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 GHANA NATIONAL PETROLEUM CORPORATION
(GNPC)
Interview with
Mr. Tsatsu Tsikata ,
Chief Executive
October 28th 1999
Contact :
Petroleum House
Private Mail Bag, Tema - GHANA
Tel: (233 21) 71 29 30 /
(233 22) 20 60 20 - 20 46 54
Fax: (233 22) 20 54 49
Telex: 2188, 2703, 2704
E-mail: gnpc@ncs.com.gh
cegnpc@ghana. com
Web-site: www.gnpc.com.gh
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Could you give us a brief historical background of GNPC?
We were created in the middle 80s and we are established as a National Oil Company integrated both upstream (involved in the exploration and production) and downstream (the marketing side). We are not involved in refining. In the last two and a half years we have transformed some aspects of our operations. Previously we were the only importer of crude oil into the country. Now there is a tender system whereby the refinery receives tenders; we are included in the tenders, and if we do not succeed in a tender we can trade the product on the international market. We operate like any of the international traders in crude oil.
We are also involved in the use of natural gas for electricity for which we have created a subsidiary company (Western Power Company). We were created at a time when Ghana was not doing very much petroleum exploration anymore, in order to promote and stimulate investment in the area of exploration and production and to try to establish a basis for Ghana’s participation in the Oil Industry within a commercial perspective.
What is the shareholdership situation today?
It is 100% state-owned.
Do you have any plans to privatize?
Yes. As the government has clearly indicated there is an interest in private sector participation in this sector of the economy. From the beginning, we have highlighted the importance of private sector participation in our activities. In the area of exploration we are in joint ventures with 5 companies from US, UK, Australia and Korea. In the power project we have been attracting foreign investor interest and we are close to finalizing a joint venture with Eskom, the South African utility, the fourth largest utility in the world. There is also a corporate ambition that we have in the future to attract private sector investment into the company itself and we are starting that through the power project.
Did you benefit from the electricity problems that hit the country 2 years ago since you are a kind of alternative supplier?
We would have liked this project to have been completed before the crisis. This is a project that we have been developing for some time and among the problems that we had in bringing this project to a conclusion earlier was the fact that there had been some doubts, sometimes in some of the institutions including the World Bank, regarding the demand for power in Ghana and the need for the additional capacity that we were trying to bring about. And the fact that this was going to depend on gas was a new thing for many people. Certainly what the crisis did was to highlight for everybody in Ghana the importance of diversifying the resources of supply of electricity for the country. Secondly it made it quite clear that gas as an alternative was the most cost effective alternative because we had to run some emergency generation fired with liquid fuel, diesel, which was extremely expensive. The problem that was created has certainly enhanced the value of the project that we have been undertaking and the urgency of bringing that about as quickly as possible.
At what stage is the West African Pipeline now and what are your expectations for this project?
The project, since April last year, has gained considerable momentum. At the Oil and Gas African Conference in Ghana last year we succeeded in having Chevron and Shell who are some of the key actors in the project to become more constructive and to work together. We had a meeting among GNPC, the Nigerian Gas Company as well as Chevron and Shell and we agreed on terms of reference for feasibility studies by a German Company, Pipeline Engineering (PLE). We later had the 2 gas companies of Togo and Benin joining. The study was started in August 1998 and completed in March this year and the Consortium presented the study to the Steering Committee of the 4 Ministers who reviewed it and were satisfied. In May this year they also gave us the mandate to proceed with the more detailed engineering phase. The project team is now working on what we call the definitional phase of the project where the detailed plan of the project will emerge. The routing of the pipeline will be determined. We have also recently appointed a financial advisor for the project. By this time next year we will be at the stage of beginning the actual construction phase of the project and by the 3rd quarter of the year 2002 there will be a West African Gas Pipeline.
The feasibility studies show that Ghana’s market is about 85% of the initial demand projections. It is going to generate a structural transformation of energy use in this region.
| Are you also looking into exporting your products? Can you give us some figures of export and expectations of export figures?
We did a pilot export of the stoves to Cote d’Ivoire. We have not begun a major export yet because we are now trying to gear up the production at the manufacturing enterprise that we have here in Tema. We have been trying to attract some investors to work with us on the production facilities that we have so as to increase the scale of production and that is when we will begin the major export drive.
In the area of LPG we are short because the demand has been increasing at an average rate of 25% per annum for some years now, and so we import lpg to complement production at the refinery..
Can you tell us what your vision for the future is for your company and your sector?
We will in the near future begin a significant amount of commercial oil production from Ghana’s Offshore area. A lot of new technical information has been acquired from the investments that Hunt Oil, Dana Petroleum and other companies have been making in the acquisition of seismic data and the drilling of wells. The next 2 years will see the most intensive degree of exploration activity in this country. The prospects are good for oil to be produced in Ghana.
In respect of the power project we expect to complete the first phase of it by the 2nd quarter next year. We expect to increase the capacity of the 125megawatt power plant that will be located in the Western region to 400 megawatt within 2 years.
The West African Pipeline is going to be a major infrastructural breakthrough and being able to get investors in that pipeline and being able to create the framework for additional investment that can use the gas for other things will be very important for Ghana. Not just in the energy sector but also overall. Energy is going to create the base for the kind of developmental growth that we are trying to achieve.
As you know Forbes Magazine reaches more than 4 million readers mainly businessmen and potential investors. What is your final message to them?
Ghana has a good track record. The kind of returns that have been on the Ghana Stock Exchange, even though it is a young one, have been very attractive. What might be considered as bottlenecks to Ghana’s accelerated development; energy, telecommunication and others, represent opportunities for investors. The Ghanaian government has shown clearly openness to receive investment even in those sectors that are considered as strategic and not open to foreign investment in some countries. Potential investors are welcome in all sectors across the country. Our human resource base is an attractive one. The next few years are going to be better than the last 15 years of Ghana. Ghana will continue to provide an attractive opportunity.
Do you try to add value to your product, and how do you market yourself?
The immediate value addition is the transformation into electricity and also the Liquefied Petroleum Gas (LPG) extraction. GNPC is also trying to add value by designing a stove that uses LPG based on our own traditional cooking hearths. There was a tremendous degree of interest when these stoves were tested so we are embarking on increasing production as a way of ensuring the use of the LPG. We have even exported some of it to Cote d’Ivoire in a pilot project. We have even had interest being shown by Liberia and Sierra Leone. It is a safe way of cooking. We have looked at our environment and engineered solutions that fit with the needs of the community. We have been able to encourage some investors to establish storage tanks in the Northern Region. There was a Dutch company that partnered a Ghanaian company in the Northern region.
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© World INvestment NEws, 1999.
This is the electronic edition of the special country report on Ghana published in Forbes
December 13th 1999 Issue.
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GHANA
