Benjamin Boakye, Exercutive Director of ACEP launching the report
The Africa Centre for Energy Policy (ACEP) has asked government to immediately review all the Petroleum Agreements (PAs) with oil companies operating in the country’s oilfields and also apply sanctions or cancel the contracts of those who do not comply with the agreements.
In its latest report, dubbed, ‘Petroleum Contracts Monitor 2017,’ authored by Benjamin Boakye, Executive Director, ACEP said future PAs should detail the specific activities and timelines within each phase to ensure that activities were spread within a defined schedule.
The report examines the existing non-producing petroleum agreements to measure the performance of the agreements against work obligations of the companies involved.
According to the report, most of the companies have not delivered on the agreements signed with Ghana.
It also said some of the companies took refuge in the preliminary ruling of the International Tribunal for the Law of the Sea (ITLOS), which placed injunction on field operations in the disputed area until the determination of the case between Ghana and Ivory Coast.
“Those companies outside the disputed area also significantly failed to deliver on their obligations. This failure is a direct function of non-enforcement of the contracts terms by government. At the same time data on the performance of the companies have not been available to aid civil society and interested parties to track performance,” it mentioned.
Commenting on how Parliament treated most of such contracts, it said it did not invite the public to submit memoranda on petroleum agreements.
“Petroleum Agreements are generally not published before parliamentary ratification to allow for public participation in the contract award process. Public accountability is therefore non-existent.”
“Parliament does not go beyond information provided by Minister to independently verify the background and capacity of the companies involved. This could be due to limited time to do so. The weakness in Parliament’s assessment of contracts needs to be addressed to ensure efficient evaluation of executive decisions.”
The report further noted that the investment requirement for all 14 active PAs for the initial period summed up to a total of $923 million.
“For those whose initial period has expired, they should have invested about $750 million in exploration. The evidence of limited activity points to less than 2 percent of the required minimum expenditure over the period. The ITLOS preliminary ruling has been used by affected companies as the reason for not investing in their blocks.
“However the evidence of inactivity on the other blocks that were not affected by the ITLOS ruling shows that the story may not have been different without ITLOS injunction. The exact cost to Ghana from the inactivity of the companies may not be easy to determine. But the opportunity cost of possible early discovery on those blocks defers potential revenues to the country and consequently.”
It therefore recommended to the Ghana National Petroleum Corporation (GNPC) to be firm in monitoring its partners so that they comply with the contract terms, while it also called on the Petroleum Commission (PC) to have a transparent monitoring system that would allow the public to participate in contract monitoring, stressing that the Exploration & Production Act should be implemented without delay.
By Samuel Boadi