1 Introduction

A true revolution of values will soon look uneasily on the glaring contrast of poverty and wealth. With righteous indignation, it will look across the seas and see individual capitalists of the West investing huge sums of money in Asia, Africa and South America, only to take the profits out with no concern for the social betterment of the countries, and say: “This is not just.’’ (Martin Luther King Jr., cited in Jobin 2003: 424–425)

Ghana discovered and started producing oil and gas in 2007 and 2010 respectively, off the shores of its Atlantic Ocean in the western part of the country. The oil and gas industry has spawned a groundswell of hope, if not euphoria, about its development prospects for the country. For these prospects to crystallize, development actors—encompassing the Ghanaian state, scholars, civil society, Western multilateral and bilateral development institutions—have been concerned about the design of the requisite institutions to govern the industry efficiently (Gyimah-Boadi and Prempeh 2012, Van Alstine 2014, Adams Ullah et al. 2019). The expectation is that good institutions can help to avert the looming danger of Ghana getting drowned in the ‘devil’s excrement’ of oil, to borrow the evocative formulation of Juan Pablo Pérez Alfonzo, the Venezuelan founder of OPEC (Starr 2007). For example, the World Bank and Norway offered Ghana a loan of US$38 million and US$15 million, respectively, to help build capacity, particularly around the management of oil windfalls (World-Bank 2010). A similar support flowed from the UK Department for International Development (DFID), with £13.6million to fund the ‘Ghana Oil and Gas for Inclusive Growth’ project.

The concerns over the good governance of Ghana’s oil and gas natural resources are legitimate and well-founded, considering the dismal records of mismanagement and misuse of oil revenues in oil-rich African countries such as Nigeria, Angola and Equatorial Guinea, to name a few, that have led to disastrous consequences for their respective economies and citizens. Yet, this chapter argues that an ideally well-governed oil and gas industry in Ghana is not a panacea to the social injustice and unequal access to benefits associated with the industry. While a well-governed oil and gas industry can curtail the resource curse ever looming in Africa, this focus on getting the institutions right does not guarantee a just and equitable distribution of benefits, neither does it safeguard against the ills associated with the industry. Probing below its surface, a well-governed oil industry in a competitive clientelist democratic setting as Ghana may actually drive and mask the prevailing social inequities and injustices of the industry, which we document below. Even within oil-rich Western democratic countries, as the cases of USA and Canada reveal, a well-governed oil and gas industry can serve to shape and (re)produce the power relations which wreak, for example, environmental and social injustices upon the marginalised and powerless segments of the society (LeQuesne 2019).

The factors that account for why a well-governed oil and gas industry may not necessarily lead to the equitable distribution of its benefits nor safeguard against its ills are closely linked to the unique nature and dynamics of what Watts (2012) conceptualised as the ‘oil assemblage’. The dynamics shaping the oil assemblage are thoroughly capitalist in form and thrust, characterised by the relentless chase for super-profits by transnational oil companies and other cognate profit-seeking elements of the assemblage. Both this imperative and the actors and processes constituting the oil assemblage are intrinsically exploitative and dispossessive, environmentally and socially deleterious, and prone to political corruption and malfeasance (Watts 2012: see also Mitchell 2009, 2011; Gillies 2019, 2020).

This chapter formulates a radical perspective of social (in)justice and (in)equity, with which it maps out and elaborates the injustices and inequities within Ghana’s oil and gas industry at two interrelated levels—global (international) and national (local). It does so by critically exploring the political-economic literature on the injustices and inequities that characterise the capitalists’ incentives underlying oil and gas extraction, zeroing into an analysis of both secondary quantitative and qualitative data on these conditions as they pertain within Ghana’s context. The conclusion proposes some political interventions by advocating specific radical strategies to promote equity and social justice at both the global and national levels. In so doing, we hope to make fresh contributions to the discourse around the development opportunities and challenges of the Ghanaian oil and gas industry, particularly through transcending the dominant resource curse debate to provoke a rethinking around issues of social justice and equity, which are so often given fleeting mention, if at all, in the extant literature.

2 Conceptualising Social (in)Justice and (in)Equity

Social justice and equity are normative or value-laden phenomena, characterised by one’s norms or/values of what constitutes morally just, fair and equitable behaviour or social order. The definition is also based on one’s view of what constitutes just, fair and equitable sharing of benefits and cost between actors in a social relationship or in a society (Jost and Kay 2010, Hatfield et al. 2011). What constitutes injustice and inequity, however, varies from person to person, society to society, ideology to ideology and so on. In simple terms, social (in)justice and (in)equity are not only ‘inherently socially constructed’ (Schroeder and McDermott 2014: 31), but are a highly contested and hotly debated phenomena, both conceptually and politically (Boucher and Kelly 1998: 3). However, only a few people will disagree that questions and debates on social equity and justice often revolve around morality and moral standards of behaviour. In that sense, social justice and equity are universal social phenomena, the notions and practices of which are found in all societies and cultures, with all individuals having some sense of what is fair, just and equitable, and vice versa (Hatfield et al. 2011). For example, social psychologists have documented that all human beings possess the ‘justice motive’, notwithstanding their self-preservation and selfish instincts (Jost and kay 2010: 1125).

In this chapter, we adopt a radical or Marxist perspective of social (in)justice and (in)equity, distilled from the writings of Karl Marx. His writings offer us the idioms and concepts for advocating substantive justice and equity in the rather inherently unjust and inequitable oil and gas assemblage. Marx’s voluminous work, theorising capitalism and criticising bourgeois political economy is enriched with the nuggets of social justice and equity which are based on rigorous scrutiny of the capitalist system, but simultaneously, offers a radical perspective that cast light on what Sen (2009) conceptualised as ‘remediable injustices’ and how these might be eliminated through struggles within a capitalist space as the oil and gas industry. There is no space here to outline Marx’ deep insights on the injustices and inequities of the capitalist system, let alone engage critically with debates on his ideas and politics of justice. It suffices, here, to provide a collage of his thoughts on these matters.

Unlike those who argue that Marx did not pronounce capitalism as unjust, nor analyse it from a moralist perspective (see e.g. Wood 1972, 1991; Igwe 2018), we take sides with those who contend that he did. Despite Marx’ scientific approach to analysing capitalism, he was politically concerned about the immoral and unjust nature of capitalism, expending a great deal of effort delineating the key characteristics of the injustices herein, and why and how it might be changed to a more just and equitable order of production and distribution of social surplus (Geras 1985, 1995; Daly 2000; Cowling 2018).

Drawing on Norman Geras’s Marxian political philosophy, it is clear that Marx was concerned about human nature and progress—human beings are by nature, social beings who depend on social relations and enter into various relationships to (re)produce themselves materially and socially (Geras 1995; Cowling 2018; see also Daly 2000). For example, human beings enter into all forms of social relations to produce the goods and services they need for survival. However, these relations of production are never free of asymmetric power relations, exploitation and alienation; posing a fundamental question of what is morally acceptable by the universal qualities of human nature and progress. For Marx, there are universal human needs which, ideally, the organisation of (re)production of material life should serve. Summarised by Norman Geras, these universal human needs include:

Food, clothing, shelter, fuel, rest and sleep, hygiene; ‘healthy maintenance of the body’, fresh air and sunlight, intellectual requirements, social intercourse, sexual needs insofar as they are presupposed by ‘relations between the sexes’, the needs of support specific to infancy, old-age and incapacity, and the need for a safe and healthy working environment (Cowling 2018: 68)

Based on his normative standards of human nature and progress, Marx’s theory and politics of justice revolved around the violent, exploitative and rapacious profit-making nature of capitalism as a system of (re)production of material and social life. For Marx, these capitalist conditions and the dynamics shaping its mode of production are inherently in conflict with social justice and equity. For example, Marx was at pains to amplify the violent and immoral processes that gave birth to capitalism—primitive accumulation. One of the characteristics of primitive accumulation is the violent means used to create the conditions for the birth of the poor working class, having nothing but their labour power to sell for survival. He writes: ‘If money, according to Augier “comes into the world with a congenital blood-stain on one cheek”, capital comes dripping from head to toe, from every pore, with blood and dirt’ (Marx 1867: 925–926). Politically, Marx was concerned about the emancipation of the exploited, particularly, capitalist exploitation; a condition he described in various idioms—‘robbery’, ‘theft’ and ‘embezzlement’ (Geras 1985: Daly 2000; Cowling 2018).

Seeing workers as the producers of surplus value, which is appropriated by the capitalist class, Marx viewed this as wrong and unjust. Thus, Marx speaks of the annual surplus product ‘embezzled from the English workers without any equivalent being given in return’. He contends that ‘all progress in capitalist agriculture is a progress in the art, not only of robbing the worker, but of robbing the soil’. He deployed rhetorical devices such as ‘the booty pumped out of the workers’, the ‘total surplus-value extorted’, the ‘common booty’ and the ‘loot of other people’s labour’ (Geras 1985: 57; see also Daly 2000: 363–364) to amplify the exploitation of workers by capitalists. Marx proposed a more humane, just and equitable alternative system of production; that is ‘a classless productive system, one which would be a fully human approach to meeting the fullness of human needs, the physical, the moral, and above all the ontological – that is, the radical human need to become fully human, to fulfill human potential in a human way, in community’ (Daly 2000:366). As noted by Geras (1995: 153–154), Marx reasoned that this alternative system of (re)production should be driven by the fundamental goal of ‘meeting the basic needs of human beings for survival and healthy activity, and of eliminating the world from … terrible cruelties and oppressions’. Essentially, Marx proposed and advocated for a need-based and redistributive justice.

Exploitation and its immoral and unjust nature are not limited to the relations of production between the capitalist and working classes, but may also exist on spatial scales; between localities, countries, regions and continents. Within Marx’s schema of the capitalist system of production, capitalism is a worldwide phenomenon, because capital moves across the world, and ‘brings areas in the backwaters into a web of exploitative relations governed by institutions of the capitalist global economy’ (Ayelazuno 2011: 541). Drawing on Marx’s theory of primitive accumulation and worldwide movement of capital, scholars of Marxian international political economy have shed light on the dynamics and mechanics of the exploitation of the peripheral regions by various transnational companies (TNCs), such as the foreign oil companies (FOCs) from the core capitalist countries.

Marxian scholars deploy idioms such as new imperialism, neo-colonialism, accumulation by dispossession, looting, ravaging, grabbing, extractive imperialism, the new scramble, new enclosures, and so on, to capture the exploitation of the natural resources from the peripheral regions by TNCs of the core capitalist countries (see e.g. Amin and Pearce 1974; Harvey 2005; Bond 2006; Ayelazuno 2011; Petras and Veltmeyer 2014; Wengraf 2018; Taylor 2020). Primitive accumulation created the unique social property relations of the capitalist mode of production, but it did not end with the advancement and maturity of capitalism. It has continued after the birth of capitalism, the signal example of which is the continuous and ongoing looting of natural resources in Africa and Latin America, a process so often accompanied by the violence of ‘dispossession’ and ‘enclosures’(De Angelis 2004; Ayelazuno 2011).

A radical perspective of (in)justice and (in)equity as formulated by Marx and his followers demands radical interventions to redress injustices and inequities, interventions which go beyond mere procedures and institutions, to engender drastic transformation of the existing power structures that underpin any system of (re)production, particularly the capitalist system. Ghana’s oil and gas industry, being a thoroughly capitalist enterprise, embodies most of the violence, exploitation and injustices that Marx and his followers capture above; calling forth radical measures to redress these injustices. We turn to these issues below.

2.1 Ghana’s Oil Rush, Its Injustices and Inequities

Petroleum exploration and production efforts in the present-day Western Region of Ghana started far back in the 1890s (Ayanoore 2018: 11), but it was not until the 2000s these efforts paid off with oil discovery in commercial quantities. Kosmos Energy, a US-based exploration and production (E&P) company discovered oil in the Tano Basin in Ghana’s exclusive economic zone (EZZ) of the Gulf of Guinea in 2007. Named the Jubilee Field, it has produced oil since 2010, joining Ghana to the club of African oil-producing countries such as Nigeria and Angola, among others. The Ghanaian oil discovery is part of what is geologically called the West Africa Transform Margin (WATM), an area that, besides Ghana, stretches across Ivory Coast, Liberia and Sierra Leone. The WATM is potentially a ‘new oil province’ (Quinlan 2009) and a ‘site for the new oil accumulation on the African continent’ (Obeng-Odoom 2014, 101). Since the Jubilee discovery, Ghana’s oil industry has grown significantly despite facing challenges such as the slump in the world oil prices between 2014 and 2016 and the maritime boundary dispute with Côte d’Ivoire. There has been a groundswell of exploration activities in the Western Basin, with over 24 additional offshore discoveries (Adadzi and Godson-Amamoo 2019) as shown in Fig. 1.

Fig. 1
figure 1

(Source Ghana Petroleum Commission: https://www.petrocom.gov.gh/maps/)

Map showing the major oil fields of Ghana and exploratory activities

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The Ghanaian state, seeing oil as a veritable revenue source, ostensibly to support development, has started exploring for oil onshore, on the Voltaian basin (Ministry of Finance 2018; Petroleum Commission, 2019). This basin encompasses 40% of Ghana’s landmass spanning 104,000 sq. km (see Fig. 2). It is estimated that 52% of the potential oil resources of this basin is in the northern part of the country (Graphic online, 2018; The Africa Report, 2019), an area inhabited by the poorest segments of the Ghanaian populace, mainly peasants eking out a living off the land.

Fig. 2
figure 2

(Source Ghana National Petroleum Commission: http://www.gnpcghana.com/operations.html)

Map showing the Voltaian Basin

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Ghana’s oil and gas wealth, particularly offshore, continue to attract both big and small international oil companies (IOCs), such as Kosmos Energy, Hess Corporation, Tullow Oil, Anadarko, ENI, Aker Energy, AGM Petroleum and ExxonMobil, among others (Adadzi and Godson-Amamoo, 2019). Such interests depict a typical African oil rush (Klare and Volman 2006; Ayelazuno 2016), exemplified by the over a dozen competitive bids within Ghana’s initial exploration licensing round. Typical of the oil assemblage, Ghana’s oil rush is part of a multibillion-dollar industry, involving a huge global petro-infrastructure, the state-of-the-art oil exploration and production technologies, and a variety of capitalist actors, including major FOCs, national oil companies (NOCs) and service companies (e.g. Watts 2012: 441–443).

Intrinsic in this capitalist oil conglomeration are significant asymmetries in power relations breeding exploitation, corruption and dispossession of the country’s powerless and poor. Asymmetry power relations exist between the FOCs and the Ghanaian state, with the former endowed with investible capital, hi-tech oil exploration and production capacities, and powerful political home support for their investment endeavours; while the latter has nothing but the endowment of oil and gas in the belly of its EEZ and incapable of extracting this wealth without the former’s support. Another asymmetry power relationship in the industry is between the inhabitants of the oil communities, who are poor and powerless, and the FOCs and the Ghanaian state, who are rich and powerful. The major corollaries to these asymmetry power relations are various injustices and inequities of the oil and gas industry, at both the global and local levels. We turn to these issues below.

3 Global Level Injustices and Inequities and the Unfair Sharing of Ghana’s Oil Wealth

The dynamics shaping Ghana’s share of its oil wealth relative to the FOCs’ pivot on the power of global capital—flowing from the latter’s superior financial, technological and human capacities to explore and produce oil and gas in the highly difficult and risky offshore environment. In contrast, Ghana, as a developing country, merely owns the oil and gas wealth located within its territorial boundaries, without the requisite technological and financial capacities to explore and produce this wealth. This means that, without the FOCs, Ghana’s oil and gas will remain buried underneath the earth, with no contribution to economic and human development in the country. This asymmetric power relationship between Ghana and the FOCs leaves former with a narrow window of opportunity for retaining a reasonable share of its oil wealth; namely, capacity to capture greater rent through the upstream oil governance processes.Footnote 1 A ‘major benefit from oil’, one authoritative source correctly observes, ‘is the rents it provides through taxes, royalties and revenues from the sale of the commodity which is held by the ruling class for and on behalf of the citizens’ (Dartey-Baah, et al. 2014: 381).

The fiscal and regulatory regime that the government of Ghana designs, the efficiency of implementation, backed by an incorrupt, patriotic and selfless political class will determine the size of rents Ghana retains from its oil wealth (ibid). Critical here are the terms and conditions for the exploration and production within petroleum agreements (PAs) Ghana signs with the FOCs, which to a large extent, influence the latitude for greater rents capture. As illustrated by the PAs with Kosmos in respect of the West Cape Three Points block and with Tullow Oil in respect to the Deepwater Tano block, Ghana benefits disproportionately in terms of the size of its share of oil and rents captured. Pundits estimated that the Kosmos contract would come at a loss to Ghana to the tune of US$3.8 billion in tax revenues over the lifespan of the West Cape Three Points block, relative to Tullow Oil’s terms for the adjacent Deepwater Tano block (Wood Mackenzie, cited in Phillips et al. 2016: 30). A recent Global Witness report on the Guyanese oil contract with the USA oil giant, Exxon, for example, reveals how oil contracts can be super-exploitative if the state’s negotiation team lacks capacity, is corrupt, or both. The report claims that the contract was exploitative, because it deprived Guyana of US$55 billion (Gant 2020).

Against this backdrop, our global level analysis of the injustices and inequities within Ghana’s oil and gas industry focuses on the upstream oil governance regime and the share of rents it captures through the PAs. Since the terms of the PAs determine the amount of rent or oil share, they serve as solid evidence of the iniquities of the global oil assemblage against Ghana. Additionally, the PAs serve as evidence to track the state’s commitment to redress these inequities and injustices or the complicity of its political class in oil negotiations. Importantly, a state committed to fighting exploitation by the global oil assemblage, as well as securing a good oil take, is expected to strongly negotiate, or even fight for PAs that are aggressive at capturing greater rents and oil share. Tanzania’s commitment, since 2008, to toughen its PA terms is a good example here, where politicians, among other strong measures, required the FOCs therein to pay an Additional Profits Tax and raised the royalty rate from 5% to 12.5% (Bofin and Pedersen 2017: 17).

Ghana’s upstream oil governance regime, which shapes its PAs, revolves around the following laws (see Petroleum Commission, Ghana 2020)Footnote 2

  1. 1.

    Ghana National Petroleum Corporation Act, 1983 (PNDCL 64)

  2. 2.

    Petroleum (Exploration and Production) Act, 2016, which repealed the Petroleum Exploration and Production Law, 1984 (PNDC Law 84)

  3. 3.

    Income Tax Act, 2015 (Act 896); it was previously governed by the Petroleum Income Tax Act, 1987 (PNDCL 188)

  4. 4.

    The Petroleum Revenue Management Act, 2011 (Act 815) as amended by the Petroleum Revenue Management (Amendment) Act, 2015 (Act 893)

  5. 5.

    The Petroleum Commission Act, 2011 (Act 821);

  6. 6.

    Petroleum (Local Content and Local Participation) Regulations, 2013 (LI2204)

  7. 7.

    Ghana Maritime Authority (Fees and Charges) Regulations, 2012 (L.I 2009)

  8. 8.

    Ghana Shipping (Protection of Offshore Operations and Assets) Regulations, 2012 (L.I 2010)

  9. 9.

    The Petroleum Commission (Fees and Charges) Regulations, 2015 (LI 2221)

  10. 10.

    Petroleum (Exploration and Production)(Measurement) Regulations, 2016 (L.I. 2246), Petroleum (Exploration and Data) (Data Management) Regulations, 2017 (L.I. 2257), Petroleum (Exploration and Production)(Health, Safety and Environment) Regulations, 2017 (L.I. 2258)

  11. 11.

    Petroleum (Exploration and Production) (General) Regulations, 2018 (L.I. 2359) as amended by the Petroleum (Exploration and Production) (General)(Amendment) Regulations, 2019 (L.I 2390).

The PAs Ghana has signed or will sign with oil companies will be guided by these laws, even though, as noted above, the terms of PAs may vary depending on various factors. With regards to the capture of more rents, the terms may vary from extremely liberal and exploitative to tough and aggressive, depending on the expertise, experience and integrity of the negotiation team of the Ghanaian state.

It is beyond the scope of this chapter to engage in the enduring debate over the specific PA model capable of extracting more oil rents—whether the production-sharing agreement (PSA) or a hybrid regime helps to secure greater oil benefits for Ghana. It is our contention that the PAs Ghana has signed with the FOCs in respect of the three oil fields presently producing oil—Jubilee, Tweneboa, Enyennra and Ntomme (TEN) and Sankofa Gye Nyame (SGN)—are characterised by global injustices and inequities. This is illustrated by Ghana’s low oil share relative to that of the FOCs. Between 2011 and 2019, the above-mentioned fields collectively produced a total volume of 386,460,893 barrels of oil. Ghana has, however, only secured a disproportionate 67,290,451 barrels, constituting a miniscule 17.53% of the total oil produced within the period (see Ayelazuno 2016, Malden and Gyeyir 2020).

Evidence of the disproportional sharing of oil benefits is also captured in the Ministry of Finance’s Annual Report on the Petroleum Funds. In the 2019 report, for example, the total amount of oil produced from the Jubilee Field, as of 31 December 2018, was 28,779,988 barrels; out of which Ghana’s share was 4,807,432 barrels (16.7%). Ghana’s oil share from the TEN Field was not different: as of 31 December 2018, the total oil produced was 23,557,361 barrels, out of which Ghana’s benefited 3,980,456 barrels, the equivalent of 17.0% of the total production. Earlier annual reports published on the Ministry’s websiteFootnote 3 reveal a similar pattern of sharing. As illustrated by Table 1, the cumulative share of the FOCs since the start of oil production in Ghana is approximately 78% relative to Ghana’s 22% or less.

Table 1 Summary of oil production and revenues accrued from Ghana’s oil sector from 2011 to 2018
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Liberal economics and business analysts have sought to rationalise this highly disproportional sharing of oil benefits between Ghana and the FOCs. They argue that a key condition shaping the sharing mechanism involves the FOCs’ incentives to recoup their cost of exploring and developing oil fields to the commercial production phase. Another rationale dwells on the various complex dynamics underpinning the fiscal regime—conditions we discuss further below—which seek to balance Ghana’s incentive to both capture greater rents and attract FOCs to invest in exploration and production activities offshore and onshore (see Amoako-Tuffour and Owusu-Ayim 2010). We argue, however, that these rational economic factors accounting for the disproportional share of oil benefits are underpinned by the asymmetric power relationship between Ghana and global capital controlled by the FOCs (e.g. Ayelazuno 2014; Phillips et al. 2016). It is unlikely that this challenge of asymmetric power relations can occur within oil-rich and developed countries such as Canada, USA and Norway who have the technology and financial capacities to explore, produce and refine their oil.

As with Tanzania above, and despite the challenge of low technological and financial capacity, Ghana’s political class could have fought for better terms, or (and radically) resisted the profit driven negotiations and power of the FOCs by insisting on better terms. Some evidence of the latter occurred under the Late President Mills’ reign when ‘Kosmos attempted to make a direct sale of its stake in the Jubilee field to ExxonMobil for a deal worth US$4.3 billion, without consulting with the government or GNPC’ (Phillips et al. 2016: 31). As documented by Phillips et al. (2016), both FOCs had to abandon the deal when the government resisted the former’s negotiations, including pressures from their respective home counties. This level of nationalism and commitment is clearly against the grain of neoliberal principles, but it has not been sustained, as other Ghanaian leaders have been concerned with the imperative to attract foreign direct investment (FDI) to the upstream oil industry. Similar to gold mining, both the New Patriotic Party (NPP) and the National Democratic Congress (NDC) governments have been interested in wooing FOCs with generous incentives rather than pursuing aggressive rent capture. These incentives have mainly flowed from the fiscal arrangements in the upstream sector and embodied within the terms of the existing PAs (see Amoako-Tuffour and Owusu-Ayim 2010). Below, we detail the liberal and generous nature of Ghana’s fiscal arrangements, which both generate losses and inform the disproportionally small share of the oil benefits the country retains.

3.1 The Liberal and Generous Incentives of Ghana’s Upstream Fiscal Regime

There seem to be general consensus that the laws and regulations governing Ghana’s upstream sector above reflect well-crafted initiatives capable of governing oil and gas resources in a developmental way (Kopiński, Polus et al. 2013, Appiah-Adu 2016). However, and as we argue above, the fiscal terms of these regulations are not strong enough to capture a fair share of oil benefits, in a large part, due to the overly liberal agreements allowing the FOCs to accumulate greater rents relative to Ghana. We take particular notice of mainstream economic and technical explanations that seek to dismiss our argument as uninformed, particularly with analysis of the underlying complex dynamics—progressivity, stability, flexibility, neutrality and the risk-sharing considerations—shaping the fiscal regime of the upstream oil industry (e.g. Tuffour and Owusu-Ayim 2010). These authors argue that the design of the upstream fiscal regime of a developing country such as Ghana and the quantum of rent this secures ‘depends on the fine balance which policy-makers put on these features and on what they consider to be the priorities’ (2010: 29).

These mainstream accounts of the dynamics shaping upstream oil governance regimes make broad business and economic sense. Such explanations, however, ignore the role of global capital, particularly how the asymmetric power relations between the FOCs and Ghana have shaped the tilting of oil benefits flowing more to the former. The question here is whether what makes business sense is necessarily just and equitable—answers to which lie within how the application of these economistic approaches to, first, gold mining, and now oil, has created an enabling environment for foreign mining and oil companies to rake in huge profits at the expense of a fair share of the natural resource wealth for Ghana. This challenge, we argue, flows from the neoliberal doctrines underpinning Ghana’s bureaucracy more broadly, with both politicians and public servants, either oblivious of the exploitative power of global capital, or considers this as normal and unproblematic. Thus, they design policies and sign contracts with foreign mining and oil companies that enable the latter to acquire a disproportionally huge share of gold and oil benefits, leaving Ghanaians with a relatively small fraction. Our argument finds support in the meagre revenue flow from the various streams above, including royalties, GNPC’s carried and participating interests, corporate income tax, annual acreage fees, surface rental fees, withholding tax, additional oil entitlements (AOE) and bonuses. These fiscal streams as executed in the PAs offer very generous terms in the form of tax exemptions, customs and import levies releases, foreign exchange transactions, ownership and control of goods and equipment, and the repatriation of profits (Ayelazuno 2016; Ayelazuno and Graham 2022).Footnote 4

3.2 The Negative Effects of Ghana’s Generous Fiscal Regime on Its Share of the Oil Benefits

As emphasised throughout this section, a major effect of Ghana’s generous fiscal terms is the country’s inability to capture greater rents from oil activities, securing a disproportionally low share of its own oil wealth. As Fig. 3 illustrates, between 2011 and 2019, GNPC’s carried and participating interests constituted Ghana’s major sources of revenue flow, followed by royalties (although overtaken by corporate income tax in 2013 and 2014). Except in 2013 and 2014, corporate income tax constitutes the lowest rents source, with nothing captured in 2011 and 2012, and very little secured between 2015 and 2017. Also, Fig. 3 illustrates that surface rentals attracted no revenues for this period.

Fig. 3
figure 3

Analysis of petroleum receipts

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While Ghana is clearly capturing some substantial rents from the upstream oil industry, it is not capturing enough to reduce the huge inequality gap between its share and that of the FOCs. As we have tried to illustrate throughout this section, the Ghanaian state is not aggressive in using the above-mentioned fiscal instruments to capture more revenue from the FOCs. This is not only because of the liberal and generous nature of its fiscal regime, but also, because it does not standardise the fiscal terms across PAs, allowing for variations in PAs to its disadvantage. The latter is not good for the capture of more rent because, ‘with no apparent safeguard for contract transparency, this leaves the State’s take of the resource rents from petroleum production subject to potentially ad-hoc negotiations with IOCs, vulnerable to corruption, and susceptible to sub-optimal financial outcomes’ (Amoako-Tuffour and Owusu-Ayim 2010: 15). For example, carried and additional participating interests constitute a strong fiscal instrument to secure greater benefits from oil, particularly that it helps to ‘increase the sense of country ownership, facilitate transfer of technology and skills and increase the host government’s control over field development decisions’ (Amoako-Tuffour and Owusu-Ayim 2010: 21).

Yet, as Table 2 illustrates, the FOCs own about 80% of the three main oil fields in the Tano-Cape Three Points Basin. Ghana’s biggest ownership share is in the Sonkafa Field, with GNPC, owning 20%. This is even less in the other two fields, with the Ghana owning 15 per cent in the TEN Field and 13.64% in the Jubilee Field (Ayelazuno and Graham 2022; see also Kastning 2011: 8). This national ownership patterns undercuts carried and participating interests as effective strategies to capture a fair share of oil benefits.

Table 2 Inequality of ownership of three oil fields
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However, one can counteract this argument by pointing to the Petroleum (Exploration and Production) Act, 2016 and Petroleum Exploration and Production (General) Regulations), 2018 (L.I 2359) that give Ghana the right to acquire additional participation interest in oil fields. While this is a well-founded and legitimate counterargument, it ignores the financial challenges most African countries face in increasing the state’s participation (Amoako-Tuffour and Owusu-Ayim 2010) and does not take seriously the power dynamics of the global oil assemblage as a challenge to Ghana negotiating good deals (see Siakwah 2017), nor takes into consideration the negative effects of weak institutions (see Andrews and Siakwah 2020), corruption and patronage/clientelist politics on the negotiation.

It is important, therefore, to situate Ghana’s fiscal regime, especially, its implementation, in the electoral democratic political context of the country. It is a context characterised by the zero-sum competition between the two dominant parties, NPP and NDC, to win the next election by distributing patronage to their cronies and party supporters (Paller 2019; Ayelazuno 2019; Driscoll 2020). In the light of the inherent tendencies of corruption in the oil industry (see Gillies 2019; 2020), the political context of Ghana breeds corruption in the country’s oil sector. Thus, the non-standardised and variable fiscal terms of Ghana’s upstream oil governance regime would serve as avenues for unscrupulous politicians to engage in bribery and corruption to build their party’s election war chest and to enrich themselves (see Gary et al. 2009; Mohan et al. 2018). World class fiscal regimes, even those that are aggressive in the capture of rents, have no real impact in the capture of more rents if they remain on paper, not implemented efficiently. The political context of Ghana shapes the implementation of its fiscal regime, and is a signal example of this situation (see Dartey-Baah et al. 2014).

Beyond participation interests, royalty payment constitutes an important fiscal instrument to extract increased rents from FOCs, but again, this has not been effectively utilised by Ghana. The existing royalty rate is not only low but negotiable and variable in PAs signed with different FOCs for different fields. It is pegged at between 3 and 12.5%. While this arrangement provides for some flexibility in pre-contract negotiations, the variable and negotiable nature of royalty payments expose negotiations to uncontrolled political discretion and foreign lobbying in the political context above. Little wonder that most of the PAs signed, the FOCs do not pay the high-end rate of 12.5%, mostly paying between 3% and 10% (Amoako-Tuffour and Owusu-Ayim 2010: 5). For example, successive annual reports on the Petroleum Funds show that none of the FOCs operating within the Jubilee and TEN fields has paid above 5% since the start of oil production in 2010. It is unsurprising, therefore, that Ghana’s royalty rates are the lowest in comparison to Nigeria, Cote d’Ivoire, Congo, Cameroon, Equatorial Guinea and Uganda (Kankam and Ackah 2014: 410).

Income or corporate tax constitute another fiscal instrument that Ghana has failed to leverage on to capture more rents from oil. The old Petroleum Income Tax Law, 1987 (PNDCL 188) set a default rate of 50%, but allowed for some variability. However, in both the model and executed PAs, Ghana has pegged this at 35%, due in a large part, to the neoliberal incentive of attracting foreign investments into the sector (Mohan, et al. 2018). Although at 35%, Ghana’s income tax rate is higher than that of other new oil-rich African countries such as Cote d’Ivoire and Uganda, (Amoako-Tuffour and Owusu-Ayim 2010), the 15% drop is considerable and contributes to undercut the country’s rents retention prospects. Meanwhile, the corporate income tax is computed net of all cost the FOCs incur in their operations, an arrangement duly adopted by the Petroleum Commission (PC) and the Ghana Revenue Agency as petroleum sector costs (Ayelazuno and Graham 2022). This opens avenues for the FOCs to reduce what they pay as income tax by reporting costs that are computed on profit rather than gross revenue. As correctly observed by Amoako-Tuffour and Owusu-Ayim 2010: 22), given the complexity of the industry, African governments are particularly vulnerable to the problems of cost verification, cost overstatement and profit stripping. This vulnerability, they argue, has to do with the weak capacity to monitor and verify the following avenues the FOCs may use to pay less revenues: capital expenditures, loss carryover provisions, transfer pricing mechanisms, ring fencing and the range and limits of expenses that may be considered deductible for tax purposes.

The issue of what costs can pass for deduction constitutes a key challenge to Ghana’s rents retention prospects. The country’s liberal and generous terms of cost deduction allow wide-ranging deductions, comprising rental fees, royalties, interest on fees and loans, expenditures on maintenance, repair or change of machinery, debts directly acquired in the conduct of petroleum activities, financial inputs into pension or provident funds accepted by the Petroleum Commission, capital allowance and losses from the previous year of assessment and many others (Ayelazuno and Graham 2022). Unsurprisingly, as Figs. 3 and 4 illustrate, rents captured through income tax are lowest in comparison with royalties and carried and participating interest.

Fig. 4
figure 4

Petroleum receipts from 2011 to 2019 in percentage terms

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4 Local Level Injustices and Inequities: Social and Environmental Ravages of the Oil and Gas Industry

Perhaps, nowhere are the injustices and inequities of the Ghanaian oil and gas industry more egregious than in the communities close to exploration activities. Intrinsically, oil and gas industries, both onshore and offshore, are inescapably accompanied by deleterious social and environmental effects, suffered disproportionately by the inhabitants of communities living close to the industry’s operations. Despite bearing the huge social and environmental burdens of exploration activities, community folks receive an infinitesimal share of benefits. Redolent of what pertains in Ghana’s mining sector, these deleterious environmental and social challenges have emerged strongly with oil exploration, alongside low political commitments to addressing these challenges. These injustices spawn a growing literature cataloguing the nature of these environmental and social ravages, particularly the dislocation of the livelihoods of fisher folks and peasants living in the coastal communities close to exploration activities (hereafter, the ‘oil’ communities).

Ethnographic research document, first-hand information, in the voices of the victims. This research has shown how inhabitants of the “oil” communities experience social and environmental injustices. In response to the question who benefits from the industry an elderly fisherman in Aboadze, one of the communities close to exploration activities, retorted that ‘the oil is the Western Region’s but we don’t know who benefits. As for us the fishing folks we don’t get any benefits but if some people are benefiting in other places we cannot tell’ (Ovadia et al. 2020: 416). In response to the same question, another fisherman in Half-Assini, another community close to exploration activities responded in a similar manner, albeit more detailed, ‘the oil rig is in the Jomoro Sea and we are those suffering but we don’t get any benefit. Whether it is the oil company or the government that benefits we do not know. They have not established anything good here that we can say that it is as a result of the oil extraction that we have this facility. We don’t know who benefits’ (Ovadia et al. 2020: 416).

The negative effects of oil and gas exploitation on the environment have generally been limited to the pollution of water bodies mainly due to the offshore nature of exploration activities, often manifesting through oil spillages that destroy biodiversity and fish stock (Acheampong 2018). Although Ghana has generally not experienced huge oil spillages of the scale seen in Nigeria and Angola (Baumüller, Donnelly et al. 2011), exploration activities discharge significant concentrations of chemicals into portions of the sea, leading to ground and marine water pollution and destroying huge volumes of fish and biodiversity (Nyarko and Klubi 2011). The evidence of the 26 dead whales between 2008 and 2012 on some beaches in the region points to this challenge, where exploration discharges are increasingly destroying the livelihoods of fisher folks (e.g. Obeng-Odoom 2014). Another emerging environmental challenge for fisher folks is the health risks associated with the debris dumped on shores of the sea by oil companies, which alongside, damage their fishing nets without any compensation (Owusu 2018). Rather, attempts by fisher folks to seek compensation from oil companies for their damaged nets have often failed, yet the fisher folks have been harassed with restrictions enforced by the Ghana Navy, pushing some to travel as far as into neighbouring Ivorian waters to fish (ibid).

The challenges around the loss of livelihoods and compensation here highlights the collusive behaviour between state institutions and oil companies that often sidesteps important regulatory rules under the pretext of investor-friendship, compounding the injustices associated with oil and gas exploitation. This excuse of investor-friendship contributed to undermining the states capacity to enforce sanctions against Kosmos Energy after it spilled 706 barrels of toxic substances into the sea between 2009 and 2010 (Obeng-Odoom 2014). Despite investigations finding Kosmos liable, and fining same US $35 million dollars, the government subsequently waived the fine under investor-friendly considerations (Siakwah 2018).

This is similar to the low political commitments to investigate and punish the entities responsible for the incidence of the 26 dead whales mentioned above, although all indications pointed to offshore exploration activities. Despite the Environmental Protection Agency (EPA) investigating this in 2012, the results have never been made public, with the excuse that the inquiries did not yield any scientific proof of liability to warrant the application of the appropriate sanctions (ibid). These compromises mirror a major injustice where the state seem less committed to protecting the environment and livelihoods of fisher folks within the epicentre of exploration activities, but appear more committed to enforcing fishing restrictions and compliance with no-go zones rules—an injustice that has recently bred tensions between fishing communities and oil companies.

Since 2010, tensions have ensued between fisher folk unions and oil companies mainly due to exploration activities encroaching on traditional fishing sites and the enclave nature of oil operations that both alienates and destroys the livelihood prospects of coastal communities. Under the conventional industry best-practice to protect oil and gas infrastructure and to keep people safe, both the state and oil companies deploy security agencies to enforce the 500 m radius rule around oil rigs and the 2 km ‘no go’ zone buffer in conformity with the International Organization for Standardization (ISO) ideals. This necessarily pits exploration interests against fisher folks as exploration activities within the Gulf of Guinea often occur very close (i.e. 60 miles) to coastal traditional fishing grounds (Agyei et al. 2012) and reflects what Watts (2004) deems a repressive strategy employed by the state and oil companies to protect their rent generation interests to the exclusion of the livelihood concerns of coastal communities. The fact that the ISO standards require oil companies to use lighting systems at specified intensities to protect oil rigs emerges as another exclusionary arrangement, not least because such lighting systems function as fish aggregating devices that attract large quantities of the fish within the no-go area (see Badgley 2011)—limiting fish catch, yet constraining fisher folks from following the fish. The injustice is compounded by the fact that both the state and oil companies have done little to provide alternative means of livelihood to fisher folks and fishmongers despite cordoning off their major livelihood grounds, with such threats constituting a key basis for the conflicts between coastal communities on the one hand and the state and oil companies on the other (Ackah-Baidoo 2013).

Alongside environmental and livelihood challenges, the adverse societal effects of oil and gas operations on the social organisation, culture and values of the people of western region cannot be overemphasised. Admittedly, oil and gas operations in the region have had some positive social gains—generating both direct and indirect business and employment opportunities, including triggering infrastructure development such as factories, offices, hotels and banks that have altogether had a broad positive impact on the living standard of residents particularly in the capital Takoradi and Sekondi. However, key publicised challenges, including high cost of living, housing challenges and displacements, increase in social vices etc., undercut the benefits above. At the risk of imputing these are novel here, such social problems are increasing in levels seen as unwelcoming and mainly caused by the concentration of exploration activities in the region due to the massive migration of people to the area to tap into the opportunities oil and gas operations and its ancillary services present.

High cost of living within the Sekondi-Takoradi Metropolis emerges as one major problem associated with oil and gas operations (see Plänitz and Kuzu 2015). Much of this challenge emanates from very high rent charges for offices, houses and shops which are often priced in dollars or its equivalent, particularly at supposed wealthy neighbourhoods such as Beach Road and Chapel Hill (e.g. Eduful and Hooper 2015), with housing deficit implications. Staff of oil companies and international businesses, with the value-power of foreign currency displace middle-income Ghanaian residents in such areas, including property owners lured by dollars. In turn, middle-income Ghanaians move to displace low-income and lower-middle-income residents within the commercially viable Market Circle area (ibid). The low-income to lower-middle-income residents bear the brunt of the housing problems within the Sekondi-Takoradi Metropolis, with some forced to seek shelter in make-shift structures (Eduful and Hooper 2019).

These disparities are reinforced by the high cost of living in the twin Metropolis, as income generating activities favour staff of oil and gas companies. The salaries of both local and foreign workers in oil and gas companies are often tied to the US dollar, potentially putting their incomes far above those in non-oil and public sector jobs. Beyond housing, the growing number of such high-income earners, coupled with the influx of people to the metropolis to share in the fortunes generated by oil have contributed to the rising prices of goods and services, including food and other commodities, exacerbating the city-wide infrastructure and services inequities. The oil propelled high cost of living within the Sekondi-Takoradi Metropolis is, thus, fast establishing a pattern of the social segregation, in terms of income, class and nationality, with implications on worsening the divides that already exist in such areas (also see Eduful and Hooper 2015).

The growing spate of social vices in the Sekondi-Takoradi Metropolis in particular is rooted in the increasing urbanisation, including the economic opportunities and social life that has emerged around the oil and gas industry. Social vices such as crime, prostitution, homosexuality and fraud have been on the increase since 2007 with the discovery of oil, occasioned by the incentives of both residents and immigrants to take advantage of the high economic and recreational living opportunities associated with oil and gas activities (e.g. Plänitz and Kuzu 2015). Prostitution, for example, increased to serve a growing demand for sex by expatriates, mostly foreigners who have immigrated without their spouses, but also locals who have earned some income in the oil economy and can afford to contract the services of sex workers (Obeng-Odoom 2014). Some prostitutes, nonetheless, migrated into the metropolis intending to trade or get jobs—failure to achieve their objectives then compels them to resort to prostitution as the only means of survival (ibid).

Alongside prostitution has been the increase in homosexuality, in a large part, due to this sexual orientation being acceptable and practised in the countries that most foreign expatriates hail from (see Habib 2016). Unfortunately, the lure of ‘oil money’ push innocent young men into such illegal acts, threatening the social and moral fibre of the Ghanaian society. Both incidents of prostitution and homosexuality, it is believed, have led to an increasing trend in HIV cases in the Sekondi-Takoradi Metropolis since the start of oil production (ibid). The growing incidents of crime, particularly armed robbery attacks, targeting prominent personalities in the metropolis and areas where many expatriates reside, is largely the creation of the real and perceived ‘oil wealth’ in the region (see Takyiwa 2014).

These negative social and environmental effects of the oil and gas industry illustrate the injustices local communities all over the world suffer from the oil assemblage. Yet, as noted above, these communities often do not get the benefits of the industry, commensurate with the burden of the ills that they disproportionally bear; and sometimes, indefinitely, and long after the FOCs have accumulated their profits and returned to their home countries.

5 Conclusion: Addressing the Oil-Injustices and -Inequities in Ghana

Drawing on critical political-economic insights of capitalism, this chapter argues that the Ghanaian oil industry is part of what Michael Watts conceptualised as the ‘oil assemblage’, whose imperatives, actors and processes are intrinsically exploitative and dispossessive of the Ghanaian subaltern classes. Far from promoting the well-being of these classes, the distribution of the benefits of the Ghanaian oil industry is unjust and inequitable. While the subaltern classes bear the deleterious environmental, social and economic effects of the industry, they do not benefit much from it. Based on these claims, this chapter has documented the injustices and inequities of Ghana’s oil industry at both the international (global) and national (local) levels.

In the rest of this conclusion, we offer suggestions for addressing these injustices and inequities. Based on the critical political-economic approach of this chapter, our suggestions are radical, requiring interventions aimed at making drastic changes to the asymmetric power relations mentioned above, the dynamics of which have engendered these injustices.

One of the major radical interventions is in the ownership arrangements within the oil and gas industry. Ghana must increase its share of ownership in all the oil fields, similar to the resource-nationalist interventions of Chávez and Morales of Venezuela and Bolivia respectfully (see Koivumaeki 2015), through maintaining a firm bargaining front capable of calling off the bluff of the FOCs. While it may be impractical to renegotiate existing contracts to extract greater ownership, particularly because of the stabilisation provisions within existing petroleum agreements, the state must push for increased national share in the future contracts.

The second major intervention is in taxes, royalties and other generous incentives. The government must work through the prevailing investor-friendly fiscal regime more closely, adopting a stronger position in the capture of rents through renegotiating the royalty rate and rigorously enforcing the upper income tax limit. Rather than the present varying royalty rate of 5%–12.5%, a tiered royalty structure based on upsides such as increasing oil prices or reductions in cost can capture more revenues for the country. Similarly, the 50% upper income tax opportunity stipulated in Act 919 should be fully and forcefully applied. Ghana must limit the quantum of profits and other revenues that FOCs can repatriate to their home countries. This will ensure that some of the profits of the FOCs are ploughed back into the Ghanaian economy, rather than the present situation where they are allowed unlimited repatriation of their profits back home. Other generous incentives such as tax exemptions on customs, import levies and duties related to the importation of equipment and other goods for oil and gas operations, including VAT, are not progressive and should be limited or withdrawn altogether.

These radical measures require a resource-nationalist state and political class, rather than the present neoliberal Ghanaian state and its liberal comprador political elite, whose political and material interests are closely entwined with the profiteering agenda of the FOCs and other actors within the oil assemblage. A resource-nationalist approach, committed to negotiating stronger deals best serves the national interest, particularly in terms of protecting Ghanaians from the inherent social injustices and inequities of the oil industry documented above.

In terms of the national/local level injustices and inequities, high political commitment towards affirmative action—deliberate policies designed to protect and give special attention to the environmental and social challenges of oil communities—is a progressive step. For example, the demand of the people of Western Region, through their chiefs to the parliament of Ghana, for 10% of the oil revenues to be allocated specially for development projects in the region should be embraced, rather than rejected (Osei-Tutu 2012: 1). Parliament should amend the existing Petroleum Revenue Management Act, 2011 to include a fund for a special development initiative in the Western Region. The request for 10% of the oil revenue may be too high, but it can be reduced to about 5%, rather than outright rejection. Similar to the Permanent Fund Dividend (PFD) programme of the state of Alaska in the USA (Brown and Thomas 1994), cash payments to inhabitants of oil communities, based on specific modalities agreed upon through a participatory decision-making process, will be a good measure to address the local level injustices documented above. Alongside cash payments, the funds should be used to finance public development projects such as schools, hospitals and roads in the oil communities.

In trying to gain social licences to operate, the oil companies have designed and implemented various corporate social responsibility (CSR) projects in the oil communities. These projects cannot address the injustices discussed in the oil communities above, because they are usually informed by business or market logic—a situation conceptualised by one authoritative source as ‘the marketisation of social justice’ (Soederberg 2009: 213–14). The FOCs should implement more generous CSR projects which should aim directly to address the injustices of the oil industry delineated above. Similar to the participatory processes described above for the government projects, the CSR projects should be participatory in design and implementation.

Some liberals may see these recommended interventions as utopian and unrealistic. Although utopian, they are useful in provoking a rethinking around what constitutes social justice and equity in the governance of natural resource industries in Ghana and Africa in general. These utopias serve as ideas for proposing more radical initiatives that can invoke a high sense of social justice and equity in actors within the oil assemblage. They may also serve as doctrines upon which the victims of the injustices of the oil industry can muse about the possibility of change and to activate their political agency to struggle for justice and equity (Panitch and Gindin 1999).