Ghana Oil and Gas Report Q1 2013

BMI View: Despite output problems, the outlook for Ghana's nascent status as an oil producer is bright,with further development at the Jubilee field and anticipated first oil from the T.E.N. project underlyingour forecast for output to grow at an average rate of 60% over the course of our forecast period to 2021.The development of infrastructure to commercialise associated gas for domestic power generation willsee both production and consumption of gas grown in Ghana. Continued upstream success with both gasand oil discoveries presents upside risk to our forecasts, however we highlight project delays andtechnical challenges as developments that could cause as to alter our forecast to the downside.

The main trends and developments we highlight for Ghana's oil and gas sector are:

After troubled start-up, output from the Tullow Oil-operated Jubilee field should reachpreviously targeted 120,000b/d figure by 2013, although for 2012 we expect production toaverage 77,000b/d.

Ghana's reserves are likely to continue to grow at a rapid rate as the appraisal of the GreaterTweneboa, Southeastern Jubilee and West Cape Three Points prospects continues, The Oil &Gas Journal (OGJ) annual reserves and production survey attributes 660mn barrels (bbl) ofproven oil reserves to the country. BMI estimates that resource base will grow to 730mn bbl by2016

Although we forecast rapid gains in oil consumption as economic growth drives demand, weexpect demand in 2012 to be particularly bullish on the back of vandalism to the West AfricaGas Pipeline (WAGP) which has been offline since August 28 2012. The supply disruption hasrequired Ghana to import some 50,000b/d as feedstock for power generation, causing us to raiseour forecast for oil consumption. WAGP operators have expressed confidence that pipeline willresume operations before 2013.

Limited refinery capacity will required continued increased in refined production in the nearterm; however, we continue to expect capacity to rise to as much as 245,000b/d over the longterm an new facilities come online toward 2018.

We expect net oil exports to grow from approximately at an average rate of nearly 3% from 2012to reach 113,000b/d by 2021, generating significant revenues for the local economy.

Upstream exploration, with strong successful results reported by both Tullow and Eni in drillingcampaigns, suggest upside potential for gas reserves and production, which we forecast will risefrom 1.0bcm in 2013 to 3.8bcm by 2021,

Ghana's ability to process gas will grow with a US$3bn loan from the China Development Banksupporting new midstream gas infrastructure capacity and facilitating a gradual increase in gasproduction over the coming years as domestic demand from power generation gathers pace.

Although domestically produced gas is currently reserved for the local market, interest on thepart of international oil companies (IOCs) remains in the development of a potential LNG exportproject.

We forecast an OPEC basket oil price for 2012 of US$107.05/bbl, which we see falling to US$99.10/bblin 2013. Global GDP in 2012 is forecast at 2.6%, down from an estimated 3.0% in 2011, reflectingslowing growth in China, a faltering recovery in the US and a worsening eurozone debt crisis.