Interview with John Taylor, Executive Chairman of Cirrus Oil Services

What is your assessment of the oil sector in Ghana?

The oil sector in Ghana has seen tremendous growth since the discovery of oil in 2007. Since then, there have been significant discoveries in Deep Water – West Cape Three points, Deep Water Tano and Offshore Cape three points, which has understandably gingered more interest in the oil industry. The lack of local expertise within the upstream sector of Ghana has resulted in the influx of highly-skilled and specialized employment opportunities.

The Ghana National Gas company was established to become a reliable supplier of natural gas products in Ghana; however the project has faced some challenges that have slowed its progress.

The midstream player, the Tema Oil Refinery (TOR), doesn’t have the capacity of meet the country’s needs. It is also saddled with equipment that is due for retrofitting and as a result, downtime in the plant is quite high. Their production only contributed 24% of the total country’s consumption in 2012.

The downstream sector is crowded and competition is stiff with over 70 oil marketing companies serving the retail market and 17 bulk distribution companies importing refined petroleum products to make up for the shortfall in TOR’s production.

Could you present Cirrus Oil Services?

Cirrus Oil is a bulk distribution company licensed in Ghana in 2007. We import and export refined petroleum products such as diesel, gasoline 91, gasoline 95, Jet A1, LPG, Kerosene, Naphtha and Fuel Oil. We own two gantries, one in Tema and the other in Takoradi with a combined storage capacity of over 70,000 m3. They were constructed in 2008 and 2009 respectively. We are expanding our storage capacity with the construction of a 200,000m3 storage depot in Tema and an 8,000 MT LPG depot also in Tema. We currently have 125 employees.

What are the challenges for Cirrus Oil Services?

The challenges include foreign exchange risk as a result of the cedi dollar transaction exposure and the rising number of bulk distribution companies in Ghana. Another challenge is the timing of price adjustments by Government in relation to the world oil price market changes and also the relationship between the public and private sectors.

What is your growth strategy?

We focus on geographical expansion through land export within the sub region and pipeline export.

What are the investment opportunities in the company and in the sector in general?

There are huge investment opportunities in both the upstream and midstream sectors of the industry.

As far as the upstream sector is concerned, support service companies need to be setup for the upstream companies. Since this is virtually a new industry most of these services are imported and this is an area of great opportunity in which investments could be channel via the importation of equipment and training of locals.

As for the midstream sector, due to the gas discoveries there is the opportunity to invest in new processing plants for gas distribution locally as well as for export, invest in gas plants for power generation which can take their feedstock from the processing plant and invest in the construction industry for the provision of roads and other necessary infrastructure Finally, products from the processing plants can lead to investments in other industries.

What is the outlook for the oil sector for 2013 and onwards?

The outlook is to see more local involvement in both the upstream and midstream sectors of the industry. The Government hopes to foster stronger partnerships between local and foreign companies. The Government is also seeking to reduce poverty throughout Ghana by 2015 with the revenue generated from the oil sector.

What is your vision for the future of Cirrus Oil Services?

Cirrus Oil will be the leader in oil trading, storage and distribution in the West African sub-region and beyond.

What would be your message to a national or an international investor interested in Ghana?

Ghana by virtue of being a developing country has a lot of investment opportunities especially in the infrastructure, construction space and the utilization of technology to improve efficiency in many other sections of the economy.

Per World Bank projections, Ghana which began exporting oil in 2011 will have the fastest growth rate on the continent estimated at 13.4 % in 2011 and 10.4% in 2012. This level of growth rate doesn’t exist in many places and this makes Ghana an ideal place for investors. This can be attributed primarily to the prevalence of relative peace together with private sector competitiveness, human resource development, civic responsibility and good governance. Ghana is better positioned to be the gateway to Africa.