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Is Ghana throwing away its oil?

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That the NDC and the NPP are agreed on the need for a new law to regulate the petroleum upstream sector is public knowledge; what is, however, baffling is the apparent silence by the NPP as the NDC government continues to dole out oil blocks to multinationals.

Even as government tarries on the passage into law of the Petroleum Exploration and Production bill, four new oil contracts have been awarded under a so-called “certificate of urgency”.

The first two, involving AGM Petroleum and Cola Natural Resources, were approved by parliament in December 2013; and the second two involving CAMAC Energy Ghana Limited and Base Energy Ghana, and AMNI International Petroleum Development Company (Ghana) Limited, have just been approved by parliament.

Apart from the above contracts, the Government is also said to have issued the right of first refusal to Miura Petroleum Limited and its partner Gondwana Petroleum to negotiate a new contract for the Offshore Cape Three Points South Block.

One would have expected that as the largest opposition party in parliament, the NPP would have made the kind of noise it makes on other matters and say, “No, we are going to boycott the signing of any oil and gas deal you bring before parliament until we have fine-tuned the Petroleum Exploration and Production bill and passed it into law. We will not endorse any oil and gas deal until the new law, which guarantees the country better terms, is passed”.

If the NPP made this noise and the NDC went ahead — per their numerical advantage in parliament — to push the deals through, the history books would record it and posterity would know who to hold accountable.

Kenya, another emerging oil-rich country, has decided to delay licencing new oil exploration blocks until a new law regulating the sector that is being sent to parliament by June is in force.

“We want first of all to get the policy and the Act in place, which will happen before the end of this financial year — that is before June. And then from there we will be able to know how to move,” Kenya’s Energy and Petroleum Principal Secretary Joseph Njoroge said recently.

This is what civil society has often urged the government of Ghana to do: put a moratorium on any further licencing until the E&P Law has been passed. After all, we are all agreed that the Petroleum (Exploration and Production) Act, 1984 (PNDC Law 84) has outlived its usefulness, and so we need a new law.
“The E&P bill is the bible of the industry,” Mr Kwame Jantuah, a member of the Civil Society Platform on Oil and Gas, told the B&FT last year

“The revenue management and the local content bills come under E&P. At the present moment, the only bill we have passed is the Revenue Management Law. If we have an oil-spill today, does PNDC Law 84 cover spillage? I don’t think it covers spillage; hence, when Kosmos spilled oil-mud in our waters, they were haggling with government over the kind of amount they were charged.

“The E&P bill is an important oil industry bill anywhere you go around the world. Let’s put everything aside and pass that bill, because If the Keta and Accra Basins and others start production, what will happen without an E&P bill?” he asked.

Aside from guaranteeing the country better terms, the new bill provides for comprehensive regulation of petroleum operations, rights and obligations of contractors and sub-contractors.

It does appear that the people of Ghana need to do some asking, and the government of Ghana needs to explain why the need for a certificate of urgency to rush through oil deals while it delays the passage of the most critical law in the sector.

The Africa Centre for Energy Policy (ACEP) has been raising the red-flag over these oil deals that are being signed before the E&P law is passed.

In a press statement released last week, ACEP kicked against approval by parliament of the two new deals, and renewed civil society’s call for the government to place a moratorium on any further deals.
The following are excerpts of the press statement:

What is more disturbing about all these contracts is that the oil blocks that are being awarded are located in known areas of the Tano Basin on which substantial 2D and 3D seismic data are already available, including a number of discoveries in the area.

Experience in most oil producing countries suggest that oil blocks from known areas are awarded through open and competitive process because such areas have been de-risked and provide opportunity for the state to negotiate better terms.

This is not the case in Ghana, as promising oil blocks are “given away” on selective basis to questionable companies that have no capacity — thus putting Ghana at a disadvantage.

The beneficial ownership behind these companies is also not known. Parliament’s Energy and Mines Committee has also not demonstrated any scrutiny of the beneficial owners in its report to Parliament, and especially the financial capacity of local firms.

Unlike the AGM contract from which the Committee disclosed the beneficial owner of MED Songhai, the same has not been done for these new contracts — raising questions as to who the owners are.

For instance, the Committee provides that Base Energy — the local Ghanaian company on the Expanded Shallow Water Tano Block — is owned by Energy West Limited (75%) and African Soft Limited (25%).

AMNI International Petroleum Development Company (Ghana) Limited is owned by AMNI Nigeria (70%) and an indigenous Ghanaian company, WCW International Company Limited (30%). But this information does not satisfy the disclosure requirement of beneficial owners.

Whilst Ghanaian participation in oil operations is commendable and consistent with the Local Content Regulations (LI2204), Government should as a matter of democratic principle disclose their beneficial ownership information in the spirit of transparency.

This in our view prevents fronting for foreign and Ghanaian interests.

We wish to observe that the path Ghana is taking is not in the interests of our country, especially when Government is determined to rush petroleum contracts ahead of a progressive petroleum law whose process it has begun.

Perhaps this explains the delay in passing the new Petroleum bill since 2012, which in our view is more urgent than the current oil contracts. Ironically, the new petroleum bill was supposed to have prevented the kind of rush and secrecy we are witnessing in Ghana today.

Ghana must show the example of a country determined to break away from the oil-curse. We recall how two earlier contracts, AGM and Cola Natural resources, were not debated in Parliament late last year.

Now we are approving two new oil contracts under certificate of urgency. Where is the transparency we are hoping for? Where is parliament’s credibility?
We wish to renew our earlier call for a moratorium on all new petroleum licencing until the new Petroleum (Exploration and Production) bill is passed into law.

Since this is being presented to us under a certificate of urgency, we would be grateful if we were informed as to the nature of the urgency that has necessitated this decision which looks so threatening to the national purse.

By Basiru Adam | B&FT Online | Ghana

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Reporting Oil and Gas project was launched on 4th June 2009atTakoradi, Western Region, Ghana by Penplusbytes (PPB – www.penplusbytes.org) with the vision of providing a one stop online information and knowledge about Ghana’s oil and gas sector
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