The Challenges Faced in Transportation of Petroleum in Ghana
CHAPTER 1
1.0 Introduction
Petroleum is a vital commodity. This is because it finds use I various aspects; petroleum is an energy source and a raw material in the process of manufacturing fertilizers as well as plastics. Because of its great importance, petroleum has been a purpose for confrontations in the world. The importance of petroleum was greatly observed during the World War I, it was used for the internal combustion engines that were used for modern machines used to carry out operations of the military.
Globally, the oil industry is faced by various challenges which include its transportation and distribution. Oil production and transportation is measured by use of the barrel and sometimes steel drums are used. The barrels have found great usage in oil transportation because it is possible to handle them by hand and this is usually by rolling. Following the increases in the growth of the economy, international trade volumes of oil have increased. Petroleum is usually transported to various areas with the highest consumers in the world being the countries which are highly industrialized for example the United States, Japan and Western Europe.
The objective of this paper is to determine the challenges that are faced in the transportation of petroleum in Ghana.
Ghana is a country that has great potential for the production of gas and oil. The production of petroleum in Ghana was officially started with the establishment of the GNPC in the year 1983 and in 1985[1] the corporation started its work and has since accessed the potential of petroleum in the country and thus attracting investors for example the Amoco, based in the US. The main function of the GNPC is to carry out the facilitation of hydrocarbon development and ensure efficient investments driven by technology for the enhancement of the economic development of the country.
It is as well the responsibility of the corporation to ensure efficient storage as well as the volume distribution of petroleum and petroleum products to other companies that focus on marketing oil. Because of the major discovery on oil, Ghana has significantly become of international and commercial interest2. There are prospects that in 5 years time, Ghana will probably be position three in oil production in West Africa.
CHAPTER TWO
2.0 Background of the study
In many countries, booms in oil have led to increases in corruption, social conflicts, damage of the environment and underdevelopment. Therefore, the rising production of oil in Ghana is a test for the country which has been a peaceful and stable country. In Ghana, the energy sector, which consists of petroleum and petroleum products, biomass energy and electricity, plays a key role in the economy of the country. The access to energy is important towards the provision of basic services to the society and precondition in the economic dynamism and growth. Among the three main energy sources in Ghana, petroleum accounts for around 23% of the consumed energy with wood fuel being about 65% and electricity at about 12%.
Ghana is emerging to be an important destination for oil and gas due to the off-shore discoveries[2]. Estimates of more than 3 billion barrels have been made in the “world class” discoveries in the deep water cape. Other discoveries made are those of 10 trillion cubic feet deposits of natural gas within the Tano fields and Saltpond. Because of these discoveries, the country is continuously attracting many off-shore investors and great attention from the global community.
2.1 ANALYSIS
2.1.1 Petroleum sector in Ghana
In Ghana, the petroleum sector is consistent of three activities. These are the upstream, midstream and downstream. For each stage, various activities are involved and these involve transportation. The upstream stage involves activities like exploring, developing and producing gas and oil from the fields. This is referred to as crude oil and gas extracts. Once they have been extracted from the fields, they are transported to the processing plant for the gas and the refinery plant for the oil. This is usually the midstream stage. The last stage which is the downstream is the stage where the actual refining is carried out and the petroleum products are transported to the consumers.
Following the recent oil discoveries, the Ghanaian government has set goals and vision for the energy sector in the country. It is expected that oil will outpace the leading export that is gold and cocoa and thus become the leading earner of Ghana’s foreign currency. To achieve this, the government has the vision of ensuring that all Ghanaians can access the modern forms of energy. Further, the government wants to become a net exporter of power and oil in three and two years respectively.
The challenges that the government faces is in the infrastructure development so as to be able to produce as well as supply enough products of petroleum and meet the requirements of the entire nation and have adequate for export as well. Other than the infrastructure needed to ensure adequacy in supply, there is the mandatory infrastructure that is needed to ensure that there is access to petroleum products and that the energy services provided will be reliable. This is also a challenge that the government is facing.
Production and transportation of oil and petroleum products can have adverse impacts on the environment and the health of the people. Thus, the test here is the means that will be used to ensure that the energy production and supply will be done in a way such that these impacts are not felt and if they are they are at very minimal levels. Efficiency in the use of energy should also be ensured. In transportation, petroleum should only be transported to the places where it is needed and this is generally about minimizing wastages. Throughout the world, the method that is most preferred for the transport of petroleum and its products is by use of pipelines. This is advantageous in that the transporting company gets to enjoy the benefit of economies of scale.
2.1.2 Road transport
In Ghana, road transport is widely used. The road transport in Ghana is such that in the large cities where the major oil transports take place, there are high traffic densities especially during peak hours. In Ghana road transport is carried out by use of BRVs (Bulk road vehicles). The challenge that is faced here is the means of monitoring these vehicles. This is because in many occurrences they do not adhere to the environmental as well as the safety standards and thus the government needs to monitor them keenly. This is challenging because it requires a lot of costs and further, the impacts that these BRVs have and especially on the roads are adverse.
Other than endangering the roads, the lives as well as the property of road users are endangered. This is because in the country, vehicles transporting petroleum have been involved in accidents and since petroleum is inflammable, the road users are exposed to great risks. The efficiency and reliability of petroleum transport by road is also at stake. The drivers of these BRVs have been known not to observe regulations set for road transport and traffic. Reports within Ghana have shown that these drivers drive in haste so as to be able to get to their destinations fast and they have also been observed to overtake repeatedly.
Alcohol use by drivers is a challenge to petroleum transport by road. For long alcohol has been associated with road accidents not only in Ghana but throughout the world. Thus, the BRVs are involved in many accidents within the country. The trucks also carry excessively and thus have greatly contributed to road fatalities. These trucks which transport petroleum obstruct the flow of traffic. For instance, they are large and will thus occupy large spaces on the road. Further, the drivers have the habit of packing them wrongly and thus also contribute to traffic obstruction. The government is thus spending a lot following the crashes that occur on the roads.
Poor working conditions of the drivers of BRVs is a contributor of the problems faced in petroleum transportation. A study has revealed that generally, drivers are paid poorly, they are not socially protected and they are also not given times for holiday[3]. The worst comes in that these drivers lack periods of rest which is very important. This is because in the country, the regulations governing the relationships that exist between employee and their employers are not clearly defined. Due to this, it is the industry which sets the rules to govern the drivers and thus most of the drivers are fatigued following lack of rest. This is a great contributor to the accidents that are observed on the roads.
Modern and more efficient trucks are needed to make the bulk road transport more efficient. However operators have limited funds that they require so as to make replacements of the existing bulk trucks that they use for transport. Following the poor maintenance of the BRVs, the numbers of vehicular emissions are also increasing and thus this is a threat to the people as well as the environment.
2.1.3 Water transport
Another means of petroleum transport in Ghana is by use of water carriers. This is by the VoltaLake transport company. However, this is also faced by challenges. Despite being the main transporter of oil by water in the country, the company is on the verge of collapsing and this has great effects on the transportation of petroleum. For instance, its ferries have been rejected and the company does not even have enough ferries for ferrying the product. The company needs a lot of funds so as to be able to sustain its operations which include the safety of the cargo as well as the people on board. Therefore, this poses challenges to petroleum transport since security is not guaranteed and with petroleum and its products being vital and expensive, there are high chances of the ships being hijacked which would imply losses for the petroleum industry.
In Ghana, there are only two major ports (the Tema and Takoradi ports) and this has been a challenge in petroleum transportation[4]. A report by the corporate planning manager of the GPHA showed that the ports in Ghana are faced by challenges and they need to be addressed. Some of the challenges which were given included constraints on the capacity of infrastructure. Further, the manager cited that the space available at the port was not enough for development and funds required for the development were also not adequate. The procedures that are used in clearing cargo at the ports are also burdensome. This then results to having a lot of uncleared cargo at the ports and high truck congestion. With these challenges being addressed, Ghana would improve on petroleum transport and thus be able to provided services of the world class.
In Ghana, port security is at stake. A report by the ministry of transport[5]revealed that the country had inadequate boats for patrol and also the security equipment that is required for the surveillance of maritime safety is not adequate. Further challenges that the industry faces in relation to water transportation are in facilities. The ports in Ghana lack the facilities that are needed for the system of inland waterway for example the warehouse facilities, and stages for landing of the transporter ships. Communication is very important during the transportation of cargo and in Ghana. The ports do not have modern equipments for communication and thereby challenging the oil and gas industry.
2.1.4 Risks associated with petroleum transport
Petroleum has various environmental risks. This is not only experienced in Ghana but it is a global issue. The petroleum industry has to balance the risks associated with the product and its cost. Oil spills are prevalent during transportation and this is mainly observed with old oil tankers. In Ghana there are many old oil tankers that are used and thus this increases the possibilities of oil spills. Petroleum development negatively impacts the ecosystem as well as livelihoods at all of its stages. These stages include offshore production, terrestrial installation, exploitation and transportation whether it is for the raw materials or final products.
Some of the common impacts on the environment are pollution and the fragmentation of the national or natural habitat. The pollution can be observed in seas, and this affects not only the vegetation within the seas but also marine animals for example fish. Thus, through the waste of these natural resources, the economy suffers as well and these are long term impacts and thereby the country will have adverse effects following these incurred wastes.
Ghana faces the challenges of procuring reliable and adequate energy supplies. The intent of the ministry has been to have the provision of clean and relatively cheap source of fuel for use by the local people. For this to be effected, the ministry collaborated with the Ghana cylinder manufacturing company. This requires the promotion of the three kilometer LPG use together with stoves in a bid to ensure that the people in the rural areas have access to LPG. Further, it is expected to be at rates which the people can afford and thereby improve their living standards.
2.1.5 Tracking system
In Ghana, petroleum products diversion is on the increase due to the use of manual systems of monitoring which are not effective[6]. The country thereby needs to make effective it’s monitoring and tracking systems. This would be helpful in cargo protection during transportation as well as storage. That is why emphasis is being made on the automation of CEPS. Addressing stakeholders, the Ghanaian finance and economic planning deputy minister, Hon Kwetey said that there would be introduction of TTMS, a system of tracking (the Ghanaian Customs Trade Lane, GCee-trak).
Automation of the tracking system would reduce the many petroleum diversion incidents. The new automation technology is based on the best international practices[7]. Further, alerts are provided immediately incase there is the occurrence of changes that are not authorized. Towards the security of petroleum and its products during transport, this would be a great step. However, it has not yet been affected since these were statements given on April 15 implying that Ghana is still facing issues of security in terms of petroleum diversion. This too implies that a lot of losses are incurred in terms of revenue.
2.1.6 Pricing challenges
Prices of petroleum products are challenging the transportation of the commodity. The industry is being forced to lower their costs so as to ensure that the local people have access to the products. This is done for environmental reasons since there is need to reduce the high dependence on wood fuel. Wood fuel is in major use among the Ghanaian people as an energy source for use in the households. Thereby, the increased dependence is fast exhausting forest reserves by deforestation, something which needs to be highly discouraged[8]. This cost lowering is despite the fact that oil is not cheap even in the world market.
The construction of petroleum production plants comes with various needs for instance the need for creation of jobs whether it is for the skilled or unskilled labor. This however is accompanied by the challenges of developing and ensuring the maintenance of infrastructure[9]. For the oil production to develop in Ghana there is need for the response to conditions at the market to earn reasonable revenue and at the same time have support for the small producers.
“Ten years from now, twenty years from now, you will see: oil will bring us ruin.. oil is the devil’s excrement.” These were the words of Juan Pable Perez, the Venezuelan oil minister in 1973. In Africa, the largest three oil producing countries as well as others have been befallen by drawbacks; these are Equatorial Guinea, Angola and Nigeria[10]. Just as cited by Perez, oil discovery has proved to be not only a blessing but also a curse in the African countries. For instance, in Nigeria, it has led to increased kidnappings. The Equatorial Guinea has observed coup attempts while in Angola civil war has been observed. The question is therefore whether Ghana will be able to avoid these drawbacks that have befallen her fellow African countries.
| Country | Nigeria | Equatorial Guinea | Sierra Leone | DRC | Angola |
| Product | Oil and gas | Oil and gas | diamonds | Coltan/Cassiterite | Oil and gas |
| Manifestations | Kidnappings, sabotage and unrests | Coup attempts | Civil war, youth soldiers | Civil war, gang violence | Civil war |
Table 1: Locations and manifestations of the resource curse.
Ghana has craftily been on both sides of the rivalry between the United States and china. The country has allowed the United States to take the development of the West Africa gas pipeline project and at the same time allowed china to participate in the completion of the BUI dam electrical project. Though this can be viewed as a smart strategy by the fact that it has involved two super powers, the super powers are just engaged in the scramble for Africa. This can result to the country loosing the close ties with one or even both of the countries. For instance, since history, Ghana has had close ties with the United States. If the country lost any close relations, then the development of the industry would suffer greatly.
2.2 Control
These challenges can be handled in various ways including:
- The development of laws by the government for the petroleum production sector. These laws would involve laws governing the conduct of employees for example drivers and the relations between employees and the industry.
- Limiting the number of deals that the country takes. This will help the country develop its skills of negotiation with time and thus be able to secure various deals. Further, the industry will not have to haste the transportation so as to meet the demands and the deals secured in the market.
-
If the country allows civic participation, then it will benefit in the long run. This is because it will be able to make better policies and decisions and further, the decisions will be greatly owned by the people.
- The rules and regulations should be put in place before implementation starts that is before start of the projects.
CHAPTER THREE
3.0 Conclusion
Petroleum and petroleum products transportation has become more profitable than the retailing of these products. However, petroleum transportation in Ghana is faced by various challenges. The major challenges that the industry faces are in the conditions of the transport media for example the roads, and ports. The poor conditions here are the challenging issues in the transportation. There are high traffic densities, a lot of costs are required to monitor the BRVs, and the only two major ports in the country do not have adequate space and the modern facilities needed for petroleum transportation.
Security is a major issue in Ghana. Petroleum products are being diverted because of the poor systems of tracking and there are also associated risks to the environment and the people of Ghana as well. With the recent discoveries of oil and natural gas, the country needs to improve its transport system so as to meet the demands of the petroleum industry.
References
Adam, M.A. (2011). No cheap oil anymore. The Ghanaian journal. January 7, 2011.
Arku, F.S. & Arku, C. (2011). The up and down sides of oil and gas development in the wood buffalo region of Alberta, Canada: positioning Ghana for progressive gains. International NGO journal. Volume 6 (1), p. 001-009.
Bell, S.R. & Memba, P. (2010). How Ghana can avoid Africa’s hydro-carbon curse: opportunities and challenges for entrepreneurs. http://whitman.syr.edu/ABP/Conference/Papers/How%20Ghana%20can%20avoid%20Africa%E2%80%99s%20Hydro-Carbon%20Curse%20Opportunities%20and%20Challenges%20for%20Entrepreneurs.pdf
Connors, W. (2010). Ghana is set to start pumping oil. The wall street journal. December 15, 2010.
Ghanaian Times, (2011). NATIONAL: Minister calls for automation of CEPS operations. http://www.ghanadistricts.com/news/?read=34138.
Ghana oil online, (2011). Ghana ports need upgrade. http://ghanaoilonline.org/2011/04/ghana-ports-need-upgrade/.
GNPC, (2011). Statement on the occasion of jubilee field first oil. http://www.gnpcghana.com/home/.
Ministry of transport, (2010). Statement Delivered By Honorable Mike Allen Hammah (MP) Minister for Transport on Tuesday 14th December 2010. At The Ministry of Information Conference Hall. http://www.ghana.gov.gh/index.php?option=com_content&view=article&id=4201:ministry-of-transport&catid=80:meet-the-press&Itemid=227
Parbey, I. (2011). Road transport workers are a deprived lot, study reveals. The Ghanaian journal. March 23, 2011.
US department of state, (2010). Ghana. http://www.state.gov/r/pa/ei/bgn/2860.htm.
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