Five years after, Tema refinery back on stream

Tema oil refinery (TOR) has resumed its core function of refining crude oil after about five years of inaction. The state owned refinery has managed to strike a deal with Sahara Energy Resources to supply it with crude oil for processing. The refinery took delivery of 800,000 barrels in two tranches of 350,000 barrels and 450,000 barrels of crude oil from Sahara Energy.

The 45,000 barrels-per-day plant has been hobbled by repeated shutdowns in the last five years, often due to a lack of funds to procure crude for processing.

It is estimated that it will take one month for TOR to finish refining the 800,000 barrels of the crude oil. After refining the crude the end product would be sold through Access Bank to the Oil Marketing Companies (OMCs) for onward sale to the general public.

The arrangement means that Sahara will not collect money upfront for the crude delivery. However, Sahara has arranged with Access Bank to provide an inspection team to monitor the refinery throughout the processing period until the finished products are sold. Sahara would then go for its money from the Bank. The deal does not also require the issuance of Letters of Credit before the crude is supplied.

It would be recalled that Sahara Energy was awarded the Nigeria-Ghana agreement on crude supply to Ghana on 90-day credit facility to keep TOR in operation in 2010, but the National Democratic Congress government decided to abrogate the contract ostensibly because the company dealt with the New Patriotic Party when it was in power.

Ghana is one of Africa’s newest crude exporters after starting production from its offshore Jubilee field in late 2010. But authorities say the country’s refinery needs an upgrade to be able to run the domestically produced oil.

Oil production has become a major source of government revenue and foreign exchange and when it came on stream it led to a spike in GDP growth in 2011, making Ghana one of the world’s fastest growing economies.

Current output stands at around 100,000 barrels per day and lags national targets.