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‘ExxonMobil deal: Let’s be cautious’

  • SOURCE: thefinderonline.com | Isaac Aidoo
  • There is absolutely no doubt that Ghana’s petroleum sector is experiencing a boom, especially after the favourable ruling of the special chamber of the International Tribunal on the Law of the Sea (ITLOS).

    Indeed, investment analysts were unanimous in predicting a boost in Ghana’s economic fortunes.
    “We believe that Ghana is going to see a return of theinvestments suspended by the decision and a lot of interest from major players in the upstream oil and gas sectors,”Chief Executive Officer of C-ENERGY, Mr Michael Cobblah says in his outlook for 2018.
    Ghana is set, therefore to attract some of the world’s oil majors- the likes of ExxonMobil (soon to start operations in Ghana), Chevron, BP, Shell and Aker into the oil and gas industry.
    This paper’s investigations into the activities of ExxonMobil reveal loads of issues of concern which must engage the attention of government, parliament, civil society organisations and all Ghanaian citizens.

    Complicity in manipulation of climate change facts
    A comprehensive, peer-reviewed academic study of ExxonMobil’s internal deliberations, scientific research and public rhetoric over the decades confirmed empirically that the oil giant misled the public about what it knew about climate change and the risks posed by fossil fuel emissions.
    According to news portal, InsideClimate News, an analysis of ExxonMobil’s own research and public statements showed a sharp contrast between what it knew about climate change and what it told the public.
    Insideclimate News quoted a study undertaken by Geoffrey Supran and Naomi Oreskes of Harvard University as saying “on the question of whether ExxonMobil misled non-scientific audiences about climate science, our analysis supports the conclusion that it did.”
    ExxonMobil’s pact with Petrobras: any implications for Ghana?
    ExxonMobil Corporation and Petróleo Brasileiro SA, Brazil’s state-controlled oil producer also known as Petrobras last year announced they had formed an alliance to develop energy projects around the world.
    The deal came two months after Exxon and Petrobras were jointly awarded six oil-rich blocks in Brazilian coastal waters.
    It is public knowledge that Petrobras has been involved in corruption and corruption related scandals. The oil company has been the target of more than two dozen lawsuits by shareholders in recent years as a result of a massive corruption scheme in which Petrobras executives allegedly took bribes from contractors who had overcharged the company for work. The company claims it was a victim of the graft.
    Meanwhile a government probe of the scandal known as Operation Car Wash is reported to have landed several former Petrobras executives and Brazilian politicians in jail.
    On whether or not Exxon’s association with Petrobras meant anything for Ghana, Economist, Samuel Bekoe with the Ghana Oil and Gas for Inclusive Growth said Petrobras had purged itself off the scandals through sweeping procurement and other reforms it carried out.
    “Petrobras is listed on the New York Stock Exchange and the demand is quite high despite the history of scandals,” Mr Bekoe stated.
    Even though he pointed out that the corruption scandals associated with Petrobras could pose “a medium risk to Ghana,” Mr Bekoe was rather focused on the technological acumen of the Brazilian oil company, saying that could be the most tangible reason why ExxonMobil struck the deal with it.

    Some provisions in the agreement are worrying
    Sweeping waivers and tax breaks in the agreement are not only worrying but suffocating, to say the least and worse still, fly in the face of the Petroleum Income Tax law.

     Tax liability has been waved on all export of petroleum from Ghana;
     No duty or other charges shall be levied on such export, including vessels used in transporting the crude;
     Tax liability waved on all imports of plant, equipment and materials for the project, on condition that GNPC shall have the right of first refusal for these goods;
     Contractor’s Value Added Tax (VAT) liability has also been waved
     Article 13.1 of the agreement authorizes 100 per ent repatriation of earnings.
    A peep into neighbouring Nigeria
    There are a lot of things Ghana needs to learn from the Nigerian petroleum sector, Dr Steve Manteaw, newly elected Chairman of the Ghana’s Public Interest and Accountability Committee (PIAC) says.
    The allocation of oil blocks in Nigeria is strictly based on competitive tendering and the government of that country insists on local content participation.
    “You must have a joint venture partner who is a local company; they also insist that fringe blocks (blocks not of high yielding production capacity) are assigned to local Nigerian companies.” Dr Manteaw explains.
    There is a way in which a lot of the value is retained in-country. The challenge for him is that “cronyism has taken over the allocation of such blocks and so the monies from oil don’t benefit the masses.”
    But for corruption, the Nigerian example would have been the best, he intimates.
    In Nigeria, multinational oil companies operate in partnership with state Oil Company, the Nigerian National Petroleum Corporation (NNPC) under Production Sharing Contracts.

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    1. News Review for 28 February 2018 | Comprehensive Ghana Oil and Gas news, information, updates, analysisMarch 1, 2018 at 9:05 am

      […] ‘ExxonMobil deal: Let’s be cautious’ […]

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