Ghana’s crude oil production is estimated to reduce from 66.93 million barrels in 2020 to 57.30 million barrels in 2021, representing a fall in the production of some 9.6 million barrels of oil.
Oil production from Jubilee and TEN fields is expected to reduce by 2.05 million barrels contributing to the overall expected 9.6 million barrels decline.
The projected fall in production, follows an already declined production of some 4.5 million barrels of oil from the 2019 total oil production of 71.4 million barrels.
The fall in production according to Price Waterhouse Coopers (PwC) in its 2021 Budget Highlights will be due to low demand for the commodity as oil consumption is expected to remain below pre-pandemic levels until 2023.
“Oil consumption is expected to remain below its pre-pandemic level until 2023. The COVID-19 pandemic could have lasting effects on oil demand through changes in consumer and employment behavior,” noted PwC in its 2021 Budget Statement Highlights.
Despite the projected decline in crude oil production for the year under review, targeted oil receipts for 2021 by the government can still be attained on the back of an expected 21 percentage points increment in oil price globally.
“Crude oil prices have been projected to increase in 2021 compared to prices in 2020. This will help the government achieve the projected receipts from upstream petroleum activities at GH¢5,427 million (1.3% of GDP), representing a 51.6% growth over the outturn for 2020,” remarked PwC.
The IMF’s World Economic Outlook report of January 2021 predicts that projected the 5.5 per cent global economic recovery is likely to cause an increase in oil prices by about 21 per cent in 2021.
Data from the January 2021 IMF World Economic Outlook (WEO) show that crude oil prices are projected at $50.03 per barrel for 2021 and $48.82 per barrel in 2022 from an average price of $43 in 2020.
With an anticipated increase and decrease in global oil price for 2021 and 2022 respectively, PwC in its 2021 Budget Highlights report advised the government to remain focused on its revenue diversification agenda and see to its completion, improving other growth drivers such as agriculture, agribusiness, and agri-processing.
This, PwC posits will not only provide more sustainable sources of revenue, but will minimise the risk of volatility in government revenue generation.
Total petroleum as at end-December 2020 amounted to $666.4 million, equivalent to GH¢3.8 billion, compared with the receipts of $937.6 million, equivalent to GH¢4.9 billion in the same period in 2019.
The fall in oil receipts was mainly due to the impact of the Covid-19 pandemic on demand for oil.
