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The discovery of hydrocarbons in the traditionally under-explored western African nations such as Ghana, Senegal and Liberia are set to change the economy of this region over the next decade.

The development of a consumer hungry middle class is driving industrialisation and urbanisation. To achieve this transformation, significant capital will need to be invested in upstream, midstream and downstream operations. While part of the capital will come from the region, the sheer scale of the investment will require large external capital inflows. What is different today is that a significant part of this investment will come from new emerging market sources of capital include other African markets such as Nigeria and South Africa, Latin America, the Middle East and Asia, especially China. Some of this however, will still come from the traditional sources of Europe and to a lesser degree the Americas.

In 2007, in the deep waters off the coast of Ghana, an independent US-based oil exploration company Kosmos Energy discovered an extensive reservoir of oil now known as the Jubilee Field. Six years later, that find has established Ghana at the forefront of the oil and gas boom in the region. Oil has subsequently outstripped cocoa as Ghana’s second-biggest export earner with shipments worth US$3 billion, according to Ghana’s central bank. This makes Ghana the 50th largest oil producer in the world, ahead of countries such as France, Turkey and Spain, according to statistics compiled by the Central Intelligence Agency’s World Factbook.

The government approval in May 2013 of Tullow’s TEN development and the likely approval of ENI’s Sankofa development heralds the shift of Ghana to a more balanced and maturing production base. After initial production challenges, oil production from Jubilee field is now in the order of 110,000 and 115,000 barrels a day just short of its maximum capacity. As output plateaus at the Jubilee field, the processing of related gas and the new developments coming on-stream, expected to start in 2016, are aiming to double production to 250,000 barrels a day by 2021.

Recent new discoveries such as those by the Hess Corporation, an American oil company illustrate that further exploration potential exists both offshore and in the Voltarian valley and further production growth beyond 2021 is realistic.

Simon Ashby-Rudd, Standard Bank’s global head of oil and gas, says, “Ghana’s future as a petroleum producer is now fairly established and the country is entering the second phase of its transition to a balanced petroleum industrial power. The exploitation of the related gas will fuel domestic power requirements and will in the longer term provide feedstock for petrochemical operations such as fertiliser and methanol plants. The new developments will provide a broader based production platform and ensure the development of related domestic oil service companies such as supply and logistics and EPC contractors. This expansion of the sector will not only expand the direct oil revenue for the country but also grow the industrial base which should develop as a regional hub to export related services to Ghana’s neighbours as they look to follow its lead and develop their own petroleum resources.”

Ashby-Rudd believes that the potential impact of the expansion of the petroleum sector in Ghana and potentially across the region is only now being understood by the wider global capital markets.

“Delays in the development of the Jubilee gas infrastructure and the lack of clarity in GNPC’s financing capability have clouded investors’ perception of the opportunity in Ghana.  However as the gas project nears completion and government provides greater clarity on the role of Ghana National Petroleum Corporation (GNPC) and indigenous participation in the industry going forward, the investment environment is becoming clearer,” he says.

The European financial crisis, has created a financing vacuum that Standard Bank and other emerging market lenders have been quick to fill given the increasing demand for investment opportunities. Standard Bank was the third-largest arranger of syndicated loans over the past 12 months with eight offerings, having concluded loan facilities in the following oil or gas producer countries: Uganda (US$115 million syndicated loan); Ghana (US$300 million syndicated loan); Mozambique (MZN 1.15 billion commercial paper); and Angola (US$1.5 billion receivables purchase agreement).