Ghana Begins Construction of $12b Oil Refinery

Ghana has officially launched the construction of a major oil refinery, with the goal of establishing itself as the leading petroleum hub in West Africa.

The 300,000 barrel-per-day (bpd) refinery, which is set to be one of the largest in the region, was announced by Ghanaian President Nana Akufo-Addo on Monday, August 19, 2024.

This ambitious project, located in the southwestern city of Jomoro, marks a significant step in Ghana’s journey since it became an oil-producing nation in 2010. Currently, the country produces approximately 132,000 bpd of crude oil and 325 million standard cubic feet per day of natural gas.

“The project promises to be a cornerstone of our nation’s development,” President Akufo-Addo declared at the construction site. The refinery, which will also house petrochemical plants, is anticipated to transform Ghana’s role in the regional oil market.

Phase one of the project is estimated to cost $12 billion and will be funded by a consortium including Touchstone Capital Group Holdings, UIC Energy Ghana, China Wuhan Engineering Company, and China Construction Third Engineering Bureau Company.

The refinery is part of Ghana’s larger vision to address West Africa’s petroleum needs. Currently, the region consumes around 800,000 bpd, with nearly 90% of that demand met through imports. By 2036, the Ghanaian refinery aims to supply enough refined petroleum and by-products to satisfy the entire region, as outlined in an agreement signed in June 2018.

Despite the government’s enthusiasm, the project has faced skepticism and opposition. Bright Simons, Vice President of the Accra-based think tank IMANI Africa, criticized the consortium behind the refinery, arguing that it lacks a solid investment plan and a bankable business model. “Our position is that this is a speculative attempt to grab a landbank for cheap,” Simons commented.

Additionally, there has been pushback from local residents affected by the project. Some have protested the government’s plans to utilize a 20,000-acre site for the refinery, demanding that the footprint be reduced to 5,000 acres. Oliver Barker-Vormawor, a senior partner at the law firm representing affected farmer cooperatives, emphasized that the government’s approach disregards significant social and environmental concerns, as well as the livelihoods of displaced farmers.

“The abrasive manner that the government is proceeding discounts valid concerns around the social and environmental impact of the project, the livelihoods at risk by the displacement of farmers, and the unsettled questions of ownership and community land rights,” Barker-Vormawor stated.

Despite these challenges, the Ghanaian government has dismissed the objections, pointing to petitions from other residents who support the refinery project. As construction moves forward, the refinery remains a focal point of debate, with its impact on Ghana’s economy and the broader West African region still to be seen.
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