Tuesday, December 10, 2013

TOR's inability to refine Ghana crude


The call by the chairman of the mines and Energy Committee of Parliament, Dr. Kwabena Donkor for government to activate clauses in the oil contract to allow Tema Oil Refinery to refine crude oil from the jubilee fields in the next five years, is important and must be considered.

The call is consistent with the view that we should not only be producers of raw materials, but also add value to our raw materials to rake in more revenue.

But should this call be made at this late hour? Is it not the case that if we refine crude oil locally it will not only build our capacity but also boost the downstream business?

We are supposed to be learning from best practices from elsewhere? Is it not ironical that Ghana produces Gold, but cannot boast of a gold refinery? Now we are producing crude oil but it has to be shipped to France and China to be refined. Until recently, we were advised against processing cocoa in Ghana and the reasons were that it was capital intensive and our status as Heavily Indebted Poor Country (HIPC) economy, we do not have the capital to build industries.

Now a similar set of reasons are being offered to defend why TOR cannot refine crude oil produced in Ghana. The first reason is that, crude oil produced in Ghana is loaded with heavy metals and Tema Oil Refinery was not built to refine this type of crude oil.

Also TOR is not technically and financial ready to refine crude oil. The state of affairs at TOR presently does not make those reasons plausible. Currently TOR have to import crude from another country in order to refine.

The transportation cost may or may not be significant but it is a cost that can be avoided if we refine our crude oil. Those who supply the bulk of petrol, diesel, gas and Kerosene to the Ghanaians Market are Oil Marketing Companies.

Interestingly, they store the petroleum products at the premises of TOR, and TOR is gradually being reduced to a rent collector.

When Ghana struck oil in 2007, the song was, the oil should not be a curse but a blessing. This aspiration was borne out of what we have come to know of the older African Oil Countries like Nigeria, Cameroon, Gabon, Equatorial Guinea, Angola that oil money circulates between few people leaving the masses to wallow in poverty.

So Ghana was determined to make the oil find a blessing. Experts went as far as Norway to learn from their best practices. Is reducing TOR to a rent collector or exporting crude oil without adding value to it, are the lessons we learnt? Whiles we wait for the key stakeholders to answer this question, the state's response that TOR will soon be made technically and financially ready for a strategic partner.

Why the need for a strategic investor? After all, TOR has enough technical and financial muscle to refine crude oil. It should be recalled that in the late 1990s, a vociferous argument was made for a Catalytic Cracker, few years after, this technology had become obsolete and the catalytic Cracker's relevance to oil refinery is almost zero.

This was another huge lost to the state. Meanwhile, the Ghana National Petroleum Company was constantly retrieving data from the jubilee filed about Ghanaians crude oil potentials. How much of that data informed a proactive thinking so that the nation does not find itself in a position to cough out another huge sums of money to update equipment at TOR.

It should not be lost on us, that the Beginning point of all the downstream business is TOR refining crude and supplying to both domestic and international markets. So far, the signs at TOR are not sustainability encouraging.

it is a sign that we are not doing things differently from the oil cursed countries. The call for TOR to refine crude oil produced in Ghana, is a call to make ordinary people part of the oil business.

This call, is also a cry from the ordinary people and other important statesmen like Dr. Kofi Annan who back in 2007 stated that the oil find must not be a curse but a blessing, and impress upon decision makers to ensure that TOR WORKS to become a success story.

 A graduate of University of Ghana

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