GNPC SHOPS FOR JV PARTNER … To Operate New Oil Block

The Ghana National Petroleum Corporation (GNPC), true to its stated strategy of optimum participation in Ghana's oil exploration and production, through playing a lead role, is in search of a partner to operate the South Deepwater Tano Block (SDWT) offshore Ghana.

Documents sighted by The Business Analyst indicate that the national oil company has already engaged the services of Zebra Data Services, U.K., a company which operates a virtual (online) data room, the EZ Data room, where it markets data worldwide.

A flyer sighted by this paper describe the block as 'Located in the prolific offshore Tano basin, in close proximity to the Jubilee Field,' and in a “water depth of 2,000 to 3,500.”

The move by GNPC comes barely two months after the corporation's Chief Executive Officer, Nana Boakye Asafu-Adjaye had told participants at the 63rd Annual New Year School held at the University of Ghana, Legon, that it had embarked on a strategy to develop the necessary capability to become an excellent Operator that can independently manage oil and gas operations in the medium to long-term.

The strategy, according to him, was founded on four pillars, namely: “capacity building and expanding activities; replacing and growing reserves; efficient capitalization and optimum participation; and catalyzing local content development.”

The SDWT block, which covers an area of approximately 3,482km² (860,421 acres) has 2,612km² of 3D seismic data covering 75% of it, some of it shot as recent as 2009.

The Deepwater Tano basin, to which the block belongs, has so far yielded exploration success rate of 75%.

Adjacent blocks to the one being promoted, “play host to several significant oil, gas and condensate discoveries, including the Tweneboa-Enyenra-Ntomme (TEN) - Tullow; Jubilee Field - Tullow & Co; Mahogany-Teak-Akasa (META) - Kosmos; Paradise (Hess); Dzata (Lukoil/Vanco),” the flyer by GNPC sighted by The Business Analyst states.

It is estimated that the block has over 1,500 Million Barrels of Oil reserves.

GNPC, according to inside sources, intends to partner an international player with a proven technical competence to operate in deepwater, and which has financial capability and a proven track record, to explore the block.

“You can't take a novice and throw him into the deepwater,” Mr. Anthony Assiamah of the GNPC Exploration Department had told The Business Analyst in an earlier interview.

Interested industry players that want to further pursue a deal based on the highlights of the data viewed on the site, would be expected to apply to GNPC for a more detailed data, after which there is a follow-up discussion and an offer made for evaluation.

The Petroleum (Exploration and Production) Law, 1984, PNDC Law 84, provides that all companies, seeking to engage in any petroleum exploration, development or production activities in Ghana partner GNPC.

Section 2 (1) of the law states that 'No person other than the Ghana National Petroleum Corporation established under the Ghana National Petroleum Corporation Law, 1983 (P.N.D.C.L. 64) in this Law referred to as "the Corporation", shall engage in the exploration, development or production of petroleum except in accordance with the terms of a petroleum agreement entered into between that person, the Republic and the Corporation pursuant to subsection (4) of Section 5 of this Law or any other authority granted or recognized under this Law.'

Sources close to the process indicate that after the national oil company had evaluated and found a fitting partner, it would then enter into a joint venture along sound commercial lines before presenting an application to the Minister of Energy to negotiate for a petroleum agreement.

This would be in compliance with Section 2 (2) of the Petroleum (Exploration and Production) Law, PNDC Law 84, which provides that 'Without prejudice to section 1 of this Law, any person who intends to negotiate for a petroleum agreement for the exploration, development or production of petroleum shall submit an application to the Secretary in accordance with such Regulations and such competitive bidding procedure as may be prescribed.'

GNPC, until recently, participated in the operations of oil blocks, at 10% carried interest. However, since the production of the Jubilee Field, and following over ten other discoveries, there has been a national clamour that the national oil company upped its stakes in order to earn more revenue from the country's oil resource.

For GNPC to become an Operator means it must have a majority stake in any joint venture it enters into to undertake that project.

Block History
The SDWT block, was on 24th October, 2008 awarded to Aker ASA of Norway, with 5% to CHEMU under a petroleum agreement that was subsequently deemed incompetent as it failed to meet the requirements of the petroleum exploration and production law, PNDC law 84.

A review of the Petroleum Agreement signed with Aker ASA, revealed that contrary to the requirements of the Petroleum Exploration and Production Law that a contractor either registered in Ghana or incorporated a company under the laws of Ghana that was not done.

That Agreement, was ratified by Parliament on November 5, 2008, and Aker ASA, got Aker Ghana Limited incorporated on October 29, 2008 with certificate of incorporation number, CA-51,646, to commence business on October 30, 2008.

A request by Aker ASA to assign its interest to Aker Ghana Limited was turned down by the Minister of Energy, Dr. Joe Oteng-Adjei by a letter dated December 30, 2009 insisting that was not possible since the original agreement was invalid.

“The assignment you have requested is legally impossible in view of the underlying failure of compliance with the law,” the Energy minister had observed, advising GNPC by a copy of the letter to reimburse Aker ASA with cost incurred in acquiring data, since such data acquired belonged to the national oil company.

Section 23(15) of the Petroleum Exploration and Production Law PNDC Law 84, states that a contractor (foreign company): “which is not an incorporated company in Ghana under the Companies Code, 1963 (Act 179) to be authorized to carry out solely petroleum operations in respect of which a petroleum agreement or petroleum sub-contract has been entered into under this Law and such signatory shall be a signatory to any petroleum agreement.”

“(b) maintain an office or establishment in Ghana to carry out petroleum operations and shall have in charge of such office or establishment a representative with full authority to act and to enter into binding commitments on behalf of the contractor or sub-contractor, as the case may be; and continues with subsection (c) that;

“In respect of such petroleum operations, open and maintain an account with a bank in Ghana.” All other oil companies operating in Ghana such as Kosmos Energy, Tullow Oil, Anadarko, Sabre Oil and Gas Holdings, had registered their companies under Ghana's Companies Code, in compliance with the provisions of the law, prior to entering into petroleum agreements for their blocks.

Jubilee partner, Anadarko had cried foul over the award of the block to AKER ASA, saying the bidding process, in which it had participated was not conducted in a transparent manner.

[The print version of this article was first published in The Business Analyst of Wednesday, April 4th – Tuesday, April 10th 2012] - E-mail:[email protected]