Players in the petroleum industry have been advised to be prudent in the management of financial resources in their operations.
They must work hard to use minimum resources in the extraction process to avoid expending more money on their business operations.
Mr. Theophilus Nyarko Ahwireng, Chairperson and Managing Director of MODEC Production Service Ghana JV Ltd, explained that in undertaking such exercises, one must be prudent in spending.
“If one is careful, along the extraction value chain, from licensing, exploration, appraisal, development, production and decommissioning, it is possible at each of these stages to optimize financial resources and get the needed value.”
He was speaking at a public lecture organized by the College of Engineering at Kwame Nkrumah University of Science and Technology (KNUST) Kumasi.
Mr Ahwireng argued that, managing the cost of petroleum was far more important than its discovery, adding that, without proper cost management, industries might witness the use of advanced technology in extracting oil offshore, but revenues that would be generated would merely cover operational expenses.
The lecture was under the theme “Capturing the Optimum Value of Petroleum Resources: Looking Beyond the Fiscal Elements.”
He stressed the need for countries to look beyond royalties, additional oil entitlements, taxes, and government participation, and build robust frameworks to fully harness these natural resources.
Nations must, therefore, conduct comprehensive review of their economic structure which was essential for identifying pathways to sustainability.
He cited countries such as Norway, Trinidad and Tobago and the West African Gas Pipeline Project from Nigeria, which had strategically managed resources to position their economies positively.
Mr Ahwireng said when Ghana took over from the Jubilee Oil Field, it had for more than a decade generated and supplied oil products for electricity worth several millions of dollars.
Again, petroleum-exploring countries must be disciplined; adhering to policies, legislation, guidelines, best practices, systems, and processes.
He stressed the need for clear mandates for state actors, emphasizing the importance of alignment among revenue managers, resource managers and policymakers.
There should be quality development solutions employed, optimization of activities along the petroleum value chain as well as the management of petroleum cost.
Mr Ahwireng believed this created significant value, greater than all revenues from the fiscal incentives.
Watch the latest episode of Health Focus below