The entry of the world’s largest oil and gas companies, ExxonMobil into Ghana to explore and produce oil from Ghana’s Deepwater Cape Three Point Offshore oilfield is undoubtedly a strong indication that major international oil companies such as British Petroleum (BP), Shell, Aker and other Chinese giants will flock into Ghanaian waters.
If the idiom ‘coming events cast their shadows before them,’ is anything to go by, then the contents of the petroleum agreement signed between Ghana and ExxonMobil Corporation should switch our radars into full gear, ready to interrogate and unpack the issues.
Ghana’s regulatory framework not mature enough
After the signing of the ExxonMobil deal, analysts have become increasingly worried about the weaknesses in the country’s regulatory regime and institution.
The Texas-based company is Number 13 on Forbes’ 2017 Global 2000 list of the world’s biggest and most powerful public companies, as measured by a composite score of revenues, profits, assets and market value.
Even though it slipped four spots from last year, the oil giant has started to see its fortunes turn as oil prices climb. Exxon reported a 122 per cent surge in profits in its latest quarter.
The concern is that:
• We are talking here about a company, whose annual turnover is several times the size of Ghana’s Gross Domestic Product (GDP); In 2016 alone, ExxonMobil’s revenue amounted to approximately US$219 billion.
• A company that has the capacity to hire the brightest and best of lawyers;
• A company that can buy political patronage in a country, whose political party funding is largely dependent on private sector funding;
• Even though the our electoral laws prohibit funding from foreigners, it is a known fact that in practice monies have come foreigners and even foreign governments to support political campaigning;
No petroleum regulations
The risk of big players overriding Ghana’s regulatory institutions is compounded even further by the fact that the development of general petroleum regulations remains incomplete. This is in spite of persistent calls from civil society groups among others for the regulations to be passed to guide the implementation of petroleum Exploration and Production law.
The Challenges Ghana has had with Kosmos over proprietary data, spill of light toxic mud, right of first refusal among others should serve as basis for caution.
Having from the onset sidestepped provisions in the law which demanded open competitive bidding with regards to negotiations with players in the upstream sector, described the agreement as among the best so far signed (before parliamentary ratification) one wonders how well Ghana’s regulatory regime can effectively stand up to the likes of ExxonMobil.
Mitigating the risks
Analysts maintain that there should be continuous strengthening of the regulator to afford effective monitoring of such big players.
Policy analyst, Dr Steve Manteaw suggests a move towards the convergence of regulatory institutions, adding that Parliamentary vigilance and effective oversight will be necessary.
Citizens vigilance and pro-activeness – including public interest litigation is strongly advised, as well as Citizens’ access to contracts, very key, even though the law is not categorical on it.
Section 56 (1) & (2) require the establishment and maintenance of a publicly accessible Register of Petroleum Agreements, licenses, and permits.