AT LAST Ghana becomes an oil nation, seeks to avoid 'curse'




Ghana began production on Wednesday from one of the largest recent oil discoveries in West Africa, transforming it into a significant producer, but raising fears over the associated risks.

President John Atta-Mills flew by helicopter to an oil-processing vessel located at the offshore field and symbolically opened a valve signifying the start of production.

Atta-Mills pledged his government will ensure the oil becomes "a blessing and not an oil curse," with output set to result in revenue that has been estimated at as much as one billion dollars per year.

"We will not let you down," he said, promising the oil will be used to catapult Ghana into a "modern 21st-century prosperous industrial nation."

A video of Atta-Mills performing the ceremonial opening was screened to dignitaries gathered at the nearby town of Takoradi, where traditional drumming greeted the start of production.

The occasion was called historic by local officials and the oil field's main operator, the Anglo-Irish firm Tullow.

But while the country, seen as a model of democracy in the region, has been counting its blessings because of the riches the oil will bring, it need only look to nearby Nigeria to understand the potential dangers.

In Nigeria and other countries, major oil production and the money that flows with it have been accompanied by widespread corruption and neglect of other industries.

"I hope we put this resource to good use," Ghana ex-president Jerry Rawlings said. "At the same time, we should not over-rely on this resource and neglect other areas of economic activity like other countries have done."

The oil curse, some say, could well take hold in Ghana, reversing development and political gains highlighted when US President Barack Obama visited last year.

But other observers argue that if anybody can handle it in the region, Ghana can, precisely because of the development that has taken place. The country is already a major producer of cocoa and gold.

It has produced oil in the past, but only in very small quantities by industry standards. The recent find has set off intense interest from investors, including from China.

"Ghana has the potential to avoid it, but still has a lot to do to avoid the oil curse," said Emmanuel Kuyole, Africa regional coordinator for Revenue Watch Institute, referring to dangers posed by the sudden wealth.

There is concern that the country has not adapted its legislation quickly enough to cope with the windfall.

Commercial production comes just three years after the discovery of the oil -- and with proposed laws to regulate the industry still under debate in parliament.

"We ought to have been better prepared," said Bright Simons, researcher with the IMANI Center for Policy and Education, a Ghanaian think tank.

Critics also argue that Ghana does not yet have the infrastructure to tap the gas that comes with crude production.

That means gas flaring will inevitably take place, observers say, despite Atta-Mills' government having declared a policy of zero tolerance on the practice, which is widely viewed as damaging to the environment.

The Jubilee field was discovered in 2007 by US firm Kosmos and is estimated to contain some 1.8 billion barrels, one of the largest finds in West Africa in recent years.

Tullow says it will produce about 55,000 barrels a day within the first few months before more than doubling output to 120,000 bpd.

While considerable, the amount is only a fraction of Nigeria's two million barrels per day.

Ghana will be keen to avoid the unrest that has plagued Nigeria's main oil-producing region, the Niger Delta, where scores of attacks and kidnappings have occurred. An illegal oil industry has also thrived there.

Traditional chiefs in Ghana are already calling for 10 percent of oil wealth.

Investment in villages close to the oil field is crucial for Ghana to avoid a situation like the one in the Niger Delta, warned Kuyole.

Awulae Attibrukusu, a traditional chief in the region, one of Ghana's least developed, said the oil "provides new hope".

Hope In Due Course Uganda will follow suit ?

Hong Kong Shares ended slightly higher Friday due to bargain hunting in property firms, though lingering concerns about economic tightening in China capped gains.

The blue-chip Hang Seng Index rose 46.07 points, or 0.2%, to 22,714.85 after trading between 22,519.61 and 22,732.62. The index fell 1.9% this week.

Market volume totaled HK$72.54 billion, down from HK$76.27 billion Thursday.

Analysts said they expect the index to trade in a narrow range ahead of the holiday season.

Alvin Cheung, associate director at Prudential, said he expects the index to remain in a 22,500-23,000 range in the near term.

'A pre-holiday mood prevails, and I think range-trading will be the overall pattern for the Hang Seng Index ahead of the Christmas holiday,' he said.

Eugene Law, head of research at Celestial Securities, said: 'A lot of fund managers made handsome profits during the rally from September to early November. Many have chosen to lock in profits...there is no need for the traditional year-end window-dressing.'

Local property developers led the gains Friday. Hang Lung Properties gained 4.3% to HK$36.30, after falling 1.8% Thursday. New World Development rose 0.4% to HK$14.64, after falling 1.4% in the previous session.

Cosco International rose 3.4% to HK$4.85 after the company said Thursday it is selling its entire 16.85% stake in property-developer Sino-Ocean Land for HK$5.60 a share, for total net proceeds of HK$5.23 billion. Sino-Ocean Land ended 6.1% higher at HK$5.39.

GOME Electrical jumped 8.1% to HK$3.08 after it said Friday its shareholders approved the appointment of two representatives of the company's imprisoned founder, Huang Guangyu, to its board.

Russian aluminum giant United Co. Rusal advanced 3.1% to HK$10.50 after it said it expects to issue Russian Depositary Receipts on Thursday. The receipts will start trading on Russia's MICEX Stock Exchange and Russian Trading System Stock Exchange on Dec. 24.

Bucking the broader index's rise, Chinese banks fell due to lingering concerns Beijing may take further measures, such as raising interest rates, to rein in rising inflation.

Bank of Communications ended down 1.4% at HK$7.70, and Citic Bank fell 1.4% to HK$4.94

GHANA DATABANK STOCKBROKERS PREDICT 15% RISE IN GHANA STOCK EXCHAGE COME 2011


Ghana’s stocks measure, Africa’s third-best performer this year, is poised to rally as much as 15 percent in 2011 as companies gain from growth linked to the start of oil output, Ken Ofori Atta’s Databank Group has said. The exchange’s All-Share index may rise to 8,338.65 by the end of 2011, after climbing to 7,251 by this year’s end, said Doris Yaa Ahiati, an analyst with the Accra-based group’s stockbroking unit.

“We expect the market to benefit from oil production, which will lift economic growth from about 5.9 percent this year to 12.3 percent next year,” she said in an interview in Accra yesterday.

The 36-member bourse, which plunged 47 percent in 2009 to make it the world’s worst performer that year, has advanced 25 percent in 2010 because of “renewing interest from foreigners” who fled investments perceived as risky during the global economic crisis, Ahiati said.

Tomorrow’s start of production at the Jubilee oil field will spur growth in the West African nation, Finance Minister Kwabena Duffuor said last month.

“We foresee an increase in the demand of the goods of the consumer stocks,” Ahiati said, citing Unilever Ghana Ltd., PZ Cussons Ghana Ltd. and Fan Milk Ltd.

Tullow Oil Plc, the U.K.-based operator of the Jubilee field, plans to list on the Ghanaian bourse next year. Comet Properties Ltd. will become the first real-estate company to trade shares on the exchange after an initial public offering set for this month.

Aluworks Ghana Ltd., a manufacturer of aluminum products whose shares declined 57 percent this year, will benefit from the restart of operations of the Volta Aluminium Co., which supplies raw material to the company, Ahiati said.

Liquidity on the market, according to the bank will be boosted by a pension law that allows employees to save part of their contributions with a private fund meaning managers will “come to the market next year grabbing whatever they get.”

HK stock market opened higher on Tuesday, gains was expanded further in later session triggered by the rebound in A-share market. Hang Seng Index gained 354 points to finish the day at 22,993 near the day-high while H share index added 198 points to 12,607. Market turnover was HK$60.0bn reflecting cautious market sentiment. Mainland insurers were strong, Ping An (2318) and PICC (2328) surged 3.4% and 4.6% respectively. Li Ning (2331) plunged 5.3% after tumbling 15.9% on Monday. The three mainland telcos saw the mobile subscribers growth to decline in Novenmber. Of which, China Mobile (0941.HK) saw the worse performance, however it followed the market to gain 0.7%.

HK stock market opened higher which overcome the resistance at 23,000, while its gain is further extended, which once rose 170 points. However, A share market retreat which narrowed the HK stock gain. The Hang Seng Index rose 51 points at 23,045 while H share index rose 4 points to 12,611. Market turnover dropped to HK$54.2bn, which reflecting lack of market momentum. Resources play perform well, of which, NDRC adjusted refined product price upward, downstream based Sinopec(0386.HK) rose 2.4%. On the other hand, since Cheung Kong (0001.HK) plans to spin-off its mainland property portfolio to be the first RMB-denominated stock in HK, Cheung Kong rose 3.5%.