Page 8 - DMEA Week 17 2020
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DMEA POLICY DMEA
Ghanaian expert says low prices could lead to cuts in oil output
GHANA
Ghana should focus
on getting its refinery back to productivity, the expert says.
GHANA’S Institute of Energy Security (IES) has warned that sinking oil prices may force the company to reduce crude output.
Paa Kwesi Anamuah Sakyi, the executive director of IES, explained to Citi Business News last week that the country’s oil industry would not necessarily be affected by the recent plunge of WTI, the main US benchmark crude, into nega- tive territory. But the sector will surely be hurt by the fall of Brent, the main European benchmark, as it indexes the price of its production to this grade, he said.
“I don’t see much concern because of the exceptional case in the US,” he stated. “However, we also saw Brent crude tumble by more than 8% today [April 24].”
If Brent continues to lose value, he said, Ghanaian crude will also fetch a lower price. “[That will mean that either all the oil produc- ers in Ghana would have to shut down or they alsohavetobepreparedtosellatalowercost,”he said. Either way, the country’s oil revenues will decline, he remarked.
Sakyi went on to say that he expected oil
prices to recover later in the year. He also cau- tioned, though, that concerns about oversupply, low demand and a shortage of storage capacity would continue to affect global crude markets in the short term.
He was speaking shortly after Duncan Amoah, the executive secretary of Ghana’s Chamber of Petroleum Consumers (COPEC), recommended that the country respond to these problems by giving a boost to local oil consump- tion. “Government should also consider getting our local refinery back to productivity in order to process Ghana’s oil locally, as we understand some of our producers or oilfields may be soon forced to shut down production due to lack of storage space globally,” he was quoted as saying by the Ghanaian Times.
CPEC has also urged the government to use domestic oil production to fill up its strategic reserves. Accra can accomplish this goal by help- ing Bulk Oil Storage and Transport (BOST), the state agency responsible for maintaining strate- gic oil and fuel stocks, to secure the credit it needs to finance this operation, it said last week.
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w w w . N E W S B A S E . c o m Week 17 30•April•2020
