Jubilee Field still viable

The Jubilee Field of Cape Three Points in the Western Region is currently the biggest oil discovery in the world since last year, and with the high quality and natural properties, it makes the field worth investing, an international oil expert has said.

Stewart Williams, Principal Energy Consultants, Wood Mackenzie, an international oil and gas consulting group who made this observation in Accra said the field still remains an economically viable venture and most attractive to global investors in the oil and gas industry, despite the fallen trend of the crude oil prices in the world market.

Crude oil prices in the world market have been falling. The benchmark price is currently below US$70 per barrels, making it unattractive for oil exploration companies to direct their investment in new oil fields.

The development phase of the country’s offshore oil wells which is estimated to hold an upside reserve of 1.8 billion barrels of recoverable oil, have begun with sub sea infrastructure currently being undertaking with the first 120,000 barrels of oil per day expected to commence in the first quarter of 2010.

Mr. Williams in an interview advised government to increase its investment portfolio in the sector. This will encourage and attract more global exploration companies to the field for drilling and will maintain the long term production structure and the expected revenue for the nation.

Conservative estimates of revenue to be injected into Ghana’s economy from the production of oil range from a minimum of US $200 million to US $5 billion, annually.

Once production starts, revenues from petroleum income taxes, royalties and government’s interest in the production are likely to exceed those from the mining sector, which currently accounts for just over five percent of Ghana’s Gross Domestic Products (GDP).

He explained that during low crude oil prices, exploration budget are usually slashed, making drilling and exploration activities very expensive, adding that, investors are more cautious with this development.

Testing and prospecting stage of a single well in offshore West Africa could cost as much as between US$50 and $100 million, which is incredibly expensive for oil exploration companies and becomes a high risk business.

“The Jubilee Field will continue to be a viable business provided the cost of drilling a well is in control and the oil prices hopefully rise at the world market.”

If the oil prices are generally low oil companies are very reluctant to start drilling, because certain level of fields might not be economically viable, he said.

“It is not business prudent to spend huge monies on explorations wells, if oil prices are going to stay low.

“It is a difficult balance for oil companies” he remarked.

Mr. Theophilus Ahwireng, Manager Geophysics, Ghana National Petroleum Corporation assured that the country has put in place a formidable price volatility policy to cover the realities and the dynamics of the oil and gas industry.

He explained that Ghana has one of the most attractive oil and gas fiscal regime policies, a flexible and progressive fiscal regime, which allows both the company and the State to be able to enjoy returns on investment when oil prices are low.

These are spelt out in a document called, The Oil and Gas Entitlement which will soon be outdoored. The current phenomenon is a good lesson for the country, he pointed out.