DWCTP Block Dev’t: Ghana to lose more than half of GDP
“The Minority in Parliament has learnt with shock, certain developments relating to the recent oil discovery in the Deepwater Tano Cape Three Point (DWT/CTP) Block which is set to lead to the loss of a whopping US$7.2 billion to the State. On 14th February 2019, the Ministry of Finance (MoF) announced what it described as the biggest oil find in Africa, of 450 – 550 million barrels with potential reserves of nearly 1 billion barrels of oil equivalent. A find which is estimated to be at least $30 billion at today’s crude oil price of $65 per barrel.
“The Minority Caucus is extremely concerned that the Government of Ghana (GoG), and the Ghana National Petroleum Corporation have failed to clarify the ownership of this latest discovery, and appears to be treating it as part of the original Hess discovery”, the Minority has stated in a statement it released last week and signed by Hon. Adam Mutawakilu (MP), Ranking Member for Mines and Energy Committee in Parliament.
Vice-President of IMANI Africa has therefore questioned why the government has not taken action to secure what is due the country.
“Those two blocks are controlled and owned by Aker. So, it is a curious trend that if it comes to that we don’t seem to pursue our rights and to get the most from our oil,” Mr Bentil said.
Apparently, Hon K.T Hammond (MP), a former deputy Minister of Energy under the previous NPP administration, has downplayed the points of IMANI Africa over Ghana’s agreement with a Norwegian oil company, Aker Energy.
ome other areas. That can’t be done because it doesn’t work like that. So I am not sure it is factually accurate. They also said Aker was changing the terms – that can’t also be done. What exists is, Aker is asking for an amendment of the original terms given to the Hess. Even if that is the case and they did that, I have no doubt that the end product will have to come back to Parliament,” said KT Hammond.
On February8th, 2006, the Republic of Ghana and the Ghana National Petroleum Corporation (GNPC) on one hand, and Hess Exploration Ghana Limited (HESS) on the other, entered into a Petroleum Agreement (PA) in respect of the Deepwater Tano Cape Three Point (DWT/CTP) petroleum Block which was subsequently ratified by Parliament that same year, with a shareholding structure of 90% for Hess, and 10% for GNPC.
The Exploration period for the DWT/CTP Block was seven years. As such the Exploration License expired on 18th July 2013. During the Exploration period, the Operator (Hess) had acquired over 500 Sq. Km of Seismic data drilled eight Exploratory Wells and made seven successive discoveries.
Following the high Exploration success rate, Hess organized a Data-Room to farm-down on it 90% interest in the Block, thus changing the shareholding structure to Hess – 50%, LUKOIL – 38%, GNPC – 10%, and Fueltrade – 2%.
In 2018, Aker Energy Ghana Limited (Aker) bought Hess’ interest in the DWT/CTP Block. And since Aker took over from Hess in 2018, it has successfully appraised the Pecan 4A well which was discovered in 2012.
“Conservative estimates show that Ghana stands to gain a minimum of US$9 billion if this new Petroleum Agreement were to be entered. The existing arrangement gives Ghana only US$4.2 billion which would be detrimental to the country’s interest, given its precarious financial position and the urgent need for resources to finance developmental agenda.”
Again, the Minority disclosed that, the government is entertaining a discussion with Aker Energy on changing the terms of the AGM Petroleum’s South Deepwater Tano (SDWT) Block which could lead to a reduction of government’s equity, royalties, and other taxes.
Considering the above concerns raised, the Minority demand that the Ministry of Energy (MoE), as a matter of urgency; clarifies the ownership position in relation to these new oil discoveries, Take steps to ensure the drafting and signing of a new Petroleum Agreement as demanded by Act 919 for these new discoveries, and apprise Parliament of the relevant information relating to these discoveries, including but not limited to all the technical, legal, and commercial details.
Additionally, the Minority demands that the Ministry of Energy should confirm if Government of Ghana, directly or indirectly through the Ghana National Petroleum Corporation, exercised the option to acquire the 10% equity interest that was negotiated and agreed with Hess as one of the conditions for the Lukoil farm-in; and which Parliament approved such spend in GNPC’s budget.
With regards to the South Deepwater Tano (SDWT) Block; the Minority demands that the Government of Ghana (GoG) needs to confirm if Aker has approached the GoG to consider reducing government’s interest from the current potential 49% that GoG and GNPC/GNPC Explorco holds in the Block.
The Minority therefore cautions government that “the situation of pronouncing a discovery under an existing Petroleum Agreement whose Exploration period has expired violates the terms of the Agreement and the laws of the country.” Hence any natural resources discovered or secured under these circumstances have to be forfeited to the State.