Modern Ghana logo

FEATURED: A Message At Christmas: Beware How The British Fooled Mankind With Chr...

body-container-line
Jan 14, 2019 | Business & Finance

NDC Minority Claims Glory for Aker’s 550m Barrels of Oil, Thrash NPP

By Modern Ghana
NDC Minority Claims Glory for Aker’s 550m Barrels of Oil, Thrash NPP

The Minority NDC in Parliament has accused the Energy Ministry of deceiving Ghanaians into believing news of a new discovery of 550 million barrels of oil by Aker Energy.

In a press release, the Minority said the Deepwater Tano Cape 3 point block discovery was rather made under the National Democratic Congress (NDC) between 2011 and 2013 by a company called Hess Ghana.

“The exploration period for the Deepwater Tano Cape Three Point Block was seven (7) years. As such, the exploration license expired on 18th July 2013. During the exploration period, the Operator (Hess) had acquired a total of 300 Sq. Km of Seismic data, drilled eight (8) Exploratory wells and made seven (7) successive discoveries; Five (5) for oil and two (2) for gas between 2011 and 2013. This translates into about 87.5% success rate of discovery,” the Minority explained.

It is important to put on record that, what Aker Energy did since 2018 and after the ITLOS ruling, was drilling Appraisal wells based on Hess's acquired data to determine the commercial nature of the discoveries that were made by Hess in 2012 and 2013.

The Minority also said the government’s actions and inaction following the oil find “have resulted in a loss of opportunity for the country to earn money.”

It further questioned the whereabouts of $47 million approved by Parliament, and subsequently transferred to the Ghana National Petroleum Company to purchase a 10% share of Hess Ghana in 2015.

Aker Energy announced that its oil exploration in the deepwater Cape Three Points showed that its Pecan4A well in the block could be holding some 450 to 550 million barrels of oil.

The Pecan field is approximately 166 kilometres southwest of Takoradi in Ghana, to a vertical depth of 4,870 meters in 2,667 meters of water, containing seven discoveries.

Find below the full statement

NO NEW DISCOVERY OF 550MILLION BARRELS OF OIL, RATHER AN OPPORTUNITY LOST FOR GHANA

The Minority in Parliament is dismayed by the Minister of Energy’s attempt to deceive Ghanaians into believing that there is a new discovery of 550million barrels of oil by Aker Energy. When in actual fact, government's actions and inactions have resulted in a loss of opportunity for the country to earn money.

BACKGROUND

It is important for Ghanaians to follow the history of the Deepwater Tano Cape Three Point (DWT/CTP) block, herein referred to as Hess block.

In 2006 the Government of Ghana signed a Petroleum Agreement with Hess Ghana (whose shares was taken over by Aker Energy in 2018) for the Exploration and Production of DWT/CTP Block which was subsequently ratified by Parliament that same year, with a shareholding structure of; Hess 90%, GNPC 10%.

The exploration period for the Deepwater Tano Cape Three Point Block was seven (7) years. As such the exploration license expired on 18th July 2013. During the exploration period the Operator (Hess) had acquired a total of 300 Sq. Km of Seismic data, drilled eight (8) Exploratory wells and made seven (7) successive discoveries; Five (5) for oil and two (2) for gas between 2011 and 2013. This translate into about 87.5% success rate of discovery.

DETAILS OF DISCOVERY

Name of Well Date of Discovery

Paradise 16th May, 2012

Hickory North 8th Jun, 2012

Beech 3rd Sep, 2012

Almond 11th Oct, 2012

Pecan 6th Dec, 2012

Cob 22nd Jan, 2013

Pecan North 18th Feb, 2013

Aside Paradise and Hickory North which carried gas, the rest are oil discoveries.

It is evident that the Pecan discovery in 2012 under President Mahama’s Government is now being treated by the Nana Addo/Bawumia led Government as if it is a new discovery.

It is important to put on record that, what Aker Energy did since 2018 and after the ITLOS ruling, was drilling Appraisal wells based on Hess's acquired data to determine the commercial nature of the discoveries that were made by Hess in 2012 and 2013.

GHANA LOST AN OPPORTUNITY

Ghana National Petroleum Corporation (GNPC) had always believed the Deepwater Tano Cape Three Point field to have a great potential for discoveries. No wonder, by the expiration of the Exploratory period of Hess, five (5) oil and two (2) gas discoveries were made. GNPC was therefore ready to take any opportunity to acquire more shares in the field.

Following the high Exploration success rate at the license, Hess organized a Data-Room to farm-down on it 90% interest in the Block. Several companies including GNPC, LUKOILl and Fueltrade put forward their requests.

  1. a) In 2014 therefore, GNPC requested to acquire 10% commercial interest (additional Interest) for its fully-owned subsidiary company called Explorco at the same terms as the other parties, LUKOIL and Fueltrade; changing the shareholding structure to Hess – 40%, LUKOIL – 38%, GNPC – 10%, GNPC Explorco – 10% and Fueltrade – 2%.
  2. b) The prime motive for acquiring the commercial interest is that the fiscal package (shown below) accompanying the agreement was one of the worst fiscal terms negotiated for the state:

FISCAL TERMS

Item Percentage

Income Tax 35

Royalty (Oil) 4

GNPC Carried Interest 10

Additional Interest 3

GNPC Paying Interest 10

  1. c) To complete the deal on the 10% commercial interest, GNPC Explorco executed an agreement with Hess for which GNPC was expected to pay Hess an amount of US$44million in 2015.
  2. d) GNPC received Parliamentary approval and support of US$47million in the 2015 and 2016 budgets to pay up; and same released by Government to support GNPC's Annual Program of Activities for 2015 and 2016.
  3. e) The Execution of the Assignment and Assumption Agreement was delayed due to the fact that 69% of the block was affected by the boundary dispute with the Ivory Coast, and this affected the petroleum operations (appraisal and development etc.) of the DWT/CTP Block between 2014 and 2017.
  4. f) It was planned that after the ITLOS ruling, payment would be made for the 10%.
  5. g) After the Nana Addo/Bawumia party won in the 2016 general elections, and following the ITLOS ruling in September 2017, it was expected that GNPC will effect the payment and acquire the 10% shares.
  6. h) That did not happen, and Hess reclaimed the 10% shares allocated to Explorco (GNPC subsidiary company); thus changing the shareholding structure to Hess – 50%, Lukoil – 38%, Fueltrade – 2% and GNPC – 10%.
  7. i) In 2018, Hess opted to sell its 50% shares to Aker Energy. The then Minister of Energy, Hon. Boakye Agyarko proceeded to approve the transaction in spite of the several requests from the Minority in Parliament to the Government to acquire the 10% paying interest to minimize the effects of the flaws in the fiscal package.
  8. j) This act of negligence and incompetence has made Ghana to lose 10% more shares in the block. The benefits that would have accrued to Government by taking the 10% share would have been enormous.

CONCLUSION

In conclusion, the Minority demand of Government to explain to Ghanaians:

  1. Why GNPC did not exercise the option to acquire the 10% share in Hess block.
  2. Why Aker Energy is not required to bring in a local partner as LUKOIL did when it acquire its shares in the Hess Block.
  3. The where about of the US$47million approved by Parliament and subsequently transferred to GNPC.

The minority will take the opportunity to call on all well-meaning Ghanaians, especially on the Institute for Energy Security (IES), the Africa Center for Energy Policy (ACEP), the Natural Resource Governance institute, IMANI Africa and the other think-tanks, to assist Ghanaians in demanding accountability from Government, with respect to the subject matter.

SIGNED: Hon. Adam Mutawakilu (MP)

Ranking Member for Mines and Energy Committee in Parliament

–citinewsroom

Powered By Modern Ghana
body-container-line