Comprehensive Ghana Oil and Gas news, information, updates, analysis

GHANA’S OIL EXPORT FACES BAN

oilgas — Fri, 18 May 2012 09:04:19 +0000

…as draft bill prioritises local consumption
Ghana could soon freeze future exports of its crude oil entitlements, which are held by the Ghana National Petroleum Corporation (GNPC), in order to meet local consumption needs. There is also the intention to require oil companies operating in the country to sell a portion of their share of crude to the Ghana government to meet domestic needs, according to fresh provisions introduced into the draft Petroleum (Exploration and Production) law, currently being worked on by the Ministry of Energy.
The immediate beneficiary of the provision could be the Tema Oil Refinery (TOR) which currently imports crude from Nigeria despite Ghana?s cumulative production of over 30 million barrels since production officially began in December 2010 at the offshore Jubilee Field.
When contacted, Mrs Aba?Lokko, Corporate and Public Affairs Manager at TOR, said she was not privy to the version of the draft law under discussion and would like to study it before speaking on the possible implications of the new provisions for the nation?s only refinery.
But sources close to the company say the implications could be very positive ranging from cutting back on freight charges (figures not available) to reducing cases of demurrage (detention of a ship, freight car, or other cargo conveyance during loading or offloading beyond the scheduled time of departure) which usually arises from TOR?s inability to establish letters of credit in good time. According to our source, demurrage could be as much as $40,000 per day.
Our sources further say, a journey to Nigeria for immediate supply could also take more than four days with a round trip requiring 78 hours and loading requiring another day. In comparison, a round trip from Tema to the Jubilee field could be 24 hours with an estimated one day required for loading.
At full capacity, TOR could refine 45,000 barrels of crude per day. Under current arrangements, a consignment of up to 600,000 barrels is delivered to TOR from Nigeria and lasts over a period of 15 to 20 days depending on operation capacity.
But this is also because oil marketing companies (OMCs) are allowed under the current deregulation regime to import refined products into the country to augment supply from TOR.
As of Wednesday when Public Agenda last checked, the GNPC and all the International Oil Companies (IOCs) operating the Jubilee Field had together lifted 34 light sweet crude consignments to the international market with Ghana?s latest (6th) lifting of 996,484 barrels of crude occurring on 3rd April, 2012. Tullow Oil Plc has indicated recently that current production is at 70,000 barrels of crude per day (bpd) but expected to hit the 90,000 barrels mark by the end of 2012 and 120,000 bpd for full capacity in 2013.
The propriety of GNPC?s sale of the Ghana share of the crude on the international market has been under intense debate for some time but officials have cited the need to expose Ghana?s brand of crude to the global market as a major reason for the practice.
But when the matter came up for discussion at a stakeholder forum held in Accra in April, Petroleum economist Mohammed Amin Adam said TOR, though technically can refine Ghana?s crude, was so inefficient that the yield per consignment will be too low and the refinery margin too high to return the desired benefit to Ghanaians.
?Except for purposes of retaining employment, close down TOR,? Mr Adam argued, explaining that the 10 percent refinery margin TOR offers to the Ghanaian public is too high and non-competitive compared to any international refinery. The refinery margin is the difference between the price at which TOR buys crude and the price at which it sells the products such as petrol (or gasoline), diesel, etc.
Mr Kyeretwie Opoku, a member of GNPC?s Board, reiterated that GNPC?s instructions are that they should get the best price possible and that is what the Corporation continues to do. However, if TOR has interest in the crude it has to make an offer.
Now, the draft law, titled Petroleum (Exploration and Production) Bill, 2011 appears to pull the breaks on the status quo as it provides in Section 64(1) that: ?A contractor shall be required to supply to the Republic a percentage of the contractor?s entitled petroleum at weighted average market prices as prescribed to meet domestic supply demand requirements as determined by the Minister [of Energy].?
It expatiates in 64(2) that ?Domestic supply requirements shall be determined as the difference between the total petroleum entitlements of the Republic and the Corporation and the total volume of petroleum and petroleum products required to meet the demand in Ghana.?
Mr Bishop Akolgo, Executive Director of the Integrated Social Development Centre (ISODEC), who has together with other experts subjected the draft law to critique, believes that Section 64 of the Bill is crucial for the ?laying of the foundation for the operationalisation of the local content and participation policy framework by subsidiary legislation.?
However, the current draft law is less user-friendly than its preceding 2010 version as well as the Provisional National Defence Council (PNDC) Law 84, Mr Akolgo observed last Monday in Accra where he addressed a stakeholders attending a national technical meeting on the Petroleum (Exploration and Production) Bill, 2011 and the Petroleum Upstream (Local Content and Local Participation in Petroleum Activities) Regulations, 2011.
?While PNDCL 84 and the 2010 Bill are written in a more simple and concise manner and the parts arranged in such a way as to be coherent to the lay person, the current Bill has rearranged most of the substantive sections containing the same ideas in such a way as to confuse rather than assist the lay person,? he stated.
Nonetheless, he gives thumbs up to the drafters for reducing the validity period of a petroleum agreement to 24 years in Section 14 as opposed to the validity period of 30 years contained in Section 12 of PNDCL 84.
It is unclear whether the new provisions will affect the jubilee partners and other existing licensees but there is certainty new entrants would have to adhere to the new legal requirements when they are finalised and subsequently passed into law.
When it becomes law, the Petroleum (Exploration and Production) Act, will replace the PNDCL 84, which is the current law under which petroleum exploration and production activities are undertaken and which is the law under which the Jubilee partners, led by Tullow Oil, were licensed.
The new draft is also expected to replace the 2010 version which has not been worked on by Parliament since 13th November, 2010 when the state-owned Daily Graphic reported the Majority Leader, Mr. Cletus Avoka, as hinting that the Bill, which had been referred to the Joint Committee of Finance and Mines and Energy Committee of the House, was to be withdrawn and repackaged.
Subsequently in February 2012, Mr Inusah Fuseini, Deputy Minister of Energy, indicated that government was unprepared to pass the 2010 Bill in its form and would introduce a new bill, replacing the 2010 version before Parliament in due course.
At last Monday?s meeting, Mr J.B. Okai, director of Policy Planning, Monitoring and Evaluation at the Ministry of Energy, vehemently protested the discussion of the 2011 version of the Bill, claiming the drafting of the Bills was still in progress and a government team had gone to Norway to have consultations on it.

http://www.ghanaweb.com/public_agenda/article.php?ID=16461

PIAC launches first report

oilgas — Fri, 18 May 2012 09:02:07 +0000

The Public Interest and Accountability Committee (PIAC), established under the Petroleum Revenue Management Act 815 and mandated to monitor the use of the oil and gas revenue, made public its maiden report in Accra yesterday. The Chairman of PIAC, Major Daniel Ablorh-Quarcoo (rtd), noted that all institutions responsible for the management of the revenue accrued from the oil find discharged themselves well, except for the fact that there were certain ambiguities with the law that guided their operations, hence the need for an amendment. According to Major Quarcoo, the key findings of the PIAC were that the 2011 government budget contained projections for the oil revenue although the act and laws for the management of revenue were not in place. These had to be revised, leading to a delay in monitoring. He disclosed that total oil lifting for the 2011 was 3,930.189 barrels representing 16.1% as against the estimated 18% while actual revenue generated was GHC666,187.085.6 billion as against the projected GHC1,250,000,000 billion . In respect of revenue disbursement, the Ghana National Petroleum Corporation (GNPC) received GHC315, 390,698 million, representing 47% of total government oil receipts. GNPC, he revealed, was yet to account for this amount as their audited account was not ready as at the time of launching the report yesterday.
The Ghana Petroleum Fund received GHC103, 808, 031.7 million which was shared between the Heritage Fund and the Stabilization Fund. The Heritage Fund was credited with GHC21, 799,687.00 million while GHC 82,008,345.00 went into the Stabilization Fund. The committee observed that the Stabilization Fund had received GHC 9,000,000 million in excess, an amount which should have gone into the Heritage Fund.
The Committee also observed there were no clear roles for the institutions involved in the management of the oil revenue. The delay in establishing agencies and procedures under the Act for the management of the resources also accounted for the delay in report. It also pointed out that the absence of regulatory laws needed to facilitate the work of the respective agencies. Major Quarcoo revealed that the regulatory law was in the daft stage, indicating it would be ready by the end of the year.
In determining Benchmark Revenue, the Committee said, government used conservative estimates based on international crude oil prices presumably, since there was no data as yet for the jubilee field.
Again, the enactment of Act 815 mid-year also accounted for the determination of Benchmark Revenue in July 2011 during the presentation of the supplementary budget for 2011, thereby revising the first projection of petroleum revenue for the year as estimated in November 2010 prior to the passage of the law. The late determination of the Benchmark revenue was therefore done as a special case considering the operational challenge of Act 815 in its first year of implementation.
Ghana?s lifting of crude oil was consistent with the Petroleum Agreements, reflecting a royalty of 5% of gross production and carried a participating interest of 13.75% of net production. Lifting of crude oil in 2011 spilled-over into 2012 in accumulated stocks of 649.138 barrels of oil being about 2% of total Ghana share for 2011. The accumulated stock by the end f December 2011 was not lifted until 3rd January, 2012. This translated into revenue overspill of US$72,463,275 million (at the realized crude oil price of (US$111.63 per barrel). Crude oil lifting are done in parcels of around 950,000 barrels per lifting and the variance of 265,224 barrel taken on the 3rd January should be regarded as Ghana?s share of production in the first quarter of 2012.
Some of the recommendations made by PIAC included the passage of a law that would take care of situations such as spill-over, and the admonition to the Ministry of Finance to abide by the law governing the management of the petroleum revenue.
The committee also entreated government to formulate a National Development Plan which would serve as a guide to all parties relative to disbursement of oil revenue for the benefit of all of Ghanaians. It also encouraged the Ministry of Finance to sign operational management agreement with the Bank of Ghana for the operational management of the Ghana Petroleum Fund. The Ministry of Finance was also asked to amend the laws with ambiguities to allow for clarity. In addition, PIAC also called on government to resource institutions with responsibilities under the Act 815 for effective delivery.

http://www.ghanaweb.com/public_agenda/article.php?ID=16462

Tullow surprises Ghana with 3 million barrels of crude oil

oilgas — Fri, 18 May 2012 08:40:03 +0000

The management of Tullow Oil says the company has been able to produce three million barrels of crude oil from the Jubilee field, this year meanwhile, it is expecting to achieve 120 thousand barrels of its produce by early next year.
This comes after the Jubilee operator, produced a little over 33 million barrels from the Jubilee field from January after 34 lifting.
The announcement was contained in an interim management statement issued by Tullow Oil ahead of its Annual General Meeting in London, Thursday.
The Jubilee operator also expects work on the country’s next major oil field Tweneboa, Enyenra- Ntomme to begin 30 months after it secures approval from government this year.
Tullow plans spending 2 billion dollars on its exploratory activities this year; about half of this will be invested in Ghana.

http://business.myjoyonline.com/pages/news/201205/86778.php

GHANA : PIAC ANNUAL REPORT ON THE MANAGEMENT OF PETROLEUM REVENUES IN 2011

oilgas — Thu, 17 May 2012 12:30:45 +0000

The Public Interest and Accountability Committee (PIAC) is established under Section 51 of the Petroleum Revenue Management Act (Act 815) with the following objectives:

a. Monitoring and evaluating compliance with the Act by the Government and other relevant institutions in the management and use of petroleum revenues.

b. Providing a platform for public debate on spending prospects of petroleum revenues in line with development priorities.

c. Providing an independent assessment on the management and use of revenues. The Committee is mandated by the law to publish a semi-annual and an annual report by the 15th September and 15th March each year. This report issued in compliance with Act 815 contains the findings and recommendations of the Committee based on its assessment of the management of petroleum revenues in 2011.

FULL REPORT AVAILABLE AT http://www.piacghana.org/PIAC%20REPORT_2011%20annual_final%20for%20website.pdf

Women have prospects in Oil and gas Industry in Africa-Geologist

oilgas — Thu, 17 May 2012 08:05:31 +0000

The emerging oil and gas industry both in Ghana and in Uganda have a lot of prospects and potentials for all women in the two countries, Ms Lyoidah Kiconco, a Ugandan Geologist, said on Tuesday.
“All the women need to do is to get the required training that will enable them to fit in the various areas available in the sector”, Ms Kinconco explained.
Addressing a group of journalists selected from Ghana and Uganda to participate in a -10 day training programme on Oil and gas reporting in Kampala, Uganda, Ms Kinconco asked governments in both countries as well as oil companies to assist women to train in the oil sector so that they could also contribute their quota to the industry.
The Revenue Watch Institute in collaboration with Penplusbyte, a Ghanaian-based International ICT Institute and the Thomson Reuters Foundation, UK, are organising the training at the African Centre for Media Excellence (ACME), in Kampala.
The training would afford the journalists the needed skills to improve on the reportage on the oil, gas and mining and the wider extractive sector.
Ms Kiconco indicated that women could equally function well as their male counterparts so they needed to be trained to become geologists, managers and administrative staffs and not only serve as auxiliary staffs.
She said in Uganda, women were being given the same opportunities as men to prove themselves in the sector provided they had the qualifications, saying “technically, there is no discrimination here. I have been a geologist for nine years and have been involved in production, drilling and exploration of oil in Uganda”.
She stressed on the need for Ghana and Uganda to manage the oil and gas resources sustainably, warning that there was no need to exploit the industry in the interest of profit making.
Ms Kiconco asked the journalists to research and report holistically on the sector to the benefit of all those who matter in the industry.
“You can look at issues regarding activities of the oil companies, status of licensing, challenges such as disputes, communities’ interest and the needs of the sector, among others”.
GNA

Ghana scores 60 per cent on Petroleum Transparency Index

oilgas — Thu, 17 May 2012 07:56:14 +0000

Ghana scored 59.7 per cent on the Institute of Economic Affairs’ (IEA) Petroleum Transparency and Accountability (P-TRAC) Index score for 2011
A report by the Institute made available to the Ghana News Agency in Accra on Wednesday, said “The overall 2011 score of 59.7 per cent shows that although some progress has been made in the year under review to enhance transparency and accountability in the management of Ghana’s oil and gas resources, more needs to be done in the coming years”.
It indicated that the country’s performance in the oil and gas sector had shown that considerable improvements were needed to improve transparency and accountability.
The P-TRAC Index is a project undertaken by IEA to promote transparency and accountability in the management of Ghana’s precious oil and gas resources.
The IEA explained that, the 2011 P-TRAC Index measured transparency based on the provision of publicly available information in four key areas – Contract Transparency, Revenue Transparency, Expenditure Transparency and management of the Heritage and Stabilisation Funds – for 2011.
A score is awarded based on the fulfilment of specified criteria for each component, which is then averaged to give an overall result.
The highest scoring component was Contract Transparency, which measures the public disclosure of information regarding the award of contracts, with a score of 66.7 per cent.
The publication of Environmental Impact Assessments by the Jubilee Partners was awarded a score of 100 per cent.
Other components such as the establishment of the Petroleum Commission, as the authority awarding contracts, the constitutional mandate of Parliament to ratify and scrutinise contracts, and the openness and competiveness of the licensing process, also performed relatively strongly.
The publication of information on licensing by government, public disclosure of oil and gas agreements, and process for appealing a license grant application were however, highlighted as areas in need of improvement.
The P-TRAC report awarded Revenue Transparency a score of 64.3 per cent and showed a varied result in the publication of reports.
Expenditure Transparency scored an average of 63.9 per cent for the frequency and quality of reports regarding expenditures from the Government’s share of revenues.
The review of projects receiving funding from the oil and gas revenue and the extent of their potential developmental impacts in areas of priority was reasonably positive and scored 88.6 per cent.
The lowest scoring component of the Index was the management of the Heritage and Stabilisation Funds, with an average transparency score of 44 per cent.
While it is pleasing to see that the Constitutional requirement for the accounts of the funds to be audited are being fulfilled, the 2011 audited reports has not yet been published by the Auditor General at the time the Index was compiled.
The score was negatively impacted by the lack of information on the performance of the Heritage and Stabilisation Funds, which is supposed to be published semi-annually by the Bank of Ghana.

GNA

Let’s maximize oil profits to benefit our people – Economist

oilgas — Thu, 17 May 2012 07:53:05 +0000

Ghana and Uganda have been urged to embark upon well strategized processes and programmes that will help maximize profits in the newly discovered oil sector to the total benefit of the citizenry.
The two countries have also been cautioned to avoid bad precedence of some oil producing countries in Africa and rather “view their newly discovered oil and gas industry as an epoch that will propel them to a new socio-economic order,” Mr Jackson Byaruhanga, an Economist with the Ugandan Oil and Gas Local Content Studies Group stated.
Mr Byaruhanga, who was addressing journalists at a training programme on Oil and Gas reporting in Kampala on Wednesday, cautioned the two countries to put up measures that would help them “get it right or might never join the club of wealthy nations”.
He said there was the need for Ghana and Uganda to learn from the experiences of Nigeria’s oil sector to guide them to avoid the mistakes encountered by that country, saying, “Nigeria is a very good example for our countries”
He indicated that the discovery of oil does not necessarily bring prosperity to a nation but it was the right measures and frameworks, including local content that when put in place, could help rise the status of a particular nation and the lives of its people.
According to the Economist, the two countries should not ignore their manufacturing and agricultural sectors, but develop them to avoid the “Dutch Disease Syndrome” which could also collapse other sectors of the economy.
He added that citizens must be given the requisite skills to enable them to fit into the oil sector to improve upon their lives.
The 10-day workshop is being organised by the Revenue Watch Institute in collaboration with Ghanaian-based Penplusbyte International Institute of ICT Journalism and the Thomson Reuters Foundation in UK.
About 16 journalists, from Ghana and Uganda are attending the workshop to help sharpen their skills in oil, gas and mining reporting.

GNA

Geophysicist asks Ghana and Uganda to manage oil revenue well

oilgas — Thu, 17 May 2012 07:50:52 +0000

When the oil sector in Ghana and Uganda are well managed, the revenue generated would be major contributions to both economies, a Senior Geophysicist of the Ministry of Energy and Mineral Development in Uganda, has said.
Mr Bernard Ongodia however warned of many dire consequences that might affect the two emerging economics should they ignore to take measures to manage the sector.
Addressing journalists at an ongoing training programme in oil and gas reporting being held in Kampala, Mr Ongodia said Uganda which discovered oil in 2006 had not started producing the product because it had taken time to put the necessary infrastructure and institutions as well as other mechanisms in place before embarking on production.
Ghana which discovered it oil finds in 2007 on the other, started the production before putting in place other major infrastructure and frameworks.
The 10-day training is being organised by Ghana based Penplusbyte, an International Institute of ICT Journalism in collaboration with the Revenue Watch Institute (RWI), also based in Uganda and the Thomson Reuters Foundation, UK.
Dr Peter Mwesige, Executive Director, RWI said the purpose of the training was to develop the capacity of the journalists to report effectively and consistently about the extractive industry, involving oil, gas and mining.
He explained that an active knowledgeable press plays a critical role in helping inform and engage the public, civil society groups as well as parliament and thus help them to hold governments and companies accountable.
He asked the journalists to well research into issues evolving the industry and report more accurately on them, adding, “journalists should pursue truth and serve as independent sources of information with fairness, accuracy and balance as their watchword”.
Mr Kwami Ahiabenu II, Executive Director, Penplusbytes said since journalists in emerging oil and gas economies lacked the needed knowledge and skills, it was important to train them so that they could effectively inform and educate their audiences in respective countries as well as help hold stakeholders accountable.
He said as part of the training, journalists would go on field trips to expose them to sources and possible stories they might not have had access to in the past.
Mr Nick Phythian of the Thomson Reuters Foundation stressed on the need for journalists to pay attention to details, data, facts and figures and interpret them more appropriately to their audience.

GNA

The 120,000 barrels production target by early 2013 – Tullow

oilgas — Wed, 16 May 2012 14:02:51 +0000

Tullow Oil is now expecting to achieve the 120 thousand barrels production target to be reached early next year.
This comes after the Jubilee operator, produced, a little over 33 million barrels from the Jubilee field from January after 34 liftings.
The Jubilee operator also expects work on the country’s next oil field Tweneboa, Enyenra- Ntomme to begin 30 months after it secures approval from government this year.
The announcement was contained in an interim management statement issued by Tullow Oil ahead of its Annual General Meeting in London today.
Tullow plans spending 2 billion dollars on its exploratory activities this year; about half of this will be invested in Ghana.

http://business.myjoyonline.com/pages/news/201205/86682.php

Ghana to get new Marine Bill to address pollution in oil industry

oilgas — Wed, 16 May 2012 10:27:55 +0000

A new Marine Pollution Bill, which incorporates the Convention on Oil Pollution Preparedness, Response, Co-operation and Dumping of Wastes to address the challenges of the oil industry, has been drafted to respond to the challenges of the oil industry.
The Bill is jointly prepared by the Ghana Maritime Authority and the Environmental Protection Agency, Ms Sherry Ayittey, Minister of Environment, Science and Technology told Parliament on Tuesday when the House reconvened.
The Minister, who was responding to a question on the floor of the House on measures being put in
place to formulate laws and regulations on environmental pollutions, said the Ghana Marine Pollution law formulated in 1964, had not seen any review to address emerging challenges particularly in the oil industry.
Madam Ayittey, touching on various types of pollution including noise, land and air, said “Ghana ratified the MARPOI Convention, which is concerned with oil pollution.”
“ The convention aims at achieving complete elimination of international pollution of marine environment by oil and other harmful substances from ships and to minimize the accidental discharge of such substance.”
On air pollution, she said the ministry has secured cabinet approval on Air Quality and Emission policy, which seeks to initiate strategies to reduce emissions with “attractive co-benefits of reducing future generation’s health locally. It would also have additional positive impacts on climate change nationally and globally,” the Minister added.
She explained that a buffer zone policy for managing fresh water bodies in the country is being prepared for cabinet to approve.
Buffer zones provide natural services such as improving water quality by trapping sediment and chemicals from runoff before reaching water bodies.

http://www.ghanabusinessnews.com/2012/05/15/ghana-to-get-new-marine-bill-to-address-pollution-in-oil-industry/