Ghana Oil Boom Raises Piracy Specter
Recent significant offshore oil discoveries in Ghana will catapult the nation into Africa’s major producers club, but it will also be a boon for piracy on the high seas, which has more recently expanded its reach to include Ghana’s coastal waters
Ghana Oil Boom Raises Piracy Specter
Recent significant offshore oil discoveries in Ghana will catapult the nation into Africa’s major producers club, but it will also be a boon for piracy on the high seas, which has more recently expanded its reach to include Ghana’s coastal waters.
Ghana has gone from producing no oil in 2010 to become a major producer by the end of 2012. Over the past three years, there have been 13 discoveries in Ghana, and a key field is nearly maximum production levels, with new projects ready to come on line. As of 2012, Ghana’s proven reserves were at about 660 million barrels, most of it in the offshore Jubilee field. Another recent find by Italy’s Eni raises that by about 20%.
Exploration is still in the early stages and there’s a ton of untapped potential here. Pirates are certainly eyeing this potential as well.
Ghana’s newfound oil wealth will require a sizable investment in maritime security to protect from piracy on the high seas. Ghana does not have the naval power to deal with what will certainly be a dynamic change in the piracy challenge.
Ghana understands the nature and scope of the threat. On Friday, Ghana’s Interior Minister Kwesi Ahwoi vowed to take this challenge head on to protect exploration off the country’s Cape-Three-Points in the west.
Ghana’s key aim here is to foster cooperation between its naval and marine police forces in a joint effort to patrol the coast and protect oil installations. The overall mandate of the naval forces is to defend the country’s territorial waters, while the marine police would be tasked with arresting and prosecuting pirates. To this end, it’s getting some logistics and financial aid from the US. A new cooperative training academy is being funding by US AFRICOM to the tune of $2 million.
What is the extent of the threat to investors in Ghana? It’s massive. The pirates’ zone of operations in the Gulf of Guinea extends from Cameroon to Cote d’Ivoire, and while piracy has been tackled somewhat in Somalia and efforts off the coast of Nigeria have been stepped up, the pirates are resilient. They simply employ a geographical shift with relatively little exertion. They are supported by local political networks of corruption, spies at key ports who provide intelligence on vessel cargoes and security measures to determine the best targets, and they use advanced technology and adaptive tactics.
Incidents of piracy in the region have increased over the first quarter of 2013, including cargo theft, hijacking of vessels and kidnapping of crew. But the modus operandi has also changed along with the security response: It’s no longer about kidnapping crew for ransom as it was in Somalia. Now it’s about temporarily hijacking a vessel, offloading the cargo for storage in an illicit facility and then sale on the black market. Once the cargo is offloaded, the crew and vessel are released.
That they can pull this off attests to massive capabilities and organizational prowess.
For now, Ghana is not terribly vulnerable. Pirate incidents in Ghana’s territorial waters are not frequent, but this will change as more production comes on line and more discoveries are made.
However, for investors there is one very troubling aspect to piracy that paints a picture of the future: Pirates who launch operations in neighboring coastal waters are known to seek shelter in Ghanaian waters and at Ghanaian ports. This means that the pirates already have solid networks in place in Ghana and will be waiting for the first opportunity to take advantage of the country’s newfound oil wealth.
Source: Oil Price
