Business News of Tuesday, 5 July 2016
Source: Graphic.com.gh
File photo
Saltpond Oil Field, Ghana’s oldest oil producing field, is to be decommissioned because of its inability to turn around its dwindling fortunes and remain economically viable.
Oil production from the field, which is about 65 miles west of Accra and operated by the Saltpond Offshore Production Company Limited (SOPCL), has declined consistently, hence the need to close it down.
The Chief Operating Officer of the Ghana National Petroleum Corporation (GNPC) Exploration and Production Company, Mr Michael Aryeetey, explained that the decommissioning the field formed part of GNPC’s plans for 2016.
“We do have about 17 licences that are active offshore Ghana, with the exception of the Saltpond Field which we are looking at decommissioning,” he said on the sidelines of the Maritime Week Africa Oil and Shipping Conference in Accra.
He said a study was currently being conducted to establish the cost of decommissioning the field which has been producing oil since the 1970s.
Some industry experts and organisations have in the past called for the decommissioning of the Saltpond field because it lacked commercial viability.
For instance, the Public Interest and Accountability Committee (PIAC), which has oversight responsibility over the management of oil revenues, has asked government to close down the Saltpond Oil Fields because it is not commercially viable.
According to the PIAC, the production cost of the field exceeds its revenues and the it is not economically viable to even pay its workers and take care of other costs.
“There is the urgent need for a critical appraisal of the viability of the continuous operation of the Saltpond Oil Field against the backdrop of low crude oil price,” the 2014 PIAC report said.
Production from Saltpond in 2015
The field continued to record a slump in production as figures from the 2015 annual report of PIAC showed that a total of 41,113 barrels of crude oil was produced from the Saltpond Field in 2015, compared to the 2014 production of 79,602 barrels of oil, representing a 48.4 per cent year-on-year decline in production.
The decline in production can be attributed to the shutdown of the Saltpond field between May 12 and October 24, 2015, due partly to what the Ministry of Finance referred to as “unresolved industrial issue with offshore crew.”
According to SOPCL, there was no production in the third quarter of 2015.
Also, no royalties accrued to the government from the Saltpond Field even though 41,113 barrels of crude oil were produced from the field.