- Paying For Jubilee Crude in Cedis Offers Relief, But Risks Shifting the Dollar Burden
Ghana should allow domestic refineries to pay for locally produced crude oil in cedis, the Chamber of Petroleum Consumers has said, arguing that forcing refiners to obtain dollars for inputs while selling fuel locally in cedis could intensify foreign-exchange shortages and weaken the currency.
The proposal follows the start of domestic crude sales by Tullow Oil from the Jubilee and Tweneboa, Enyenra and Ntomme fields. Sentuo Oil Refinery acquired the first cargo under the arrangement earlier in 2026, marking a potentially important shift in Ghana’s petroleum value chain.
COPEC Executive Secretary Duncan Amoah said cedi settlement would align the currency in which local refineries purchase their primary input with the currency in which they sell finished petroleum products.
“Don’t forget, whatever they refine and sell, they sell to the Ghanaian market in cedi,” he said. “And so if you ask them to pay dollar, you are simply asking them to come back to the same market that doesn’t have enough dollars for the other importation space to crowd them out and further put pressure on the cedi, causing depreciation.”
The argument is attractive at first glance. A refinery earns cedis from the sale of petrol, diesel and other products in Ghana. Requiring it to purchase millions of dollars before acquiring crude creates a currency mismatch, adds transaction costs and exposes its working capital to exchange-rate volatility.
But cedi payment does not, by itself, remove the dollar economics of crude oil. It changes who carries the foreign-exchange risk and when the demand for dollars appears.
The viability of COPEC’s proposal will therefore depend on whether Ghana can design a commercial framework that supports domestic refineries without forcing upstream producers, the Bank of Ghana or the state to absorb hidden losses.
Tullow’s decision to sell Jubilee and TEN crude to Ghanaian refineries is an important development for a country that has produced oil since 2010 but continues to import much of its refined petroleum requirement.
Tullow Chief Financial Officer Richard Miller described the first sale to Sentuo as a “fantastic achievement”, adding that the transaction was conducted on a commercial basis and supported by a favourable refinancing mechanism.
Domestic refining could help Ghana retain more value from its petroleum resources. Rather than exporting crude and importing petrol or diesel after processing abroad, the country could use local refineries to capture refining margins, create jobs and reduce some freight, insurance and handling costs.
The supply of about one million barrels of Jubilee crude to Sentuo was presented earlier in the year as part of a broader effort to strengthen fuel security. COPEC said Tema Oil Refinery and smaller modular plants should also benefit from sustained access to feedstock.
The potential benefit has become more relevant because global petroleum prices and shipping risks have risen. COPEC projected increases of 5.21 per cent for petrol and 22.91 per cent for diesel at the beginning of October, attributing the expected adjustment to higher international prices and cedi depreciation.
Local refining cannot insulate Ghana completely from global prices because domestically produced crude has an international value. But it can remove some costs associated with exporting raw crude and importing finished products.
The policy objective should therefore be to create an efficient domestic supply chain, not to treat Ghanaian crude as inherently cheap simply because it was produced within the country.
At current prices, a one-million-barrel cargo can require tens of millions of dollars. If multiple refineries regularly seek foreign currency to purchase crude, their demand could become a substantial source of pressure in Ghana’s relatively shallow FX market.
Allowing them to pay in cedis would remove that immediate requirement. Refineries would receive cedi revenue from the domestic sale of products and use the same currency to purchase their next crude cargo.
This could improve their cash-flow management, reduce exchange-rate uncertainty and make it easier to plan production.
The wider economy could also benefit if fewer refineries compete with manufacturers, pharmaceutical companies and other importers for limited dollar supply.
COPEC’s proposal is particularly relevant at a time when Ghana is using gold-export proceeds to improve the availability of foreign exchange through commercial banks. Reducing avoidable dollar demand could complement those supply-side interventions.
There is also a monetary-policy argument. When large companies enter the market at the same time to purchase foreign exchange, they can create sudden volatility even if the country’s overall external position remains manageable. A predictable cedi-based crude arrangement could smooth some of those demand spikes.
Yet the effect would be genuine only if the upstream producers could use the cedis they receive.
Crude oil from Jubilee and TEN is owned by commercial partners whose economics are largely denominated in dollars.
Tullow and the other participants incur dollar costs for offshore equipment, specialist services, debt servicing, insurance and distributions to international shareholders. Tullow itself has been restructuring its finances and managing significant external obligations.
The company extended the maturity of about US$1.3 billion in senior secured notes to November 2028 and agreed to acquire the TEN floating production, storage and offloading vessel for US$205 million. Those obligations underline why dollar revenue remains important to the company.
If a refinery pays Tullow in cedis, the producer may still need to convert most of those cedis into dollars. The FX demand would then move from the refinery to the producer without necessarily declining.
Alternatively, the Bank of Ghana could guarantee conversion at a fixed rate. That might protect the producer, but it would transfer the exchange-rate risk to the central bank and potentially consume reserves.
The state could also accept cedis and provide dollars to the petroleum partners through another mechanism. Again, the demand would be relocated rather than eliminated.
A successful arrangement must therefore distinguish between cedi settlement that creates a genuine natural hedge and cedi settlement that merely hides a future dollar liability on the public balance sheet.
The strongest framework may not require every barrel to be paid for entirely in cedis.
A partial-settlement model could divide payment according to how the proceeds are used. The cedi component could cover petroleum taxes, royalties, local payroll, domestic suppliers and other Ghana-based expenses. The dollar component could meet external operating costs, financing obligations and shareholder commitments.
Such a structure would reduce refineries’ immediate dollar requirement while ensuring that upstream producers retain enough foreign currency to meet legitimate external obligations.
Another option would be to price the crude in dollars, preserving its international commercial value, but allow payment in cedis at an independently determined exchange rate on the settlement date. The producer could then convert only the portion required for external use.
This would protect the economic value of the crude while reducing disputes over whether a favourable cedi price amounted to an indirect subsidy.
The government could also use an escrow arrangement under which refineries deposit cedi proceeds from domestic fuel sales. Payments to producers would be made according to a transparent schedule, with any FX conversion conducted through the formal banking system.
Forward contracts or swaps could help refineries manage exchange-rate risks between the date they acquire crude and the date refined products are sold. But such instruments must be priced commercially and disclosed properly to prevent contingent liabilities from accumulating at the Bank of Ghana.
Mr Amoah said President John Mahama had instructed the Energy and Finance ministries to ensure that refineries receive flexible trade terms.
“I am happy that Mr President has already instructed the Energy Minister, the Finance Minister to ensure that these refineries are given a flexible trade term such that they can pay for the crude in the local currency,” he said.
Flexibility could include deferred payment, trade finance, guarantees or settlement in cedis. Each instrument carries a different risk.
Deferred payment can help a refinery process and sell products before paying for the cargo, reducing the amount of working capital it needs. But the producer must be compensated for the financing period and protected against default.
Government guarantees could lower financing costs, but they create contingent liabilities for taxpayers. If a refinery fails to pay, the state may become responsible for the obligation.
Selling crude below its international value would provide immediate support to the refinery but reduce petroleum revenue belonging to the state and its upstream partners. It could also distort competition if some refineries receive more favourable terms than others.
COPEC recognised this commercial constraint.
“That the crude is being sold on a commercial arrangement basis is a good thing so that the Jubilee Partners do not lose, Tullow does not lose, the state Ghana does not also lose the expected revenue,” Mr Amoah said.
This principle should anchor the policy. Domestic value addition should not be financed through opaque discounts on a national resource.
