n AfricaGrowth Agenda - Oil spill economics : how Ghana can succeed

Volume 2011, Issue 4
  • ISSN : 1811-5187


Ghana is about to become a major oil producer. The country's newfound oil 60 km offshore is expected to bring in USD 4.5 billion this year and ultimately about USD 9 billion a year from 2013 onward for quite some time. These revenue estimates assume an oil price of USD 100 per bbl, with continued instability in the Near East and North Africa and continued upward pressure on oil demand from emerging market economies. With expected increases in the oil reservoir and potential production of 500,000 to 1 million bbl per day from about 2018 onward, the nominal total revenue flows from oil could reach between USD 18 billion to USD 36 billion per year. For comparison, Ghana's GDP in 2008 was USD 17 billion and her merchandise exports USD 7 billion. The oil discovery thus promises to make an important contribution to Ghana's economy. At present the exact percentage of revenue that will accrue to the Government of Ghana remains unknown and could range between 15% and 70%. Even so, the Ghanaian authorities are aware that abundant oil wealth does not constitute a one-way ticket to seventh heaven. Understandably, they are eager to avoid replicating the 40-year experience of oil-rich Nigeria next door. So let's begin in Nigeria.

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