December 2010


Dec. 15, 2010 marked a great day in the lives of many Ghanaians because Ghana joined the list of countries producing oil on a commercial basis. The question on most people’s minds is: How does this benefit us (Ghanaians)?

Ghana's President John Atta Mills turns on the valve to allow the first barrel of crude to flow from the Jubilee offshore oil field on Dec. 15. Ghanaians welcomed their country's first oil on Wednesday, optimistic they can enjoy the economic benefits without the troubles that oil wealth has brought other African countries. CTM Communications/Tullow Oil/Reuters

His Excellency John Atta Mills, President of Ghana, was in Sekondi-Takoradi, where he was flown offshore to the FPSO Kwame Nkrumah to open the valves to make way for the flow of first oil. Jubilee Partners, which include Tullow Oil plc (34.7 percent), Anadarko Petroleum Corp (23.49 percent), Kosmos Energy (23.49 percent), Ghana National Petroleum Corporation (GNPC) (13.75 percent), Sabre Oil and Gas (2.81 percent) and E.O. Group (1.75 percent) participated in a formal celebration to commemorate the first oil, hosted by the president at the Takoradi Air force base.

The first phase of production at the Jubilee oilfield has begun, ramping up to 55,000 barrels of oil per day (BOPD) this month and 120,000 BOPD during the first half of 2011 as additional wells are completed. This marks the beginning of Ghana’s first significant commercial oil production and will allow the country to join the ranks of sizable West African oil exporters.

Estimates on the quantum of Ghana’s oil wealth vary hugely. The common starting point is that Jubilee will produce about 120,000 barrels per day and some $1.2 billion in government revenue a year for 20 years.

Map of Ghana offshore oil fields including Jubilee, Tweneboa, and Dzata

The adjacent Tweneboa field is reckoned to be as big as Jubilee’s, but industry experts forecast the biggest finds will be onshore in the Keta basin. With companies like Exxon Mobil, BP, ENI and Sinopec vying to buy equity in the Jubilee field, the assumption is that Ghana has several billion barrels of reserves.

Location of the Keta basin study area, wells and proximity to other fields in the Gulf of Guinea Province.

David Throup of Online Africa Policy Forums Blog points out that:

Ghana urgently needs to improve its infrastructure: it needs new sewers and water pipes and ring-roads in Accra, a revamped electricity grid, improved generating facilities at Akosombo, improved rail-links from Accra to Kumasi and Tamale and on to Burkina Faso, and a renewed and extended network of secondary and tertiary feeder roads through the rural hinterland. Others will argue for improving educational and health facilities. Such development spending would generate employment in construction and ancillary services, and hopefully promote sustained economic activity and growth. In a society where 60-70 percent of the population depends on smallholder agriculture for their livelihoods and 90 percent of the population in urban areas depends on the informal sector, such job-generating spending could be beneficial. But the money must be spent wisely and over a number of years if it is not to exacerbate inflation and exceed Ghana’s capacity to absorb the spending.

Ghana enters new era with oil field launch

TAKORADI, Ghana, December 15 – Ghana joined the ranks of Africa’s oil exporters on Wednesday, pledging to work to ensure lucrative new revenues further bolster one of the continent’s rising star economies.

John Atta Mills, the president of Ghana, wearing safety gear and blue overalls, opened the valves in a televised ceremony at the 330-metre-long floating platform some 40 miles (60 km) off the west African country’s Atlantic coast.

Initial production of around 120,000 barrels per day will rank Ghana as sub-Saharan Africa’s seventh largest producer, with output set to double within three years.

The start of commercial production came just three years after discovery of oil at the field, named Jubilee to mark the timing of the find 50 years after independence in 1957.

“After a long wait, the day has come,” Mr Mills said.

“But … it means that we are assuming a very serious responsibility. And especially for those who are in leadership positions, we must ensure that it becomes a blessing not a curse,” he warned.

Aside from state-owned Ghana National Petroleum Corporation (GNPC), top players in Jubilee include UK-listed operator Tullow Oil, US producer Anadarko Petroleum and privately held US energy firm Kosmos.

The event underlines the importance of the Gulf of Guinea as a growing source of energy to consumers such as the US, where some see it supplying a quarter of US oil by 2015.

The region already counts Nigeria, Equatorial Guinea, Gabon and Congo Republic as exporters and others such as Liberia and Sierra Leone are hopeful of joining the club.

Ghana has taken advice in how to manage its oil sector from countries including Norway, and is anxious to avoid the strife and corruption which nearby Nigeria’s oil has brought.

“It will be a blessing because we are all jobless and poor,” said Brian Salmon, a 17-year-old small-holder in the western region coastal town of Takoradi.

“Normally when oil comes everybody is fighting to get their daily bread, but we Ghanaians have an understanding and will avoid conflict,” he added.

Ghana is the world’s second largest cocoa producer after neighbouring Ivory Coast and Africa’s number two gold miner. It has a $750m eurobond currently yielding about 6.4 per cent.

Ghana expects Jubilee’s oil and gas to help double its growth rate to more than 12 per cent next year, funding projects to boost infrastructure and laying the foundation for new industrial sectors. New data on Wednesday showed inflation running at 18-year lows.

Analysts say that while two decades of multi-party politics have led to a level of governance others in the volatile region can only dream of, Accra has dragged its heels on drafting the legal framework needed to manage the oil revenues.

Total revenue from oil into the 2011 budget is put at only 1.9 per cent of GDP. Although this is due to rise over the years, the initial impact on the economy is seen as modest.

Many are concerned a complex petroleum revenue management bill has yet to be voted by parliament and note the current draft allows 70 per cent of revenues to be used as collateral against loans, a possible incitement to excess borrowing.

“As a country we have a fairly terrible track record of hedging our commodities,” said Emmanuel Gyimah-Boadi of Ghana’s Centre for Democratic Development.

Ghana failed to tuck away proceeds from its assets in time to cushion it from a price slump in 2000, forcing it to seek $3.7bn debt relief two years later. Its budget deficit is set to finish 2010 just under 10 per cent of national output.

In a saga that unnerved some potential investors, Kosmos in August called off what sources close to the deal said was a $4bn pact to sell its stake to ExxonMobil after resistance from GNPC, which wants to raise its own holding.

Ghana Pumps First Official Oil

History was recorded yesterday in the Western Region when President Atta-Mills turned the valve on the FPSO Kwame Nkrumah to signify the beginning of the production of crude oil in commercial quantities in the Jubilee oil field.

It was a memorable occasion for all Ghanaians many who stayed glued to their TVs at home and work places to watch the programme live. The function itself took place at the Takoradi Air Force base and was graced by two former Presidents, Jerry John Rawlings and John Agyekum Kufuor as well as Ministers of State, members of the diplomatic corps, Members of Parliament, Chiefs and Ghanaians from all walks of life.

Also present were the jubilee partners; Tullow Oil plc, Anadarko, EO Group, Cosmos, Sabre and GNPC who are the shareholders of the Jubilee field.

At about 10 am, President Mills arrived on the FPSO in a helicopter and went through the safety briefing before being led by a Tullow official to the pipeline where he turned open the valve to open the pipes for the crude oil to gush through.

Ghana’s oil is the light sweet crude kind that is much sought after in the international market. The Jubilee Field will produce an initial 55,000 barrels of oil per day, but with the development of more wells, production is expected to hit 120,000 barrels per day.

The first export of oil will be in the first week of January 2011 to the United States of America and other European countries with the rest being used for domestic purposes. President John Evans Attah Mills, after turning open the valve, went ahead to interact with some Ghanaian engineers and doctors working in the vessel. Dr. Claudia Donkor and trainee engineers Emmanuel Kojo Dei and Francis Antwi were part of those the President interacted with. They expressed their joy at being part of the historic occasion.

Addressing a large gathering at the Takoradi Air Force base later on, President Mills paid glowing tributes to Former Presidents Rawlings and Kufuor for their immense contribution towards the production of crude oil in commercial quantities in Ghana.

He said former president Rawlings “clearly laid a massive foundation for what we are witnessing today. President John Agyekum Kufour continued from where President Rawlings left off. He also devoted attention to the oil.”

President Mills also paid special homage to Former GNPC boss, Tsatsu Tsikata under whose watch great strides were made towards the discovery of crude oil in commercial quantities in Ghana.

The President also applauded the efforts of the Jubilee partners in concluding Ghana’s odyssey to crude oil production in commercial quantities but reminded them on the need to respect all the agreements signed especially the fact that local content in the production process must be a priority.

Touching on the concerns raised by Chiefs in the Western Region about the need to use 10% of the oil revenue to develop the region, the President assured them that the region would be given priority.

“The Western Region where the oil and gas is located will be given the pride of place as far as development is concerned. Indeed there will be a massive development within the Western Region in the next few months,” he said.

With production beginning, Ghanaians are hoping that the under development that has been the lot of the country for years would soon be a thing of the past.

I spoke with Ghana. Everyone was watching on tv and feeling some pride. We are all watching with hope and trepidation in our hearts. In all too many cases we are watching with greed in our hearts as well. May we protect ourselves from the ill effects of our own greed and the immense greed from outside Ghana’s borders. And may all Ghanaians share and enjoy the benefits and positive opportunities the oil offers.

Almost half of the top 12 fastest growing economies in the world come from Africa. Ghana has swept from a 4.5% growth rate last year, to an astonishing 20.146% growth rate for 2011, making Ghana the fastest growing economy in the world.

The true size of Africa in perspective, just a reminder of how big Africa is, and how big its potential is as well.

See more information and detail at The True Size of Africa

Ghana is expected to be the fastest growing economy in the world in 2011!

12 Fastest Growing Economies of 2011

For 2010, we noted that none of the top growth countries were advanced economies; only one was G20.

Many people assume that China is the fastest growing country in the world, but that is not the case – it is the fastest growing large economy, and as we will see that is a different thing.

We also took a look at the key trends that are driving the growth figures.
Let’s take a look at the stats for 2011:

Growth rates are much higher this year. The chart tops out at over 20%.

Once again, developed countries do not feature in the Top 12. Almost half of the top 12 come from Africa. Ghana has swept from 4.5% last year, to an astonishing 20.146% for 2011.

One third of the Top 12 are from the Far East; two from the Middle East and one from Central Asia.

The African decade continues to hold sway. 2010 to 2020 is bringing massive development to the continent. As China continues to boom we will see the Chinese offer more large-scale infrastructure development to African governments in return for natural resources and farmland to support it’s vast population. In turn African countries are continuing to challenge old perceptions of corruption and violence through practicing better governance. Chart leader Ghana is one of Africa’s strongest democracies. African countries will continue to veer in favor of increased prosperity. The picture continues to be replacement of Western aid for Africa by Eastern trade with Africa.

The peace and democracy bonanza.
Rounding of our counter-intuitive list is another perfectly intuitive point. Countries like Ghana who are experiencing a new era of good governance will enjoy massive growth increases. Where there is peace and good governance, prosperity will follow as we see these countries making use of their resources more actively and using them to build, rather than wage war.

Check the Ghana Economic Statistics and Indicators.

Ghana is not the only country in Africa that is doing well. From Roubini Global Economics:
African Poverty Is Falling…Much Faster Than You Think.

Many believe:

Sub-Saharan Africa has made little progress in reducing extreme poverty, according to the latest Millennium Development Report. This column presents evidence from 1970 to 2006 to the contrary.

The sustained African growth of the last 15 years has engendered a steady decline in poverty that puts Africa on track to meet the Goals by 2017. If peace is established in the Democratic Republic of Congo, and it returns to the African trend (which is what happened to other African nations that were formerly at war), Africa will halve its $1/day income poverty rate by 2013, two years ahead of the 2015 target.

Moreover, African poverty reduction has been extremely general. Poverty fell for both landlocked and coastal countries, for mineral-rich and mineral-poor countries, for countries with favourable and unfavourable agriculture, for countries with different colonisers, and for countries with varying degrees of exposure to the African slave trade. The benefits of growth were so widely distributed that African inequality actually fell substantially.

Africa: graph of poverty and GDP, 1970-2006

  • Using the $1/day definition of poverty adopted by the Millennium Development Goals, African poverty declined strikingly, from 41.6% in 1990 to 31.8% in 20061.

  • Poverty seems to co-move with GDP almost perfectly.

  • African inequality has also fallen over this period, almost entirely reversing its rise since 1970, but still remaining at a high absolute level

  • Our main conclusion is that Africa is reducing poverty, and doing it much faster than many thought.

    • The growth from the period 1995-2006, far from benefiting only the elites, has been sufficiently widely spread that both total African inequality and African within-country inequality actually declined over this period.
    • The speed at which Africa has reduced poverty since 1995 puts it on track to achieve the Millennium Development Goal of halving poverty relative to 1990 by 2015 on time or, at worst, a couple of years late.
    • If the Democratic Republic of Congo converges to the African trend once it is stabilised, the MDG will be achieved by 2012, three years before the target date.

    We also find that the African poverty reduction is remarkably general.

    • African poverty reduction cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic.
    • All classes of countries, including those with disadvantageous geography and history, experience reductions in poverty.

    This observation is particularly important because it shows that poor geography and history have not posed insurmountable obstacles to poverty reduction.

    The authors, Maxim Pinkovskiy and Xavier Sala-i-Martin, explain their methodology and provide many more graphs that demonstrate their research and conclusions. View the graphs and read more at: African Poverty Is Falling…Much Faster Than You Think

    In a previous post I wrote about The African Growth Miracle PDF study by Alwyn Young at the London School of Economics, published in September 2009. His study showed:

    … real household consumption in sub-Saharan Africa is growing around 3.3 percent per annum, i.e. more than three times the 0.9 to 1.0 percent reported in international data sources and on par with the growth experienced in other developing countries.

    Measures of real consumption based upon the ownership of durable goods, the quality of housing, the health and mortality of children, the education of youth and the allocation of female time in the household indicate that sub-Saharan living standards have, for the past two decades, been growing in excess of 3 percent per annum, i.e. more than three times the rate indicated in international data sets.

    The thing that delayed this growth and created setbacks is war. It is unfortunate that current US attention to Africa is almost entirely military, preparing for more war. US foreign policy in Africa is military policy. The US is missing the African success boat.   It may be trying to sink it with its efforts at seabasing, its emphasis on military training to facilitate proxy war, and where there is war, partnering with the perpetrators.  I would like to see positive development in US relations with African countries.   For that to happen we need US leadership that can learn, that knows a bit of history, or we need new leadership.

    Nevertheless, this news on economic growth and the reduction of poverty and inequality is wonderful news, something we can celebrate as we prepare for lots of hard work ahead.

     

    When banks are too big to fail, whole countries fail instead. Bankster greed is destroying our nations, our cultures, and the water, air, and land where we drink, breathe, and live.

    What the markets want, as one commenter points out:

    The markets want money for cocaine and prostitutes

    Paul Krugman featured this comment in one of his columns:

    “Kevin O´Rourke has a post, What do markets want , raising the same issues I´ve been discussing about debt, austerity, etc.

    But never mind all that: read the comments, specifically this one:

    The markets want money for cocaine and prostitutes. I am deadly serious.

    Most people don´t realize that “the markets” are in reality 22-27 year old business school graduates, furiously concocting chaotic trading strategies on excel sheets and reporting to bosses perhaps 5 years senior to them. In addition, they generally possess the mentality and probably intelligence of junior cycle secondary school students. Without knowladge of these basic facts, nothing about the markets makes any sense-and with knowladge, everything does.

    What the markets, bond and speculators, etc, want right now is for Ireland to give them a feel good feeling, nothing more. A single sharp, sweeping budget would do that; a four year budget plan will not. Remember that most of these guys won´t actually still be trading in four years. They´ll either have retired or will have been promoted to a position where they don´t care about Ireland anymore. Anyone that does will be a major speculator looking to short the country for massive profit.

    In lieu of a proper budget, what the country can do-and what will work-is bribe senior ratings agencies owners and officials to give the country a better rating. Even a few millions spent on bumping up Ireland´s rating would save millions and possibly save the country.

    Bread and circuses for the masses; cocaine and prostitutes for the markets. This can be looked on a unethical obviously, but since the entire system is unethical, unprincipled and chaotic anyway, why not just exploit that fact to do some good for the nation instead of bankrupting it in an effort to buy new BMWs for unmarried 25 year olds.”

    That´s what I call a policy recommendation – and it´s better than most of what passes for wisdom these days.”

    I have a friend working in a posh hotel in New York. When I sent him this passage he wrote back:
    “… having served many of these dudes at my hotel…..very true.”

    For more on the American lead in all this see:
    Griftopia: Bubble Machines, Vampire Squids, and the Long Con That Is Breaking America by Matt Taibbi, taking off from his legendary Rolling Stone article. You can also read about the book discussed here.

    Another book about the US financial crisis that sounds interesting is All the Devils Are Here: The Hidden History of the Financial Crisis. I have not seen the book yet, but did watch an interview with the authors that interested me.

    Others who know far more than I have discussed all this and more. I have always been a fan of political cartoons, and the video above is an inspired example of the genre, worth spreading far and wide.

    Oil Companies Impose Foreign Policy On Ghana

    “Some of the oil companies operating in the Jubilee Field have taken an unprecedented step to control Ghana’s foreign policy and reduce the country to nothing more than an instrument of US hostility against other countries.

    In a proposal to the Government of Ghana, the Companies are insisting that Ghana should automatically apply US sanctions against Iran, Cuba and Sudan.

    Map of Ghana offshore oil fields including Jubilee and Dzata

    The exact proposal is contained in the “Jubilee Field Unit Crude Oil Lifting Agreement” which is scheduled to be discussed in London next week.

    It states that “All export tankers owned, technically managed or commercially operated by a company headquartered in, or flying flags of US sanctioned countries shall be automatically rejected.

    “At present these countries are, Cuba, Iran and Sudan.

    “TGL reserves the right to specify certain further flag states to be subject to this section 1.7 if they have been found not to comply with TGL vetting procedure.”

    The proposal is calculated to undermine relations between Ghana and Cuba, Iran and Sudan and does not take account of the strategic interest of the people of Ghana.

    Ghana has excellent relations with Iran which spans the fields of Health, Agriculture, Education and Culture.

    Last month Iran gave Ghana a grant of US$1.5 million and tractors for the agricultural sector.

    Iran has also established a University and a Clinic in Accra.

    Every year, Cuba gives Ghana at least 200 health workers who keep the country’s health delivery system alive.

    Cuban experts are also currently working on a malaria eradication project in Ghana and other West African States.

    Over the last 30 years, Cuba has provided scholarships to thousands of Ghanaians to study in different fields.

    If the Government of Ghana accepts these demands it will turn Ghana into a poodle of the US and undermine her credibility in the African Union and the Non-Aligned
    Movement.”

    Kwesi Pratt, The Insight Newspaper comments at GhanaWeb

    Deja vu all over again

    Differences over Ghana’s foreign policy caused the US to engineer and support the coup that overthrew Nkrumah.

    What new kind of interference may we be looking at?

    With whom is the US Africa Command partnering?

    US Embassies are actively engaged in spying on African countries and citizens, collecting:

    -- Biographic and biometric data, including health, opinions 
    toward the US, training history, ethnicity (tribal and/or 
    clan), and language skills of key and emerging political, 
    military, intelligence, opposition, ethnic, religious, and 
    business leaders.  Data should include email addresses, 
    telephone and fax numbers, fingerprints, facial images, DNA, 
    and iris scans.
    09STATE37561

    It seems like US foreign policy can be summed up with a line I heard in a cartoon this week: A friend is just an enemy who has not attacked yet.

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