The government will earn at least $110 million in proceeds from the sale of 995,259 barrels of Jubilee Crude lifted by the Ghana National Petroleum Corporation (GNPC) from the Jubilee Fields Wednesday.
The money will be paid through a letter of credit arrangement 30 days after the sale of the crude oil, meaning on April 8, 2011, it will reflect in the GNPC’s account with the Ghana International Bank in London, which will immediately transfer the government’s share to the Bank of Ghana.
Initial feedback on the emergence of Jubilee Crude Oil on the world market, according to GNPC officials, indicates that the quality of the crude has been hailed as very good.
The Chief Executive Officer of the GNPC, Nana Boakye Asafu-Adjaye, briefing journalists in Accra, described the GNPC’s first lifting of Jubilee Crude as “historic and good news”.
The cargo by the GNPC, which has a 13.75 per cent interest in the Jubilee Field, was lifted at 22:12 hours (GMT) from the FPSO Kwame Nkrumah to the MV Poetic, a Greek flagged vessel, which has since set sail to the US for delivery to Sun International, a subsidiary of Sunoco Inc, a US Atlantic Coast refiner.
It brings to 3,630,391 barrels the total consignment of crude lifted from the Jubilee Field by the partners under a crude oil lifting agreement (COLA) since President J. E. A. Mills launched the first commercial oil from the field on December 15, 2010.
Per the scheme of entitlements by the Jubilee Partners, the government will rake in additional earnings in respect of five per cent of gross proceeds in royalties from the crude share of all the commercial partners.
It will also receive additional oil entitlements (AOEs), which is an instrument that ensures that as field production becomes more and more profitable as a result of cumulative production or oil price increases, the government’s share of that production increases.
Tullow Ghana Limited (34.7 per cent shares) and EO Group (1.75 per cent shares) together lifted the first crude of 649,064 barrels on January 5, 2011, while Kosmos Energy Ghana HC (23.49 per cent shares) lifted the second crude of 989,360 barrels on January 20, 2011, with Anadarko WCTP Company (23.49 per cent shares) and Sabre Oil and Gas Holdings Limited (2.812 per cent shares) jointly lifting 996,708 barrels on February 9, 2011.
“Over the months to come, as the daily oil production increases, the government and GNPC can expect more frequent lifting from the Jubilee Field,” Nana Asafu-Adjaye said.
He said Tullow Ghana Limited reported that it obtained a price of more than $90 per barrel for its first lifting of crude from the Jubilee Field, adding that the commercial partners were required to redeem their tax obligations to the government every quarter.
Nana Asafu-Adjaye said as a new product on the world market, the Jubilee Crude Oil needed to be branded in order to carve the right international market niche, adding that the GNPC had engaged the services of Vitol SA, a leading global oil trading company, and Cirrus Oil Services, a reputable Ghana-based oil company, to market its crude.
He said the proceeds accruing from the country’s share of the oil would be distributed in accordance with the Petroleum Revenue Law and Regulations.
Nana Asafu-Adjaye said the government had not yet hedged the country’s crude, pointing out that it was, nonetheless, weighing that option carefully considering the risks associated with such an arrangement.
Responding to a question on efforts by the GNPC to buy the shares of Kosmos Energy in the Jubilee Field, the Board Chairman of the GNPC, Mr Ato Ahwoi, said when the corporation approached Kosmos last week, the American oil company indicated that it would not sell to GNPC.
“So as far as we are concerned, that chapter is closed,” he said.
Mr Ahwoi declined to disclose how much GNPC had offered to Kosmos, claiming that in international transactions, an offer could only be disclosed if it was successful.
He said the GNPC had sought the partnership of the China National Offshore Corporation and BP in the failed bid to buy the shares of Kosmos Energy.