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Govt Engaging In Deceit…No Barrels Of Oil Has Been Found - Minority   
 
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14-Jan-2019  
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Adam Mutawakilu
 
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The Minority in Parliament has expressed dismay at the Minister of Energy's attempt to deceive Ghanaians into believing that there is a new discovery of 550 million barrels of oil by Aker Energy.

According to a statement signed by Mr Adam Mutawakilu, the ranking member of Mines and Energy Committee of Parliament, "the government’s actions and inactions have resulted in a loss of opportunity for the country to enhance the benefits of an already existing discovery for the people of Ghana".

If you may recall, Aker Energy earlier this year, announced that it has discovered oil in commercial quantity in Ghana estimated around 450 – 550 million barrels.

According to them, the well was drilled at the Pecan field approximately 166 kilometres southwest of Takoradi in Ghana, to a vertical depth of 4,870 meters in 2,667 meters of water. The DWT/CTP block offshore Ghana, contains seven discoveries, of which Pecan is the main discovery to date.

However, the minority has cast doubt on this information and has asked government to explain to Ghanaians:

1.Why GNPC did not exercise the option to acquire the 10% share in Hess block after the highly favourable ITLOS ruling.

2. The whereabouts of the US$47million approved by Parliament and subsequently transferred to GNPC.

3. Why GNPC did not exercise its preemption rights under the law which could have reduced the purchase price of the 10% interest and increased its interest even more.


Below is the Minority’s full statement

NO NEW DISCOVERY OF 550 MILLION BARRELS OF OIL, RATHER AN OPPORTUNITY LOST FOR GHANA

The Minority in Parliament has expressed dismayed at the Minister of Energy's attempt to deceive Ghanaians into believing that there is a new discovery of 550 million barrels of oil by Aker Energy. When in actual fact, the government’s actions and inactions have resulted in a loss of opportunity for the country to enhance the benefits of an already existing discovery for the people of Ghana.

BACKGROUND

It is important for Ghanaians to follow the history of the Deepwater Tano Cape Three Point (DWT/CTP) block, herein referred to as Hess block.

In 2006 the Government of Ghana signed a Petroleum Agreement with Hess Ghana (whose shares were taken over by Aker Energy in 2018) for the Exploration and Production of DWT/CTP Block which was subsequently ratified by Parliament that same year, with a shareholding structure of; Hess 90%, GNPC 10%.

The exploration period for the Deepwater Tano Cape Three Points Block was seven (7) years. As such the exploration license expired on 18th July 2013. During the exploration period, the Operator (Hess) acquired a total of 5000 Sq. Km of seismic data drilled eight (8) Exploratory wells and made seven (7) successive discoveries; Five (5) for oil and two (2) for gas between 2011 and 2013. This translates into about 80% discovery success rate.

DETAILS OF DISCOVERY

Name of Well - Date of Discovery

Paradise 16th May 2012

Hickory North 8th June 2012

Beech 3rd September 2012

Almond 11th October 2012

Pecan 6th December 2012

Cob 22nd January 2013

Pecan North 18th February 2013

Aside Paradise and Hickory North which carried gas, the rest are oil discoveries. It is evident that the Pecan discovery [which was made] in 2012 under President Mahama's Government is now being treated by the Nana Addo/Bawumia led Government as if it is a new discovery.

It is important to put on record that, what Aker Energy did since 2018 and after the ITLOS ruling, was drilling Appraisal wells based on the successes chalked by Hess and GNPC to continue already ongoing work to determine the areal extent and commercialize the discoveries that were made by Hess in 2012 and 2013.

GHANA LOST AN OPPORTUNITY

Ghana National Petroleum Corporation (GNPC) had always believed the Deepwater Tano Cape Three Point field to have a great potential for discoveries.

No wonder, by the expiration of the Exploratory period of Hess, five (5) oil and two (2) gas discoveries were made. GNPC was, therefore, ready to take any opportunity to acquire more shares in the field.

Following the high Exploration success rate at the license, Hess organised a DataRoom to farm-down on its 90% interest in the Block.

a) In 2014 therefore, GNPC requested to acquire 10% commercial interest (additional Interest) for its fully-owned subsidiary company called Explorco on the same terms as the other parties, LUKOIL and Fueltrade; changing the shareholding structure to Hess – 40%, LUKOIL – 38%, GNPC – 10%, GNPC Explorco – 10% and Fueltrade – 2%.

b) The prime motive for acquiring the commercial interest is that the fiscal package (shown below) accompanying the agreement was one of the worst fiscal terms ever negotiated for the state:

FISCAL TERMS

Item Percentage

Income Tax 35

Royalty (Oil) 4

GNPC Carried Interest. 10

Additional Interest. 3

GNPC Paying Interest 10

c) To complete the deal on the 10% commercial interest, GNPC Explorco executed an agreement with Hess for which GNPC was expected to pay Hess an amount of US$44million in 2015.

d) GNPC received Parliamentary approval and support of US$47million in the 2015 and 2016 budgets to pay up, and same released by Government to support GNPC’s Annual Program of Activities for 2015 and 2016.

e) Payment was delayed due to the fact that about 70% of the block was affected by the boundary dispute with the Ivory Coast, and this affected the petroleum operations (appraisal and development etc.) of the DWT/CTP Block between 2014 and 2017.

F) It was planned that after the ITLOS ruling, if successful, the payment would be made for the 10%.

g) After the Nana Addo/Bawumia party won in the 2016 general elections and following the ITLOS ruling in September 2017, it was expected that GNPC will effect the payment and acquire the 10% interest.

h) That did not happen, and Hess reclaimed the 10% shares allocated to Explorco (GNPC subsidiary company); thus changing the shareholding structure to Hess – 50%, Lukoil – 38%, Fueltrade – 2% and GNPC – 10%.

i) In 2018, Hess opted to sell its 50% shares to Aker Energy. The then Minister of Energy, Hon. Boakye Agyarko proceeded to approve the transaction in spite of the several requests from the Minority in Parliament to the Government to acquire the 10% paying interest as a precondition to minimize the effects of the flaws in the fiscal package.

j) This act of negligence and incompetence has made Ghana lose at least 10% more interest in the block. The benefits that would have accrued to Government by taking the 10% interest would have been enormous.

CONCLUSION

In conclusion, the Minority demands of Government to explain to Ghanaians:

1.Why GNPC did not exercise the option to acquire the 10% share in Hess block after the highly favourable ITLOS ruling.

2. The whereabouts of the US$47million approved by Parliament and subsequently transferred to GNPC.

3. Why GNPC did not exercise its preemption rights under the law which could have reduced the purchase price of the 10% interest and increased its interest even more.

The minority takes the opportunity to call on all well-meaning Ghanaians, especially on the Institute for Energy Security (IES), the Africa Centre for Energy Policy (ACEP), the Natural Resource Governance Institute, IMANI Africa and other think-tanks, to assist Ghanaians in demanding accountability from Government, with respect to the subject matter.

SIGNED: Hon. Adam Mutawakilu (MP)

Ranking Member for Mines and Energy Committee in Parliament
 
 
Source: Peacefmonline.com
 
 

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