Oil revenue sinks 43%

By Kizito CUDJOE

Petroleum revenue has dropped for a second straight year in 2025, plunging 43 percent from US$1.36billion in 2024 to US$770million, as crude oil production extended its six-year slide – falling from 71.44 million barrels in 2019 to 37.3 million barrels. This represents a compounded annual average decline of 9 percent.

The sustained decline in output – compounded by delayed liftings and absence of inflows from the Tweneboa-Enyenra-Ntomme (TEN) field – has sharply reduced receipts from the country’s share of crude, according to the Public Interest and Accountability Committee (PIAC) latest report.

This trend highlights mounting structural pressures in the upstream sector, raising fresh concerns about revenue reliability, fiscal stability and government’s ability to sustain development spending amid shrinking oil inflows.

Data from PIAC show that crude liftings fell by more than half year-on-year in 2025, reflecting both lower production volumes and operational setbacks. In particular, the TEN field recorded no liftings during the year due to delays… further tightening inflows to the Petroleum Holding Fund.

The continued production decline, now stretching over six consecutive years, points to deeper challenges within the country’s oil sector including maturing fields, under investment and regulatory bottlenecks.

Analysts warn that without urgent interventions to boost exploration and optimise output from existing fields, petroleum revenues will remain volatile and increasingly unreliable as a pillar of government financing.

A resource governance expert who preferred to remain anonymous noted that the 2025 petroleum revenues would largely have been spent by now, so the effects are already being felt. “In that sense, the impact we are discussing is more backward-looking,” he said.

“Petroleum revenues remain critical for both infrastructure and social spending. That is precisely why government amended the law to allow a larger share of the Annual Budget Funding Amount (ABFA) to be channelled into infrastructure, particularly under the Big Push agenda. It shows how central these revenues are in bridging Ghana’s infrastructure and social gaps,” he added.

He noted that the implication of a roughly 40 percent drop is straightforward: it slows things down. “Most of these projects are multi-funded; so when inflows fall in a given year and the gap is not immediately filled, implementation suffers. Projects that might have seen accelerated funding will instead face slower disbursements and delayed completion timelines.”

In practical terms, he said, some of these projects could take significantly longer than originally planned.

However, he asserted that petroleum revenues do not operate in isolation. They form part of a broader government revenue mix and finance ministers typically find ways to close such gaps. In this instance, rising gold prices have provided some relief.

“Government has already redirected a significant share of mineral royalties previously allocated to the Minerals Income and Investment Fund (MIIF) toward infrastructure financing. With gold prices remaining strong, this offers a viable buffer to offset the shortfall,” he said.

For the Ministry of Finance, the sharp drop in oil receipts presents renewed fiscal pressure – especially at a time when petroleum revenues remain a key source of funding for critical public expenditure. This situation is likely to test the resilience of budget assumptions and reinforce calls for greater diversification of revenue sources to cushion the economy from commodity shocks.

Also reacting to the report, a Technical Advisor at the Ministry of Finance, Dr. Theo Acheampong, noted that the increase in revenue recorded previously was largely driven by higher oil prices rather than increased production.

“Production volumes contributed less significantly, meaning the gains were mainly due to price effects. This underscores the inherent volatility of oil revenue, as global prices are determined by external demand and supply factors beyond the country’s control,” he said.

To manage this volatility, he said, Ghana has put in place systems under the Petroleum Revenue Management framework. “After allocations to the Ghana National Petroleum Corporation (GNPC), the remaining funds are distributed into the national budget, Ghana Stabilisation Fund (GSF) and Ghana Heritage Fund (GHF). These mechanisms are designed to cushion the economy against shocks and promote long-term fiscal stability,” he added.

Dr. Acheampong maintained that the recent adjustments do not change this framework but refine how funds are utilised. “Instead of spreading resources across numerous small projects with limited impact, the focus is now on a few large, transformational projects that can deliver significant economic benefits, such as the Accra–Kumasi Expressway.”

He said in times of economic shocks, the GSF can be used to support the budget while the Heritage Fund remains dedicated to intergenerational equity. Overall, current actions remain consistent with the intent and provisions of the law.

PIAC’s 2025 report also indicated that Corporate Income Tax (CAPI) contributed                  US$346.84million to the Petroleum Holding Fund (PHF) in 2025, representing one of the highest revenue streams. ENI Ghana, Vitol Upstream and Tullow Ghana were among the major contributors.

The Committee in its findings stated that Explorco, a subsidiary of GNPC, has failed to account for petroleum revenue due the Republic of Ghana to the tune of                          US$561,648,786 between 2022 and 2024 after numerous calls by PIAC for the revenues to be accounted for and deposited into the Petroleum Fund.

This revelation adds a fresh layer of concern to a sector already strained by falling production and shrinking revenues, highlighting that accountability challenges are now compounding structural and operational pressures in the country’s oil and gas industry.

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