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Aker-AGM deal: We’ll drag GNPC to court, say CSOs

The vice-president of IMANI Africa Bright Simons says the Ghana National Petroleum Corporation has consistently invested in unproductive ventures at the expense of the state

Civil Society Organisations (CSOs) have served notice they may drag the Ghana National Petroleum Corporation (GNPC) to court for what they termed “acting against the interest of the country”.

GNPC has come under pressure over its decision to acquire 37% interest in the Deep Water Tano Cape Three Points (DWT/CTP) operated by Aker Energy Ghana Limited and 70% stake in the South Deepwater Tano (SDWT) operated by AGM Petroleum Ghana Limited.

Speaking on Town Hall Talk with Kofi Abotsi, the Vice-President of IMANI Africa Bright Simons said the CSOs will not hesitate to take legal action soon if they have “enough reasons to do so.”

“We are not speculating that they are acting against the interest of Ghana. We are asserting that they are acting against the interest of Ghana.

“The level of commitment to our position is that GNPC action, not in this matter alone but in a wide range of various matters has consistently been against the interest of Ghana, this is not something we are sugar-coating,” Simons said.

He added: “We are deeply concerned about the nature of the action and activities that GNPC is undertaking in this country and we seek to shine light on it… and if something is not done at some point, we may proceed to the law court eventually if we have the right grounds.”

Rational behind acquisition

Ghana has in place eighteen (18) petroleum agreements, many of which have not seen substantial work done as at December 2020. Out of the 18 fields, three (3) are producing fields and four (4) are discoveries.

The Petroleum Exploration and Production Act, 2016 (Act 919) which governs the upstream petroleum industry gives GNPC exclusive rights to undertake its mandate in all open blocks in the country. It requires all persons wanting to undertake upstream petroleum operations in Ghana to partner with the Corporation.

But, the declining number of majors in Ghana and the ongoing energy transition means that if no one else is willing to explore or develop, GNPC may have to develop Ghana’s deep water resources alone. To do so GNPC must have operator capabilities and the technology.

GNPC acknowledges that it will need some capacity building in order to become an operator on its own. The process requires a major oil company willing to travel on this learning route with GNPC. Partnership with AKER Energy and AGM, with proven deep water capabilities, provides such opportunity for the national oil company to develop operator capabilities.

GNPC proposes to partner with Aker Energy/AGM to jointly develop the DWT/CTP and SDWT blocks. The two companies, with a wealth of deep water experience and the requisite technology, are keen to entering into this arrangement with GNPC.

The existing discoveries by Aker Energy and AGM (the Pecan and Nyankom fields) are by far the largest discoveries in Ghana, and the only ones that can be developed as stand-alone developments. This partnership has the potential to add more than 200,000 barrels of crude oil to Ghana’s current production within the next 4 to 5 years.

 Benefits of the Partnership

The Transaction according to the Energy Ministry, offers significant benefits to Ghana in its quest to develop her petroleum sector. Among others, GNPC gets to build operator capacity at a critical time in history to ensure that the hydrocarbon resources in the country can be fully developed.

Other expected benefits are Ghana’s crude oil production will increase by 140,000 to 200,000 bpd within 3 to 9 years, oil produced may be exported or refined in Ghana for domestic use thereby reducing imports of refined products and conserve foreign exchange, local content agenda can be effectively set by GNPC and a GNPC with operator capabilities will provide enhanced value creation for Ghana.

GNPC Explorco will eventually recoup the capital expenditure as part of petroleum costs and loan offered to GNPC Explorco for the transaction can be repaid at First Oil through securitization of crude oil entitlements.

Additionally, tax expenditures (through exemptions) and initial concessions extended to Aker Energy/AGM will be substantially reclaimed by GoG and assets to be acquired by GNPC Explorco will be done at a discount to current valuation.

Royalties, tax revenues and profits to GNPC Explorco will amount to about USS6.5 billion in nominal value over 15 years and substantial foreign exchange inflows will accrue to Ghana which will contribution to GDP growth and expanded job opportunities.

Fred Dzakpata

Asaase Radio 99.5 – tune in or log on to broadcasts online
Follow us on Twitter: @asaaseradio995

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