A Senior Research Fellow at the Africa Centre for Energy Policy (ACEP) has called for a review of the country’s old legal framework for the oil and gas sector.
He says it is necessary to fast track the passage of new laws and regulations such as the Petroleum Exploration and Production Bill, the Local Content and Local Participation Bill and a National Gas Policy.
According to Mr. Peter John Amewu , “these old laws have outlived their usefulness and effect,” insisting that there is an urgent need to review them to conform to modern trends and demands.
“Some of the issues that are arising now in the industry were not captured in the existing laws so it becomes very difficult to address them. Issues of thin capitation are not even clear in our tax laws. Others such as fencing and cross fencing are very critical issues for the development of the region and Ghana as a country and an emerging oil and gas industry,” he points out.
Ghana announced the discovery of oil in commercial quantities in 2007. Commercial production began in December 2010, but apart from some few new laws including the Petroleum Revenue Management Act 2011, (Act 815), and the Petroleum Commission Act 2011, Act 821, the country still depends on legal frameworks and regulations that were enacted long before oil production began.
Most of the legal instruments were passed into law as far back as the 1980s.
For instance, all the existing contracts that the government of Ghana has signed with international oil companies were based on the Ghana National Petroleum Corporation Law of 1983 (PNDC Law 64) and the Petroleum Exploration and Production Law of 1984 (PNDC Law 84). Other old laws that the country still enforces include the Petroleum Income Tax Law 1987 (PNDC Law 188).
Another proponent of the review of the old laws, Dr Steve Manteaw of ISODEC, explained that these legal regimes were passed into law at a time when Ghana was at the early stages of oil exploration.
A readiness report card prepared by the Civil Society Platform on Oil and Gas in Ghana says, “while the commercial development of the Jubilee has been fast-tracked and brought into production in three-and-a-half years, the development of the legal and regulatory framework has lagged far behind, hampered by delays, political wrangling and a change in government at the beginning of 2009”.
Mr Amewu emphasized that no country can effectively operate an oil and gas industry without strong regulations and legal frameworks.
He also pointed out that the country does not have any specific focus for its vast gas potential because there is no master gas plan.
According to him, a comprehensive natural gas policy will spell out the direction the country should go and provide a road map as to how it wants to use and price its gas. It will also entail transportation, pipeline regulation tariffs, strategic gas aggregator and a domestic gas supply obligation.
Despite the absence of a gas policy and a gas master plan, work on the 110km onshore Lean Phase Gas Pipeline Project and the Natural Ghana Gas Processing Plant by the Ghana National Gas Company is far advanced.
The Ghana National Gas Company proposes to undertake the construction, installation and operation of a 110km onshore Lean Phase Gas Pipeline Project from the Amansuri River Enclave near Atuabo to Aboadze and the 25km LPG pipeline from the Amansuri River Enclave near Atuoabo to Domunli Enclave near Bonyere catchment areas.
The pipelines will transerve the following districts in the Western Region: Ellembele District, Jomoro District, Nzema East Municipal, Ahanta West, Tarkwa-Nsuaem Municipal, Mpohor Wassa East District, Sekondi- Takoradi Metropolis and Shama District.
The Gas Infrastructure Project, which is expected to be completed by December 2012, involves receiving gas from the oil and gas fields in the Tano (Western) Basin and processing it into lean gas, propane, butane and condensate.
According to information on the website of the Ghana National Gas Company, the overall goal of the project is to ensure that natural gas, associated gas and NGLs produced in Ghana are effectively and efficiently processed into clean fuels and feedstock for the domestic, and export markets; promote the development of petrochemical industries; substantially reduce and/or eliminate flaring of gas; and develop Western Region of Ghana as a new economic growth pole for the country in the long term.
The initial gas to be processed will come from the Jubilee field which is located approximately 50km offshore Ghana, in the Western Region. The field straddles two blocks, the West Cape Three Points block and the Deep-water Tano block. The field is 75 km south-southeast of the Cote D’Ivoire [Ivory Coast] and Ghana border and is 132 km southwest of the port city of Takoradi. The associated raw gas production profile from the Jubilee Field development plan estimates a maximum 120 mmscfd for the initial phase. This is expected to be maintained over a three year period.