- Government Turns to Upstream Reforms and Domestic Gas as Ghana’s Oil Output Slumps
Ghana is intensifying efforts to revive its declining upstream petroleum industry, betting on regulatory reforms, renewed investment and greater use of domestically produced natural gas to reverse a six-year fall in crude output and reduce the economy’s exposure to imported energy.
Energy and Green Transition Minister Dr John Abdulai Jinapor says reversing the decline in petroleum production has become a central government priority, alongside increasing gas supply to meet rising domestic demand, particularly from the power sector.
The intervention comes at a critical moment for an industry that has been an important source of export earnings, government revenue and foreign exchange since commercial oil production began in 2010.
Crude output has fallen for six consecutive years, declining from about 71.44 million barrels in 2019 to roughly 37.30 million barrels in 2025, according to figures cited from the Public Interest and Accountability Committee. That represents a fall of approximately 47.79% from the 2019 peak.
The numbers expose the cost of relying increasingly on mature fields without sufficient new investment and replacement production.
Following discussions with the Ghana Upstream Petroleum Chamber, Dr Jinapor said government was seeking to deepen reforms designed to restore investor confidence and improve Ghana’s ability to compete for upstream capital.
“A key priority for government is to continue and deepen the reforms that have contributed to restoring confidence in Ghana’s upstream petroleum sector and creating a more attractive environment for investment,” he said.
That competition for capital is becoming increasingly important. International oil companies allocate exploration and development budgets across multiple jurisdictions, comparing geological prospects against fiscal terms, regulatory certainty, political risk and how quickly discoveries can be converted into producing assets.
For Ghana, the consequence of losing that competition is straightforward: ageing fields continue declining while fewer new barrels arrive to replace them.
“At the same time, reversing the decline in oil production is high on our agenda, alongside increasing gas production to meet growing domestic demand, particularly for power generation,” Dr Jinapor said.
Government has targeted an additional 10,000 barrels per day of crude production in 2026 as part of efforts to change the trajectory.
But the strategy increasingly extends beyond crude oil.
Natural gas is becoming central to the economics of Ghana’s petroleum policy because of its direct connection to electricity generation.
Gas from offshore fields supplies thermal power plants, meaning higher domestic production can affect power-generation costs, foreign-exchange demand and the financial pressures running through the broader energy sector.
“Our objective is to maximise the value of the oil and gas produced in Ghana by processing and utilising more of our resources domestically,” Dr Jinapor said.
“Increasing gas supply for domestic consumption, especially power generation, will be critical to improving energy security and reducing our dependence on imported natural gas and other energy products.”
The foreign-exchange argument is significant. Every commercially viable unit of domestic gas that replaces an imported fuel potentially reduces the demand for dollars needed to purchase energy abroad. For an economy that has periodically struggled with foreign-exchange shortages and currency depreciation, that makes gas more than simply an energy-sector commodity.
It becomes part of the country’s external-sector strategy. Greater domestic gas availability could also reduce exposure to global oil and gas price shocks while improving the reliability of fuel supply to thermal power plants.
Government has pointed to increased gas availability from the Sankofa and Jubilee fields and plans for a second gas-processing facility as part of a broader effort to deepen the domestic petroleum value chain.
The policy therefore represents an attempt to extract more economic value from hydrocarbons before they leave the country.
Oil can generate export earnings and fiscal receipts, but domestic gas can also support power generation, industrial activity and potentially downstream processing.
That distinction is important because Ghana’s petroleum challenge is no longer simply how many barrels it exports. The larger question is whether hydrocarbons can strengthen the domestic economy while they remain commercially available.
The fall in crude production makes that question more urgent. Lower output can translate into weaker petroleum revenues for government, reduced export earnings and lower foreign-exchange inflows. If falling domestic production is accompanied by greater reliance on imported energy, the country can suffer pressure on both sides of the external account.
That is why the investment climate remains decisive. Reversing the decline will require actual exploration, drilling, field development and capital expenditure rather than policy announcements alone.
Upstream projects involve large sums committed over long periods, making contract certainty and regulatory predictability particularly important. Investors also need confidence that fiscal rules will remain sufficiently stable for projects whose returns may take years to materialise.
Government is consequently reviewing parts of the upstream legal and regulatory framework in an effort to make Ghana more competitive.
But there is a delicate balance. Terms that are too onerous may discourage investment. Terms that are too generous may attract capital while leaving the country with an inadequate share of the economic rent generated from finite petroleum resources.
The policy challenge is to find the point at which Ghana remains investable without giving away excessive value.
Dr Jinapor said cooperation with industry would be central to achieving that balance.
“I greatly value this constructive engagement with the Ghana Upstream Petroleum Chamber. A strong partnership between government and industry is essential to building a more competitive, predictable and sustainable petroleum sector,” he said.
The next test will be measurable. Investor confidence ultimately has to show up in final investment decisions, drilling activity, new field development and additional barrels and gas molecules entering the system.
For Ghana, the objective is no longer simply to remain an oil-producing country. It is to reverse a production decline that is steadily eroding one of the economy’s important sources of foreign exchange while using more domestic gas to reduce imported energy dependence.
If regulatory reforms can unlock new capital and gas infrastructure can deepen domestic utilisation, Ghana could strengthen both its petroleum sector and its broader macroeconomic resilience. If investment remains weak, however, the country risks watching an industry that once transformed its export profile become progressively less important with every depleted barrel.
The race is therefore not merely to produce more oil. It is to extract more economic value from Ghana’s petroleum resources while there is still enough geological opportunity and enough investor appetite to rebuild the sector.
