. The flexure is due to a northwest obduction on the craton of the younger Pan African crust.[2] The Basin covers about forty percent of Ghana’s continental landmass and stretches across six countries, viz Benin, Burkina Faso, Cote d’Ivoire, Mali, Togo and Ghana, even though the Volta River flows primarily through Burkina Faso and Ghana.

Rt. Hon Speaker the Voltaian Basin has a good potential to hold significant petroleum resources. Geologists from the Soviet Union in the early 1960s observed viscous black oily bitumen in core samples of sandstones, shales and siltstones of the Oti Group in the Middle Voltaian, suggesting the presence of a working petroleum system. The current exploratory work of the National Oil Company should therefore throw further light on the existence of a petroleum system and hopefully, actualize the system and move the Voltaian basin from probable to prospect.

Mr. Speaker, the possibility of finding oil and or gas in commercial quantities would provide the country with a double edged sword. One side of the sword would be a low cost production resource than can be solely exploited by indigenous oil companies in partnership with the National Oil Company. A land rig is only a fraction of the cost of a deep offshore rig and within the reach of a number of Ghanaian firms. More importantly, the production cost of onshore oil and gas, as well as the technology cost is only a fraction of offshore production cost. Such low cost production would generate higher revenue levels for the treasury as well as enhance local content and local participation. This must be the desired outcome should oil and gas be discovered in the Voltaianand indeed any other onshore basin in commercial quantities.

There is Rt. Hon Speaker, the other side of the sword that must give this House and the nation we represent great trepidation. Onshore production comes with a number of challenges ranging from environmental degradation, social ownership and license, local empowerment, economic equity, surface rights, displacement of agriculture and community lifestyles, in-migration, insecurity, suitability of legal frameworks, governance related national – local conflicts etc. Even though these challenges are not exclusive to the oil sector and indeed permeate the general extractive sector, they are more pronounced in the oil and gas domain. In our immediate neighbourhood, oil production in the Niger Delta has faced insurgency from militants demanding a more equitable distribution of oil revenue and a solution to widespread pollution. This has found expression in vandalism, criminality, kidnapping etc. The very foundation of the nation state has been undermined.

Mr. Speaker, an estimated $4,972,372,727[3] has flowed into the Ghanaian Treasury from Offshore Oil production since the late Prof. Mills first turned on the oil pipe in 2010. This has no doubt boosted the Treasury but this has not come without challenges. Impacts on frontier communities have been troubling especially on fishing communities. The experiences of different communities in the Western Region where land was obtained from farmers for processing plants, warehouses and other ancillary services highlighted that the negotiations and engagement fell short of the farmers’ expectation. The farmers and landowners reportedly received limited compensation while the benefits of potential revenue from the oil production were not perceived to be offsetting the damage to their livelihoods since processing plants employed relatively few local people.[4]

It must be noted that land is a sacred commodity held in trust and tied up with people’s communal identity. In most Ghanaian cultures, land is seen as communal property administered by chiefs on behalf of the whole community, including the interests of ancestors and of the unborn.[5]

Mr. Speaker, oil production is going to raise if not highlight a number of issues that the Ghanaian State must of necessity address before we proceed any further. These issues would include Surface Rights, Revenue Sharing, Community Participation in ownership of concessions, Environmental degradation and mitigation, protection of contractor assets such as production platforms and pipelines, in-migration, stool lands disputes, engagement of local human capital, provision of appropriate security architecture, compensation for land acquisition in a sustainable and enduring manneramong others. And each of these has the potential of destabilizing the political and social order whether localized or escalated.

Mr. Speaker, a lackadaisical sleep walk into petroleum discovery and production in the Voltaian would be disastrous for Ghana. With the prevalent high level of youth unemployment, the influx of undesirables of other jurisdictions and the current ethnic tensions in parts of the Voltaian, any discovery and production without prior agreement as to what to do with the wealth in terms of distributional equity, a sustainable environmental management practice and an appropriate security architecture can set the country ablaze with conflicts that would make the Ogoni experience in Nigeria a child’s play.

Rt. Hon. Speaker, this House and the Executive Arm have the responsibility to proactively address the enumerated issues in a manner that must turn any discovery into a blessing. I recommend for the consideration of the House and the Executive Arm a couple of measures:

1. GNPC must not undertake any drilling until a vigorous Environmental Impact Assessment and an Environmental Management Plan have been developed, discussed and nationally agreed.

2. A national conference on what to do with the proceeds and opportunities from the Voltaian and any other onshore discovery. We must learn from the Botswana experience here. This Conference should be preceded by the appointment of a Preparatory Committee that should include representation of the National House of Chiefs, Institute of Surveyors, Ghana Bar Association, Representatives of Farmers, Environmental Civil Society Groups, Development Planners, Youth Representatives, the Internal Security Services, Oil and Gas Executives etc. The Committee should come out with a draft document for the National Conference to consider and this must address related issues including surface rights, revenue retention in host communities, local content and equity participation, environmental management, compensation, community employment and empowerment, land restoration etc.

3.Amendments to the Petroleum Exploration and Production Law 2016 to specifically accommodate peculiarities of Onshore production, amendment of the Petroleum Revenue Management Act to make provision for subnational structures and a commitment to restrict onshore production to Ghanaian interest only. Oil Service Contract methodology may be recommended.

Mr. Speaker it is my prayer that this House would lead a national discussion that would ensure that any possible discovery of oil and gas in commercial quantities in the Voltaian basin would add to the wealth and prosperity of the Ghanaian people rather than become a cause of instability of the Nation State.

I am grateful for the opportunity to make this statement.

[1] See PNDC Law 64, PRM Act, E&P Act

[2]Ako, Justice A & Wellman Peter (1985) Journal of the Geological Society, 142, p 625-632

[3] PIAC, 2019

[4]Jo Robinson and Lilli Loveday ‘Ghana’s Extractive Industry moves onshore: The challenges and opportunities for inclusive growth’  (Oxford Policy Management)

 

[5]Amanor S.K (2006) Family Values, Land Sales and agricultural commodification in Ghana pp.22

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