{"id":9619,"date":"2016-11-03T22:30:08","date_gmt":"2016-11-04T02:30:08","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/building-a-sustainable-and-competitive-oil-gas-company-in-a-developing-country\/"},"modified":"2016-11-03T22:32:52","modified_gmt":"2016-11-04T02:32:52","slug":"building-a-sustainable-and-competitive-oil-gas-company-in-ghana","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/building-a-sustainable-and-competitive-oil-gas-company-in-ghana\/","title":{"rendered":"Building a sustainable and competitive oil & gas company in Ghana"},"content":{"rendered":"

I was born and raised in Ghana, a poor developing country in West Africa. As a consequence, thinking about climate change, its impact on the environment and one\u2019s day-to-day life can sometimes feel like a luxury. \u00a0This is because you are confronted with extreme poverty and other seemingly more urgent and short-term problems. However, I believe thinking about the impact of climate change on daily life in Ghana is not only important, but has perhaps greater urgency as the country continues to develop as an oil and gas producer (and hopefully exporter).<\/p>\n

The Ghana National Petroleum Corporation (GNPC) is Ghana\u2019s National Oil Company and was brought into existence in 1983 by constitutional law. The company\u2019s mission is to lead the sustainable exploration, development, production and disposal of the petroleum resources of Ghana, by leveraging the right mix of domestic and foreign investments in partnership with the people of Ghana[1]<\/strong><\/a>. <\/em>While the company has been in existence for over two decades, it was not until nine years ago when significant deposits of oil and gas were discovered that the spirt of the company\u2019s mission developed a sense of urgency. Currently GNPC partners with foreign oil & gas companies in oil & gas exploration. However, its overarching strategic goal is to \u201cbecome a stand-alone operator by 2019 and a world-class operator by 2027.\u201d In order to achieve this goal, the company needs to ensure that its operations can conform and adapt to the realities of a world that continues to be impacted by climate change.<\/p>\n

 <\/p>\n

On sustainable exploration \u00a0<\/strong><\/p>\n

What does sustainable exploration mean for oil and gas exploration?<\/em><\/strong> To me that means building an oil & gas industry that is not only compliant with current climate change policies but also considers the future of climate change and associated regulation on its daily operations.<\/p>\n

Risks that oil & gas companies face<\/strong><\/p>\n

I view that the most significant risks facing companies that are involved with extractives such as oil, gas, mining, etc. include (1) stricter regulatory limits on air emissions and water discharges, (2) stranded assets if strong carbon constraints or costs are imposed and (3) reputational damage for companies seen as major contributors to climate change or major water users in water-scarce areas[2]<\/a>. The risk of stranded assets is particularly pressing for GNPC given that one bank estimated that 40% to 60% of the current market value of leading oil and gas companies\u00a0may be at risk given the value of carbon trapped on company\u2019s balance sheet in terms of energy reserves[3]<\/a>. Given the relative newness of Ghana\u2019s oil & gas fields, I view that GNPC is in an advantageous position to modify its operations to ensure that the company is nimble and can\u00a0adapt to a world that is increasingly affected by climate change.<\/p>\n

 <\/p>\n

What can GNPC do to mitigate some of these risks?<\/strong><\/p>\n

Greater focus on natural gas exploration:<\/strong> Given that natural gas is the least carbon-intensive fossil fuel, climate-related policies may create opportunities for natural gas consumption. According to the U.S. Energy Information Administration, global consumption of natural gas is expected to grow faster than global consumption of liquid fuels. Between 2012 and 2040, world consumption of natural gas is forecasted to grow 1.9% vs. 1.0% for liquid fuels. For African specifically, consumption of natural gas is forecasted to grow 3.3% vs. 2.4% for liquid fuels[4]<\/a>. It is unclear to me the extent to which GNPC can direct its operations (and those of foreign partners) to focus more on natural gas exploration. However, given the trends in climate change and global consumption pattern, it seems imperative to me that this be a core mandate.<\/p>\n

\"screen-shot-2016-11-03-at-10-11-28-pm\"<\/a><\/p>\n

Focus on empowering communities and building local talent and content:<\/strong> The extent to which oil & gas industries support or at least do not undermine local communities\u2019 resilience to climate impacts may affect their reputation and social license to operate[5]<\/a>. \u00a0One effective way GNPC is working to empower local talent and content is through its GNPC Oil & Gas Learning Foundation (OGLF). The OGLF is an autonomous institution set up to ensure the training of citizens of Ghana and the development of national capabilities in all aspects of petroleum operations. The OGLF does this by facilitating scholarship awards and grants to support individuals and Educational and Training institutions, to build national capacity in oil and gas sciences, policy, management and operations. One may argue that as a government controlled company the GNPC need not worry as much about reputation and public perception affecting its ability to operate. However, GNPC recognizes the need to ensure that Ghanaians have the knowledge and skills that will drive innovation around ways to make GNPC and Ghana\u2019s oil & gas industry sustainable for many years.<\/p>\n

Word Count: 784<\/p>\n

[1]<\/a> http:\/\/www.gnpcghana.com\/overview.html<\/a><\/p>\n

 <\/p>\n

[2]<\/a> United Nations Environmental Programme, GEO-5 for Business: Impacts of a Changing Environment on the Corporate Sector. http:\/\/web.unep.org\/geo\/sites\/unep.org.geo\/files\/documents\/geo5_for_business.pdf<\/a><\/p>\n

 <\/p>\n

[3]<\/a> United Nations Environmental Programme, GEO-5 for Business: Impacts of a Changing Environment on the Corporate Sector. http:\/\/web.unep.org\/geo\/sites\/unep.org.geo\/files\/documents\/geo5_for_business.pdf<\/a><\/p>\n

[4]<\/a> U.S. Energy Information Administration<\/p>\n

http:\/\/www.eia.gov\/forecasts\/aeo\/data\/browser\/#\/?id=6-IEO2016&cases=Reference&sourcekey=0<\/a><\/p>\n

 <\/p>\n

[5]<\/a> United Nations Environmental Programme, GEO-5 for Business: Impacts of a Changing Environment on the Corporate Sector. http:\/\/web.unep.org\/geo\/sites\/unep.org.geo\/files\/documents\/geo5_for_business.pdf<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Ghana National Petroleum Corporation: Building a sustainable and competitive oil & gas exploration company in a new market while confronting the challenges from worsening climate change. <\/p>\n","protected":false},"author":2231,"featured_media":9758,"comment_status":"open","ping_status":"closed","template":"","categories":[1466,1468,741,157,1471,1467],"class_list":["post-9619","hck-submission","type-hck-submission","status-publish","has-post-thumbnail","hentry","category-ghana","category-gnpc","category-natural-gas","category-oil-and-gas","category-petroleum","category-west-africa"],"connected_submission_link":"https:\/\/d3.harvard.edu\/platform-rctom\/assignment\/climate-change-challenge-2016\/","yoast_head":"\nBuilding a sustainable and competitive oil & gas company in Ghana - Technology and Operations Management<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/building-a-sustainable-and-competitive-oil-gas-company-in-ghana\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Building a sustainable and competitive oil & gas company in Ghana - 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