MANAGING DIRECTOR'S MESSAGE
In 2008 we had a strong year of operating and financial results. The Corporation operated within a more supportive external environment as compared to 2007 due to the intense interest generated with Ghana’s oil discoveries and the high oil price regime.
We made significant progress in advancing our development projects. We pursued our exploration program, grew our reserves and strengthened our financial position by leveraging value from: ownership of good quality data; unearthing and highlighting the quality of the geology of Ghana’s sedimentary basins; improving and extending our core competency of possessing the best and most comprehensive knowledge of Ghana’s basins and; bridging the business culture gap with prime customers and joint venture partners.
There was uncertainty about developments in crude oil prices, increased inflation and interest rates, but, the corporation’s strategy in 2008 remained focused. The high oil price regime throughout the first half of 2008 had a dual effect. While it aided the corporation’s promotion efforts, the high oil price regime negatively impacted GNPC and its partners’ ability to secure oil rigs on a timely basis. Regardless of the fierce competition in the rig market, GNPC and its partners were successful in securing oil rigs to execute work programmes because GNPC placed more emphasis on attracting partners who own rig equipment as an additional requirement.
The prevalent high fuel bill made access to cost-effective fuel a big concern for the nation’s electricity power generation. GNPC began work to provide cost–effective natural gas to operate power plants in aid of national growth and development efforts. To this end, GNPC and its partners have accelerated plans to develop the necessary infrastructure to support the on-shore usage of natural gas while helping to implement the national policy of zero gas flaring.
The Corporation’s strategy for gas utilization is to take a leading role and sole initial responsibility for developing the necessary infrastructure that would deliver low cost fuel to electricity generators and industry. Despite the challenging global economy, we actively pursued the implementation of strategies that would enable us to secure attractive financing for the effective utilization of the natural gas associated with the Jubilee field for national development.
A lot of interest was generated in our sedimentary basins with several companies visiting the corporation and reviewing data. As a result, in 2008, Parliament ratified three agreements between the Government of Ghana and GNPC on one hand and Vitol Upstream of Switzerland in late June; Oranto Petroleum of Nigeria in July and Aker ASA of Norway in November.
During the year, the corporation planned to attract about US$300 million of foreign direct investment. By the end of September, 2008, this target had been exceeded by US$223 million at US$523 million. These investments were mainly used for drilling wells, acquiring high resolution 3D seismic data as part of our appraisal programs and acquiring long lead items.
Most of the year was devoted to appraisal work and development planning activity for the Jubilee Field. The Mahogany-2 appraisal well was drilled and completed successfully in July 2008 by the Kosmos Energy consortium. In early 2008, Kosmos and its partners drilled another well, the Odum-1 exploration well. The well was a discovery. The Odum-1 well, which tested a different prospect than the Mahogany-1 discovery well, was suspended as a future development well.
The Tullow oil consortium drilled Hyedua-2 to appraise the discoveries made in 2007. Amerada Hess deepwater well, the Ankobra, spudded on 5th September 2008, was unsuccessful. Tullow Oil also drilled Ebony-1 exploration well in its shallow water licence area which was a discovery.
The Corporation, in association with the operator of the Saltpond Field, Saltpond Oil Producing Company Limited, produced a cumulative total of 163,601 barrels of oil over the 9 month period ending in September, at the rate of 650 barrels per day.
Over the last year, the Corporation and The Ghana National Continental Shelf Delineation Project (GNCSDP) made significant strides in completing all studies and processes required for submission to the United Nation’s Convention on the Law of the Sea (UNCLOS). GNPC successfully secured funds from internal sources to conduct the acquisition of the seismic data that is required to justify an economic interest in order to claim another 150 nautical miles of the sea for further exploration.
The Corporation is currently relying on the Geological Survey Department of Ghana for data for further work on the Voltaian basin. GNPC will need adequate financing to conduct extensive data acquisition activities in this inland basin and are open to team up with investors to carry out this project which, we believe, holds potential for hydrocarbons.
The Corporation continued to train staff in key areas including, crude oil lifting operations, oil and gas production operations, geosciences and general management.
Given the significant changes in the corporation’s external and internal environments and circumstances, we will shift our focus in the next five years from an emphasis on investments promotion and facilitation to a corporation that is organized to become a key player in the sub-region. Our strategy will be based on:
• Investing systematically and prudently in capacity building to manage a wider portfolio of producing assets;
• Promoting investments for the replacement and growth of reserves;
• Securing capital at the lowest possible cost to maintain an optimum level of participation in petroleum operations and;
• Facilitating the creation of appropriate environment for stakeholder participation.
Our successes in previous year could not have been achieved without the hard work and dedication of our employees and the board. We encourage ourselves to work even harder as it is just the beginning.
