Ghana’s oil and gas sector, once hailed as an engine for economic transformation, now faces a critical juncture.
Plummeting production, investor exits, and regulatory stagnation threaten to derail what was once a beacon of national progress.
With crude output dropping by 32% between 2019 and 2023—from 71.4 million barrels to 48.2 million—the industry’s decline is more than a statistical blip. It’s a fiscal crisis in the making, one that could undermine Ghana’s economic stability and its aspirations for industrial growth.
The numbers paint a stark picture. Petroleum revenues, which contribute significantly to GDP and foreign exchange reserves, fell from ₵12 billion in 2022 to ₵10.7 billion in 2023. Corporate tax receipts from oil firms are dwindling, reflecting squeezed profitability, while the state-owned Ghana National Petroleum Corporation (GNPC) struggles to fund exploration amid shrinking allocations. Aging fields like Jubilee and TEN, responsible for the bulk of production, are nearing peak decline. Meanwhile, promising frontiers like the Voltaian Basin remain untouched, stymied by bureaucratic inertia and investor skepticism.
ExxonMobil, Anadarko, and AGM Petroleum have all exited Ghana’s upstream sector in recent years, citing regulatory ambiguity, uncompetitive taxes, and protracted contract disputes. These departures signal a broader erosion of confidence. Industry groups warn that Ghana’s fiscal regime—a 35% corporate tax and royalties up to 12.5%—is driving investment to rivals like Guyana and Nigeria, where terms are more favorable. Compounding the problem, a six-year stalemate over the 2018 Licensing Round has left exploration blocks in limbo, while legal battles, such as the Eni/Vitol-Springfield unitization dispute, have frozen development of new fields.
“Ghana is pricing itself out of the global energy race,” says Kofi Miga, an Accra-based energy analyst. “Investors aren’t just looking for resources—they want stability. Right now, the rules here feel like shifting sand.”
The government’s response has been tepid. While Energy Minister Matthew Opoku Prempeh recently announced a committee to review sector-wide challenges, critics argue piecemeal reforms won’t suffice. Targeted legislative changes, they say, are urgently needed. Key proposals include slashing corporate taxes for new projects from 35% to 25%, extending exploration licenses for deepwater ventures from seven to ten years, and establishing an independent regulator to fast-track approvals.
At the heart of the debate is Ghana’s Petroleum Act (2016), which critics claim grants excessive ministerial discretion and lacks transparency. For instance, Section 89’s “Additional Oil Entitlement” clause allows the government to claim extra revenue during price spikes—a provision that deters long-term investment. Similarly, GNPC’s reliance on state funding limits its ability to partner on major projects. Reforms to grant the corporation financial autonomy, including bond-issuing powers, could reinvigorate its role as a strategic player.
Gas commercialization is another weak link. Chronic payment defaults by power producers have left gas projects underfunded, prompting calls for enforceable payment guarantees. “Monetizing gas is crucial for energy security and industrial growth,” says energy economist Nana Ama Boateng. “But without payment safeguards, investors will keep avoiding it.”
The path forward hinges on political will. Ghana’s petroleum reserves remain substantial, yet unlocking them demands bold legislative action. Neighbors like Nigeria have modernized their frameworks—cutting taxes and streamlining approvals—to attract capital. Guyana, now the world’s fastest-growing economy, offers ultra-low royalties to spur exploration. Ghana risks being left behind unless it adopts similar competitiveness.
Time is not a luxury. With global oil demand projected to peak by 2030, the window for leveraging hydrocarbon wealth is narrowing. For Ghana, the choice is clear: overhaul an outdated system now or watch its oil dream fade into obsolescence.
Ghana’s struggle mirrors a broader African challenge—balancing resource nationalism with investor appeal. While public ownership of natural wealth is politically popular, excessive control often backfires. The Norwegian model, which combines state participation with market-friendly policies, offers a blueprint. Ghana must learn to walk this tightrope—or risk falling into the abyss of missed opportunities.
