The ongoing tripartite military confrontation involving the United States, Israel, and the Islamic Republic of Iran, specifically the blockade of the Strait of Hormuz since late February 2026 has precipitated an 18% surge in Brent crude prices to over $87 per barrel with Goldman Sachs Research estimating potential price escalations of $15 per barrel for a full one-month closure of the Strait. This geopolitical shockwave, affecting approximately 20 million barrels per day (mb/d) of global oil flows and 80 million tonnes per annum of LNG transit, presents both existential challenges and strategic opportunities for Ghana’s petroleum sector.
Ghana currently possesses 660 million barrels of proven oil reserves, ranking 43rd globally, with production averaging 205,590 barrels per day (bbl/d) in 2024. However, the nation confronts a critical inflection point: production has declined 25.9% year-on-year in H1 2025, with the Jubilee Field experiencing a 32.8% output reduction. At current consumption levels of 102,779 bbl/d, Ghana’s reserves-to-production ratio indicates approximately 18 years of remaining reserves, a precarious position exacerbated by natural reservoir depletion, operational shutdowns, and critically, no new petroleum agreements ratified since 2018.
*The Strait of Hormuz Crisis*
The Strait of Hormuz blockade represents the most severe energy chokepoint disruption since the 1980s Tanker War. Technical analysis reveals 25% of global petroleum sales transit through the aforementioned maritime corridor. Again, 55% of world crude reserves are concentrated in Gulf states dependent on the Strait. Alos, 19% of global LNG supply (Qatar and UAE exports) is at risk and brent crude volatility has increased with refining margins for jet fuel reaching 200% above monthly averages.
For Ghana, this crisis manifests through import vulnerability, revenue volatility and foreign exchange pressure. Ghana spends approximately $3 billion annually on refined petroleum product imports, with monthly import bills averaging $430 million in 2025. Petroleum receipts dropped 56% from $840 million (H1 2024) to $370 million (H1 2025). Also, the widening gap between declining oil exports ($1.12 billion reduction in Jan-Oct 2025) and rising refined product imports threatens balance of payments stability.
To address this crisis, Ghana must develop a comprehensive, long-term strategy for oil and gas sector expansion that reduces structural dependency on crude oil imports. This narrative offers pragmatic recommendations for insulating the national economy against crude oil price volatility driven by external geopolitical shocks.
*Legal and regulatory framework analysis*
The Minister of Energy should invoke Section 37 of the Petroleum (Exploration and Production) Act, 2016 (Act 919) to mandate 4D seismic acquisition, waterflooding and gas injection programs for pressure maintenance and artificial lift optimization in mature wells.
Currently, 70% of petroleum revenues flow into Annual Budget Funding Amount (ABFA) for budget financing. The Act permits allocation to Stabilization Fund to cushion against price volatility and the Heritage Fund for future generations.
Under the Petroleum (Local Content and Local Participation) Regulations, 2013 (L.I. 2204), there is an establishment of a minimum local content levels and preference mechanisms. The Petroleum Commission should amend the First Schedule to mandate minimum 25% local content in EOR technology services, compelling contractors to partner with Ghanaian firms for reservoir engineering services, production optimization consulting a well intervention technology.
The NPA should utilize Section 11 to require all Bulk Distribution Companies (BDCs) to maintain minimum 45 days of strategic petroleum stocks, exceeding the current inadequate reserves.
Section 3(2)(d) of National Petroleum Authority Act, 2005 (Act 691) mandates the maintenance, storage and distribution of strategic petroleum stocks. Despite this statutory mandate, Ghana lacks a Strategic Petroleum Reserve (SPR) infrastructure. The NPA must immediately designate emergency storage caverns or floating storage facilities, establish compulsory stockholding obligations for importers and create inter-agency coordination with the Ghana National Petroleum Authority for SPR management.
*Pragmatic Technical and Legal Recommendations*
*Recommendation 1: Immediate Reserve Replacement Strategy*
Section 10(9) of Act 919 permits direct negotiations without public tender where they represent the most efficient manner to achieve optimal exploration, development and production. The Minister of Energy should invoke Section 10(9) to directly negotiate with technically capable independents for marginal field development.
On Marginal Field Licensing, there is the need to utilize Section 10(5) of Act 919 to offer relinquished portions of contract areas to Ghanaian companies under Indigenous Ghanaian Production Company categories defined in Petroleum Commission (Fees and Charges) Regulations, 2015 (L.I. 2221).
On the Volta Basin promotion, government, through the Ministry of energy should aggressively market the onshore Volta Basin using GNPC’s 2D seismic data to attract unconventional exploration investment.
*Recommendation 2: Domestic Refining Capacity Expansion*
Ghana imports 80% of refined petroleum products despite crude production, exposing the economy to import parity price volatility. This therefore calls for the rehabilitation of the Tema Oil Refinery (TOR). The dynamics may not incentivise the government to fully revive the refinery. Even if revived, there is the need to utilize Section 11 of Act 691 to grant tolling arrangements to private investors for TOR refurbishment, with local content requirements under L.I. 2204.
The government should also fast-track the Petroleum Hub Development Corporation (PHDC) licenses under Section 12 of Act 691 for 400,000 bbl/d refining capacity, petrochemical integration for product diversification and regional export capacity to ECOWAS markets.
*Recommendation 3: Fiscal Regime Optimization for Reserves Security*
The government should invoke section 24 of Act 919 to extend production licenses to 2040 contingent on EOR investment commitments, introduce sliding scale royalties favouring production maintenance over peak extraction and implement ring-fencing provisions preventing cost recovery from new fields until existing field depletion is addressed.
The government should also amend Income Tax Act, 2015 (Act 896) to provide investment allowances for EOR equipment, cost uplift of 20% for qualifying EOR expenditures and tax holidays for incremental production from EOR projects.
Again, there is the need to permit early decommissioning fund drawdown for EOR infrastructure where facilities are repurposed rather than abandoned, subject to Ministerial approval.
*Recommendation 4: Regional Energy Security Cooperation*
There is the need to propose regional Strategic Petroleum Reserve mechanism utilizing Ghana’s Petroleum Hub storage for landlocked neighbours.
Again, Ghana should negotiate increased gas transit capacity through West African Gas Pipeline under WAGP Regulations, 2025 to diversify from liquid fuels.
The government should also utilize Section 42 of Act 919 on Cross-Border Cooperation and Unitization, to jointly develop trans-boundary fields with Côte D’Ivoire, ensuring reserves pooling rather than competitive depletion.
*Recommendation 5: Institutional Coordination and Enforcement*
Under Petroleum Commission Act, 2011 (Act 821), the Petroleum Commission should establish Reserves Management Division. There should be a dedicated unit monitoring reserves replacement ratio (RRR) and recovery factor optimization.
The Petroleum Commission should also establish Data Repository Utilization. It is important to enforce section 56 of Act 919 (Ownership of Petroleum Data) to compel operators to submit 4D seismic data for national reserves auditing.
There should be strictly compliance of Regulation 34 of L.I. 2204, requiring Local Content Performance Reports to ensure technology transfer for reserves maintenance.
By Samuel Saint-Ayisi
