New Oil Deposits ;Ghana risks "lapse" $4.8bn over expired agreement-IMANI

Policy think tank, IMANI Africa is raising flags over potential revenue loses the country is likely to incur over the discovery of new oil deposits in the country.

According to IMANI, Ghana is likely to lose $4.8 billion if the agreement with Aker Energy is not renegotiated.

Early this year, Aker Energy announced the discovery of oil in the Pecan well in the Deepwater Tano Cape Three Points (DWT/CTP) block offshore Ghana.

The company explained that initial works done show 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.

According to the company it estimates that with the next appraisal wells to be drilled, the total volumes to be included in a Plan of Development have the potential to increase to between 600 – 1,000 barrels of oil.

IMANI Africa in a statement insisted that the amount of money Ghana stands to gain is woefully inadequate and that the country is likely to lose huge sums of money due to improper negotiations.

“Given the fact that this impressive find constitutes additional oil discovered in Aker’s contract area previously held under an old Petroleum Agreement (PA) which lapsed in 2014, it is our considered view that the additional oil discovered in 2019 are essentially not covered by any of the Petroleum Agreements (PA) in force, hence those additional finds require a new Petroleum Agreement [and] should be negotiated under the Petroleum (Exploration and Production) Act, 2016 Act 919.”

IMANI explained that if the agreement is renegotiated, “Ghana stands to gain an estimated $9bn, through potentially 25% to 30% increased equity interest and royalties (assuming 5% royalty plus 15% carried interest plus 5%-10% additional participating interest in block) in the short term plus any potential corporate income tax and the windfall additional oil entitlements (AOE) in the long term.”

“As things stand, Ghana stands to gain a paltry 14% of increased equity interest and royalties (10% interest in block + 4% royalty) amounting to $4.2 bn in the short term, representing a potential loss of $4.8 billion – that is, $9bn less $4.2 bn,” the policy think tank added in its statement.

“GNPC may have sold Ghana short by allowing Aker to assume from start that these new oil discoveries automatically fall under the existing Petroleum Agreement (PA), which is erroneous. At the least, Ghana could have exercised its right to take up the 10% additional equity option in the Aker Block. The failure, refusal or negligence to do this is truly startling for a developing nation which needs to make the most of its natural resources.”

IMANI in its statement further asked some 16 questions it believes will help Ghana make “a much better deal than one developed by a few stakeholders.”