Ghana puts the glitter in the pursuit of black gold

Ghana has set a precedent on the African continent for speedy and transparent development of new-found oil reserves that other governments would do well to follow.

Ghana is the latest country to join Africa's oil bonanza. Ghanaian President John Atta Mills (R) sits prior to fly by helicopter to an oil-processing vessel located at the offshore field, in Takoradi.Show more

Ghana is the latest country to join Africa's oil bonanza, but as the taps opened for the first time last month, pessimists wondered if the country would avoid the troubles that black gold have caused in the region.

Initial planned production of about 120,000 barrels per day will make Ghana sub-Saharan Africa's seventh largest producer, with output set to double within three years. Ghana's government hopes the oilfield will put its economy into hyperdrive and predicts it will boost GDP growth rate from about 5 per cent last year to 12 per cent this year.

Other countries in the region also enjoy the bounty including Nigeria, Equatorial Guinea, Gabon. By 2015 the US expects to import a quarter of its oil from the Gulf of Guinea.

This has not come without cost, however. Nigeria has an ongoing struggle with insurgents in its oil-rich Delta region.

It has also to contend with spills and environmental destruction. Equatorial Guinea is run by a man diplomats have alleged is a murderer, who uses much of the country's wealth to pay for a private army to protect himself from his unhappy citizens.

Oil producers must also contend with so-called "Dutch disease" - as their wealth increases, so does the value of their currency, which pushes many of their other industries to the wall. So, if Ghana's fishermen are not to see their livelihoods destroyed by spillages, have its farmers discover their produce is priced out of the market, or endure leaders who make regular trips to Switzerland with suitcases stuffed with bank notes, it will have to do something different.

Fortunately, its ruling echelon is aware of the pitfalls, or at the very least, is saying all the right things.

"It means that we are assuming a very serious responsibility," said John Atta Mills, the president of Ghana, at the ceremonial opening of the first oil tap in December. "And especially for those who are in leadership positions, we must ensure that it becomes a blessing not a curse."

The country has already prospered, in part because it has enjoyed two decades of stable democracy. Its parliament is weighing up laws that will see benefits of the oil windfall are felt by ordinary citizens. Norway, which has one of the world's most successful records in managing its own crude revenues, has been asked to give advice on setting up a sovereign wealth fund.

The World Bank has put up US$38 million (Dh139.5m) to develop gas and oil management skills. This includes not only creating an army of bean-counters to monitor the flow of dollars, but also developing a workforce with the technical skills, such as engineers, electricians and the other specialists, needed to keep the taps open.

Ghana has other advantages, too. It is the world's second-largest cocoa producer after neighbouring Ivory Coast and is Africa's number two gold miner.

GDP is about $26 billion, so an influx of petro-dollars should not unduly upset its financial system. This year Ghana expects to take in $400m in crude revenues and, although this is sure to climb as production increases, oil will remain dwarfed by other commodity exports.

"It's a bit of oil, not a whole lot, so it's not enough to give you the Dutch disease and a curse," Ishac Diwan, a World Bank country director, told Reuters last month.

If Ghana gets it right - and indications are it will - the impact could be felt beyond its borders. Oil producers have long accepted dealing with unsavoury characters as part of the business.

But Ghana's oil production, which took a mere three years from discovery to production, has set a precedent in the region. Its partners, Kosmos, Tullow and Anadarko, are delighted at the speed and painlessness of the process.

Other countries in the region are looking to become producers, too, and they may find oil companies will expect the same transparent process as that being carried out in Ghana.