The ravaging impact of the COVID-19 pandemic on economies and industries worldwide makes it imperative for companies in the extractives space to think outside the box in order to survive the crisis.
The much-reported fall in oil prices and historic agreement sealed by the Organization of the Petroleum Exporting Countries (OPEC) on April 12, 2020 to cut global oil production by close to 10 million barrels a day has accelerated the pressure for a low carbon economy on a global level.
The disruption of the entire sector and consequent loss of export earnings, threat to livelihoods is a major concern for many developing countries.
Amongst those impacted by the outbreak are National Oil Companies (NOCs), exploration and production companies and then companies that provide support services along the value chain.
GNPC pushes for greater participation in sector
Ghana’s National Oil Company (NOC), the Ghana National Petroleum Corporation (GNPC) is advocating an aggressive change in strategy from being just a facilitator to full operatorship in the upstream sector.
Acting Chief Operating Officer (COO) at GNPC, Mr James Yamoah at a recent webinar on COVID-19 response strategies in Africa’s oil and gas industry stressed the need to consolidate the gains made so far in the sector in Ghana.
“We have to pursue an aggressive change in strategy because if we look at the National Oil Company in Kenya, it owns fuel stations so there should a more serious focus and increased investment in GNPC operated blocks,” Mr Yamoah stated.
With the impact of the pandemic on operations, there has been a corresponding impact on foreign direct investment. With the world oil price plummeting, revenues have suffered and by extension government’s share of petroleum revenue some of which is allocated to GNPC.
COVID-19 justifies calls for diversification of energy sources
The COVID-19 outbreak has given impetus to calls for the diversification of the country’s energy sources and revenue streams.
This, the Corporation believes should inform stakeholders and policy makers, going forward.
Firms suspend operations
The COVID-19 outbreak had compelled some firms in Ghana’s oil and industry to suspend their operations while others had deferred to the second and third quarters of 2021.
This means expectations of new exploration activities for the year which would have added to the country’s reserves have been dashed.
COVID-19 deepens Tullow’s woes
Operations Director at Tullow Ghana Limited, Mr Anthony Pearce said, “I think before the onset of COVID-19 in early March and the subsequent oil price fall, I think we have been a company in crisis; we were already a company in crisis and we have gone deeper.”
Tullow, he recalled had many challenges in the last few months. It lost its Chief Executive Officer last year, had a significant challenge with the company’s share price “which has been decimated in the last six months.”
The oil giant had a bad year in terms of misses in its key production targets. Beyond the challenges, Mr Pearce maintained that “weve had some pretty intensive capital projects that we commit to here in Ghana.
We’ve got operational units in both Kenya and Uganda at various stages of development, but not really moving very far.”
The production from Ghana was most critical for the country and “to our partners and we’ve quickly realised that since the onset of COVID-19, the only thing that’s keeping the company going was its operations here in Ghana.”
Not to downplay the importance of Tullow’s investments in other jurisdiction but stressed that “in terms of keeping the wheels of the company running everything we have been doing out here has been absolute critical since the presence of the pandemic.”