THE EFFECTS OF OFFSHORE OIL AND GAS OPERATIONS ON THE SOCIO- ECONOMIC LIFE OF GHANAIANS: A CASE OF THE PEOPLE OF ELLEMBELLE DISTRICT IN THE WESTERN REGION OF GHANA

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ABSTRACT

The oil and gas discovery and production in Ghana has given the country a new status which has invigorated the scholarly debate on the effects of oil and gas discovery on the socio-economic development of the citizenry. The discovery, and its subsequent production, at Ghana’s Jubilee fields was met with high expectations by the Ghanaian citizenry, especially those within the catchment areas, as far as enjoying quality job opportunities, socio-economic development in infrastructure, improvement in education and health was concerned. Ghana became part of the oil and gas discovery and production nations when she discovered commercially large quantities of oil around the Cape Three Points Area. While the discovery and production of the oil and gas is envisaged to have positive effects on the socio-economic life of the citizenry, its negative effects should not be underestimated. This study aimed at critically examining the effects of the oil and gas discovery and production on the socio-economic lives of the people within the Ellembelle District in the Western Region of Ghana. The study also aimed at identifying the role of the government, oil firms and other stakeholders in solving the negative effects of the oil and gas operations on the people within the catchment area.

To digest these issues comprehensively, the study used the Resource Curse Theory, which describes the relationship between oil discovery and economic growth and the impact of oil and gas on national development (Auty, 1993). The Social Action Theory was also used to explain the reaction of human beings in a social context and how their actions and inactions affect their lives (Weber, 1991).

In addition, the researcher used the qualitative research approach, employed focus group discussions and in-depth interviews to collect data for the study. Afterwards, descriptive-

narrative method was used to analyze responses recorded on audiotapes from the field. The researcher used the descriptive case study under the qualitative method to explain the effects of the offshore oil and gas operations on the socio-economic development of the people within the catchment area.

The study concluded that the offshore oil and gas discovered and produced in Ghana has double-edged effects. The study also revealed that while a segment of the communities in the catchment area is benefiting from the oil and gas exploration in various degrees through corporate social responsibility and capital investment, others such as farmers, fishermen and traders have lost their most important capital without adequate compensation. The study revealed that pollution, migration, high cost of living and the breakdown of cultural values were the negative social effects of the oil and gas operations in the Ellembelle District. On the other hand, positive social effects such as infrastructural developments, provision of social amenities and tourist attraction that brings revenue to the local communities were revealed. The study again revealed mainly negative economic effects of the oil and gas operations in the Ellembelle District such as high unemployment rate, the breakdown of local businesses and land litigation. The researcher, therefore, recommended that in order to solve or reduce the issue of unemployment that emanates from loss of lands, the Ellembelle District Assembly in collaboration with relevant stakeholders, traditional authorities and Non-Governmental Organizations (NGOs) must initiate several alternative livelihood programmes from which the affected inhabitants can survive on, as this would help salvage the issue of unemployment in the Project Affected Communities     (PACs).

CHAPTER ONE INTRODUCTION

            Background to the Study

Across the world, natural oil and gas reserves are being discovered and already endowed fields are being re-evaluated, accounting for an increase in onshore and offshore production projects (Industrial Info Resources, 2015). According to Industrial Information Resource (2015) report, a great number of countries throughout the world including Ghana are into oil and gas exploration and production activities and as a result, new and existing offshore oil and gas fields are being developed and rejuvenated using new technologies. History has underscored that many of the discoveries and operations of these lucrative offshore oil and gas resource countries in Sub Saharan Africa, Africa and the world at large have undertaken oil and gas activities without the feel of effect on their socio-economic development and environmental sustainability. Jakpor (2012a) claimed that Albertine Graben basin in South West Uganda exploration of lucrative oil and gas may possibly increase government revenue in several folds. Nonetheless, the commercial exploitation and production of oil and gas poses formidable environmental challenges to many countries due to feeble and ineffective institutions, absence of public involvement and participation, weak communication systems, and a large number of labour without the requisite expertise in the oil and gas industry. To add to the above, other indicators such as lack of essential policies, ineffective organizational structures and governance systems, which continue to affect all activities leading to unmaintainable actions at both the national and community levels of the country.

The Oil Spill Prevention Administration and Response (OSPAR) Commission (2009) in Iceland reported that within the OSPAR area, offshore oil and gas is a substantial

business, particularly in the Greater North Sea and Celtic Seas, but so eminent in the Arctic Waters. The various offshore oil and gas activities in the regions have culminated to an extensive spillage, pollution and degradation. Major pollution experienced had to do with contamination of air, water and land degradation. According to Jakpor (2012) since oil companies began operation some years ago in Nigeria, not only have communities in the oil and gas catchment areas been subjected to rising noise levels, but air and water sources of these communities have been polluted and farmlands deserted due to excessive oil and gas activities in these Project Affected Communities (PACs).

Ghana’s discovery of major offshore oil fields, as happened in many other countries, has generated a blend of happiness and fear (Integrated Social Development Center, 2009). It is against this background that the study in the Ellembelle District, where the oil and gas Processing Plant and Free Port Project, are constructed is very necessary and equally important to unearth the effect of the offshore oil and gas discovery on the socio- economic life of Ghanaians in that area.

The West Cape Three Points block and Deepwater Tano block which Kosmos Energy and Tullow Ghana Ltd companies are championing respectively (Kosmos Energy, 2012) is a natural resource which is counted as one of the noticeable fossil fuels among which is coal, and natural gas. The discovery to the government and people of Ghana denoted a dramatic change in the progressive efforts of the country’s development. In the sense that the advent of oil discovery, development and production presents Ghana with its next great test in terms of right institutions being put in place, accountability and transparent policies to efficiently and effectively manage the resource. According to Integrated Social Development Centre (ISODEC) report (2009), Ghana has had desirable record of good

governance and stability. The report added that despite this progress, the country with a populace of about twenty-three million still remain poor and depend largely on primary commodity exports such as cocoa, gold, and timber and about 10 million of Ghanaians live on less than two US dollars a day (ISODEC, 2009). Ghana’s discovery and production of oil and gas could change and add to her over dependence and support on primary exports commodity subject to price swings that make development planning difficult. Petroleum, which is often called black gold in Ghana, is very valuable to mankind and has played enormous economic roles in the world especially in communities where they are explored and produced.

Africa is proud of a long list of oil and gas producing countries. United States Energy Information Administration (USEIA) Report (2010) intimated that sixteen (16) out of the fifty-four (54) countries in Africa could boast as exporters of oil. History indicates that from the year 1980 to 2012 and even beyond, oil production has increased from fifty- seven (57) billion barrels to one hundred and twenty-four (124) billion barrels in Africa. The estimation is given that at least another one hundred (100) billion barrels are offshore and waiting only to be discovered EIA (2010).

The offshore oil and gas operations in Ghana are relatively new undertakings that involve discovery and production of the resource far away from the land. The oil and gas  activities involve the construction of the rig platform, drilling, dredging, filling and anchoring of vessels offshore. The operations as well include discharging from drill cut, supply vessels and the use of helicopters. In addition, the offshore oil and gas operations take into consideration transporting the unprocessed oil and natural gas from the offshore production point to refineries and plant on land. On the rig platform offshore, very little
refinery is carried out while the larger portion of the refinery is done on land (Arctic Offshore Oil and Gas Guidelines, 2009).