Ghana is presently facing the challenge of a continuous rise in the price of petroleum products due to high importation costs and a deregulated downstream industry.
The West African nation, which has been a net exporter of crude oil since 2010, is highly vulnerable to oil price shocks because it imports a significant share of petroleum products consumed in the country, mainly from Europe (Rotterdam). As a result, their economy is subject to volatility in international markets for crude and petroleum products, as seen recently with the Russia-Ukraine conflict.
Things are, however, expected to change as the Chief Executive Officer of the National Petroleum Authority (NPA) of Ghana, Mustapha Abdul-Hamid, believes the coming onstream of the Dangote Petroleum Refinery is expected to transform the Ghanaian downstream sector.
According to him, the coming onstream of 650,000 barrels-per-day (bpd) refinery will transform the Ghanaian downstream sector through the reduction in the cost of importation of petroleum products into Ghana.
- The completion of the refinery is expected to have a huge impact on Ghana’s downstream sector, which is currently deregulated.
- The Ghanaian government is also building a $60-billion petroleum hub on a 20,000-acres of land for storage and marine facilities.
Speaking at the 16th Oil Trading and Logistics Expo in Lagos, Abdul-Hamid said the completion of the Dangote Petroleum Refinery project would be a breakthrough for the West African region, which has for a long time depending on the importation of petroleum products.
“Right now, Ghana’s downstream industry is completely deregulated, and there is no petrol subsidy in Ghana. For a deregulated market where the importers recover their costs fully, importing from Nigeria will certainly be more cost-effective and cheaper than importing from Rotterdam in the Netherlands, where we get the bulk of our fuel in Ghana,” he said.
“As we all know, the price builds up for a litre of fuel will include the cost of shipment, transportation, insurance, and others, but if we are importing from Nigeria into Ghana, this will bring down the cost of fuel in our country,” he added.
Abdul-Hamid also hailed the decision by the Ghanaian government to build a $60-billion petroleum hub on a 20,000-acres of land in the western part of the country for storage and marine facilities.
According to him, the project will help accelerate the petroleum hub, consisting of refineries and petrochemical development of the continent’s oil and gas resources, by connecting the downstream to the upstream.
“It will promote cleaner fossil fuels and biofuels as the pathway to a just energy transition. Gas has been accepted as the transition fuel because gas is the least carbon-emitting fossil fuel”, he added.