GHANA PETROLEUM DOWNSTREAM INDUSTRY Presentation Outline Introduction Downstream

GHANA PETROLEUM DOWNSTREAM INDUSTRY

Presentation Outline • Introduction • Downstream facts and figures • Role of NPA • Overview of Petroleum Downstream Licensing Process in Ghana • Reasons for working visit 12/15/2021 2

Introduction - Ghana Petroleum Sector Oil & Gas Production and Exploration Upstream 12/15/2021 Transportation and processing (Gas) Midstream Refinery, Distribution and Marketing of refined Downstream products 3

Introduction – Downstream policy objective • Key policy focus for the petroleum downstream is removal of government control (deregulation) with the following objectives: 1. Price De-control (Price liberalization) – Achieved in 2015 2. Removal of restrictions on the establishment and operation of facilities – Achieved in 2004 3. Removal of restrictions on the importation of crude oil and petroleum products – Achieved in 1996 12/15/2021 4

Introduction – Historical Milestones September 2006: Private sector company licensed to sell wholesale to the OMCs and bulk consumers July 2015: Petroleum Product Price Deregulation 2015 2006 2005 June 2005: The establishment of the National Petroleum Authority (NPA) to oversee the deregulated market in a takeover from the National Petroleum 12/15/2021 Tender Board 2007 October 2007: Biweekly adjustment of petroleum products prices to reflect oil prices on the International market 5

Downstream Facts & Figures – Supply chain Aviation Industry Refinery Shipping Mining Industr Storage Marine Industry Importation of crude oil and refined products 12/15/2021 Retail Market Export Market 6

Downstream Facts & Figures – Service Providers SHIPPING TOR OTCs (27) BDCs (35) REFINING STORAGE TOR Platon Oil & Gas Akwaaba Link BOST TOR Depot BDC Storage (11) TRANSPORT Transport Operators (562) BRVs (3, 649) VLTC (1) RETAIL (Local & Export) OMCs (114) LPGMCs (42) Retail Outlets (3, 944) Export Companies (26) SUPPORTING COMPANIES LICENSED BY AUTHORITY v v v v Mooring Company (1) Ghana Ports & Harbor Authority SPM & CBM (1) Oil Jetty (2) Stratification Company (1) Bunkering Companies (55) Tank Cleaning (10) Calibration (9) v v v Kerosene Outlets (57) Filling Stations (1, 381) LPG Outlets (666) Reseller Outlet (168) Service Station (1, 672) 12/15/2021 v Lubricant Manufacturing Companies (2) v Lube Blending (9) 7

Downstream Facts and Figures Consumption Premix. ATKFuel oil 1. 6% 2. 7% 0. 3% Petrol 32. 7% Diesel 46. 7% Total annual consumption of over 4 billion litres LPG 8% 12/15/2021 Kerosene MGO Foreign MGO Local Gasoil (Rig) Gasoil (Mines) 0. 2% 0. 9% 6% 8

Downstream Facts and Figures Storage • Total National Storage capacity of petroleum products is estimated at 1. 3 million MT. Kerosene, 2, 5% LPG, 2, 0% Premix, 0, 3% Unified, 0, 1% ATK, 4, 3% Crude, 22, 4% PMS, 28. 5% AGO, 39, 9% 12/15/2021 9

Role of NPA: Established under NPA act 2005, act 691 as a semi-autonomous agency to regulate, monitor and oversee activities of the downstream Industry 12/15/2021 10

Role of NPA – Technical Divisions ns a nic ch e T l io s i Div IM&HSSE • Inspections and Monitoring to ensure compliance with industry standards PPR • • • Pricing and price risk management activities National stocks management and planning Industry Research and business development UPPF • • • Unified Petroleum Price Fund Operations Bulk Road Vehicle Tracking Operations Primary Distribution Margin Management Quality Assurance • • • Ensure integrity of quality of products supplied Save tax revenue otherwise lost to the state Save misapplied subsidies • Processing and issuance of licenses and permits Licensing 12/15/2021 11

Downstream Programmes & Policies 12/15/2021 12

Price Deregulation Objective : Removal of government controls in pricing and elimination of subsidies Strategy : Petroleum Service Providers (PSPs) to set their price according to the prescribed PBU formula, PSPs to ensure their company prices are the same throughout the country Successes : Elimination of subsidy, lower competitive prices and higher investor confidence Next Steps : Deregulation of transportation 12/15/2021 13

Low Sulphur Fuels Objective : Reduce maximum Sulphur in fuels as follows Diesel: 3000 ppm to 50 ppm Petrol: from 1000 ppm to 50 ppm Strategy : BDCs to import at 50 ppm diesel and petrol. BDCs started importation of 50 ppm in August, 2017 Challenges : No clear indication from TOR about plans to retrofit the refinery. 12/15/2021 14

National LPG policy Objective : Adopt an LPG cylinder recirculation policy Strategy : Change of current LPG marketing operations to reflect cylinder recirculation model. Revise the LPG supply chain to include bottling plants, Limitation of current refilling plant marketing of LPG to autogas Successes : Policy was approved by Cabinet in October 2017. Implementation Committee has been formed to plan and oversee the implementation 12/15/2021 15

OVERVIEW OF PETROLEUM LICENSING PROCESS IN GHANA 12/15/2021 16

LICENSING OF PERTOLEUM SERVICE PROVIDERS Sections 11 (1) and (2) of the NPA Act, Act 691 stipulate that: 1. A person shall not engage in a business or commercial activity in the downstream industry unless that person has been granted a licence for that purpose by the Board. 2. The business or commercial activities of the downstream industry in respect of crude oil, gasoline, diesel, liquefied petroleum gas, kerosene and other designated petroleum products are (a) importation, (b) exportation, (c) re-exportation, (d) shipment, (e)transportation, (f) processing, (g) refining, (h) storage, (i) distribution, (j) marketing, and (k) sale. 12/15/2021 17

LICENSING OF PERTOLEUM SERVICE PROVIDERS • Section 30 of the Act also stipulates that ‘A person shall not construct or operate in the petroleum downstream industry (a) a petroleum products retail station, (b) a petroleum products storage depot and pipeline, (c) a liquefied petroleum gas depot, or (d) an oil refinery without the prior written authorization of the Board’. 12/15/2021 18

LICENSING OF PERTOLEUM SERVICE PROVIDERS v The Licensing Division has outlined various requirements needed to obtain licences and permits for the various categories of PSPs listed. These are available as Public Notices of the NPA (NPA N. 001 to NPA N. 031). v All licence applications are submitted in hard copy at the NPA Head Office in Accra. Applicants are required to pay a non-refundable processing fee for each licence application. v The application is reviewed by the Division and forwarded to the NPA Licensing Committee for further consideration and subsequent approval by the Governing Board. v Upon Approval, applicants will be issued with a licence subject to full payment of the new entrant licence fee.

RENEWAL OF LICENCE ***All PSP Licences expire on 31 st December of the calender year. In line with Section 15(4) of the NPA Act 2005, (Act 691), all PSPs are required to apply for the renewal of their licences 60 days prior to the expiration of their licences. Documentation Requirements 1. Audited Financial Accounts for previous year 2. Annual Returns as filed at the Registrar Generals Department; 3. Current Directors And Shareholders; and 4. Payment Of Annual Renewal Fee.

CONSEQUENCES FOR NON-COMPLIANCE WITH THE REQUIREMENTS FOR THE RENEWAL OF LICENCES In line with Section 18 of the NPA Act, 2005, (Act 691), failure to comply with the requirements and deadline for the renewal of licences will result in the following: §Sanctions and penalties for late renewal. §Refusal to renew licence. §Withdrawal of licence. §Suspension of licence. §Revocation of licence.

REASONS FOR WORKING VISIT v To fully automate licensing procedures to ensure swift processing of all licence applications. v. The NPA has already acquired an Enterprise Relational Database Management System to automate some operations. (Phase 1 has been fully deployed) v. Phase 2 will include the full automation of licensing procedures. The NPA will require first hand information from the Department of Energy on the implementation challenges and areas of concern in this regard. 12/15/2021 22

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