United States Ambassador to Ghana, Virginia Palmer, has called on the government and key stakeholders in the oil and gas sector to honour the terms of contracts signed with industry partners.

She stressed that doing so would ensure a stable and conducive business environment, which, in turn, would foster economic growth for the West African country.

Speaking at the 2024 Ghana Oil and Gas Conference organised by the Ghana Upstream Petroleum Chamber and held at the Accra Marriott Hotel, Ambassador Palmer further highlighted the importance of the Ghana Revenue Authority (GRA) adopting more investor-friendly tax policies to attract and retain investment in the sector.

“Improving Ghana’s business climate will be an important next step and one it must tackle. This means a commitment to contract sanctity, including provisions on international arbitration.

It means clear, consistent, and fair treatment by the Ghana Revenue Authority. It means speedy dispute resolution,” she remarked.

The U.S. Ambassador added, “It means real consultations on changes to localisation requirements and timely payments, as well as proper application of VAT exemptions in this key sector,” she emphasised.

The Ghana Oil and Gas Conference is held annually to evaluate the performance of Ghana's upstream oil and gas industry and to share ideas on how to further develop and invigorate the sector.

The conference includes presentations on critical issues such as monetising natural gas resources, deepening local content, and securing financing for Ghanaian service companies. The event typically lasts two days and is held annually.

The oil and gas industry in Ghana is subjected to a variety of taxes and levies, which include a 35% corporate income tax, a surface rental fee, and a royalty rate ranging from 5% to 12.5% depending on the field’s production level.

From 2018 to 2023, exploration activities in Ghana have reduced by over 40%, according to reports. Investment in the oil sector dropped from $3 billion in 2015 to around $1 billion in 2022.

The government’s revenue from the oil sector has fluctuated, with a notable decline from $980 million in 2019 to approximately $830 million in 2022, reports have shown.

The upstream oil and gas sector in Ghana contributed 3.7 percent to the Gross Domestic Product (GDP) in 2020 and recorded a growth rate of -4.6 percent (at constant 2013 prices), according to the Ministry of Finance.

The 2023 annual report by the Public Interest Accountability Committee (PIAC) revealed that Ghana produced 48,247,036.61 barrels of oil in 2023, down from 51,756,481 barrels in 2022. This decline continues a trend from the peak production year of 2019 when 71,439,585 barrels were produced.

Production fell to 66,926,806 barrels in 2020, representing a 6.32% decline. This downward trend continued with 55,050,391 barrels in 2021, a 17.75% decline; 51,756,481 barrels in 2022, a 5.98% decline; and 48,247,036.61 barrels in 2023, a 6.78% decline.