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The Petroleum Exploration and Production Bill in its current state does not guarantee the country any better terms in oil contracts, and so must be withdrawn from parliament to allow for a production sharing provision, the Ghana Institute of Governance and Security (GIGS) has said.
In a strongly-worded statement to government, the think-tank asked why Ghana — when 81 other oil nations have production-sharing agreements — has adopted the Modern Concession approach to giving out oil blocks, which only robs Ghanaians of a fair share of petroleum revenues.
Under concession, GIGS told the media in Accra, oil and gas resources become the bona fide property of the oil company and the host nation is limited to a carried and participating interest, royalties and other rentals — all of which do not amount to much, aside from taxes.
If the country had gone the production-sharing way, it said, Ghana would have earned from the Jubilee Field between US$5billion and US$6billion as at September 30, 2014 instead of the US$2.557billion it earned.
“The foreign companies made away with US$9.953 billion, representing 79.50 percent, in the name of investment under the prevailing system — the Modern Concession. The whole initial investment of US$4billion which they claimed they made, which Ghana also contributed to, has been fully recouped in three years,” the think-tank said.
“Currently, there are 81 countries in the world, 34 in Africa, producing oil and gas under this progressive fiscal arrangement. Is Ghana claiming to be wiser than all these 81 countries, moving away from progressive, fairer and equitable Production Sharing Agreements to the exploitative Modern Concession?”
Under the Production Sharing system the contractor, being the oil company, invests in exploration and production, and after deducting its costs what is left, known as “profit oil”, is shared with the host country.
A Senior Oil and Gas Research Officer at GIGS who read the press statement said the Modern Concession system was designed by the west to rob emerging oil producers in Africa, after Indonesia –when it gained its independence from the Netherlands in the 1960s — succeeded in winning good oil deals for its citizens through Production Sharing Agreements.
“We have observed Ghana is about to pass a law to legalise and perpetuate the robbery of its citizens in the name of investment…what we found disheartening is that South Sudan, the newest country in the world, has a better and more robust law than what Ghana, the star of Africa, is proposing to pass,” he said.
He appealed to President Mahama to “withdraw the bill” and allow for a review “to reflect Production Sharing Agreement fiscal provisions, the only way to achieve full maximum benefits from our oil and gas resources”.
Source: B&FT
