Government urged to operationalise Petroleum Act - ACEP
The Africa Centre for Energy Policy (ACEP) is urging government implementing the provisions in the Petroleum (Exploration and Production) Act, 2016 Act 919, with emphasis on the award of oil contracts.
Implementing the provisions, ACEP believes, will help build transparency in the sector and will ultimately foster investor confidence.
A Policy Analyst at ACEP, Ms Linda Ahunu, in an interview on April 13, 2017 explained that although the Act has been passed it was important for government to develop the guiding regulations and subsequently go ahead to operationalise it.
“We recommend that the Government of Ghana should operationalise the Petroleum Act, 2016 (Act 919) to provide the transparent mechanism for the award of Ghana’s upstream oil and gas licences.”
“We have passed it now but we need to have regulation to guide the implementation of the Act. The Act gives a provision for open and competitive bidding, once investors know there is some sort of transparency when it comes to the award of oil rights, it gives them some sort of confidence to come in and bid,” she explained.
Ms Ahunu explained that if the provision on open and competitive bidding was applied, government would not end up awarding oil rights to just any company, which would end up not performing.
“If we apply that provision, it means we will not just award oil rights to anyone without having to go through the open and competitive bidding process,” she said.
Review non-performing contracts
ACEP is also urging government to review non-performing contracts to give way to companies that have the potential to work to get oil contracts.
“We know there are committed investors who can actually do exploration and production; why don’t we open up to those ones to rather come in? If there are people who have licences and they are not operating why should they continue to hold them?” she quizzed.
She added that “further bold step will be required to sanction companies holding on to licences without meeting their minimum work obligation. We recommend that non-performing contracts should be reviewed and, where necessary, relinquishment decisions be urgently taken on inactive blocks to free up space for more serious investors.”
ACEP welcomes new FPSO
A statement issued by ACEP on April 13, 2017 and signed by its deputy Executive Director, Mr Benjamin Boakye, said the arrival of the FPSO John Agyekum Kuffour (JAK) was timely and good news for Ghana.
This signals timely completion of the Sankofa Gye Nyame (SGN) field Development, estimated to produce 2,633,110 barrels of oil in 2017 when production starts in the last quarter of the year. Though the projected production for 2017 is not significant compared to existing field, this will contribute to overall fiscal stability in government’s estimates for the year.
The statement said the contribution of SGN to government revenue would be greater in 2018 with about 50,000 bop/d and 180mmscf/d of gas production. This is in spite of the fact that corporate taxes may not be realised in the first five years of production resulting from the juicy fiscal package granted the project by government.
The SGN as the third oil field since Ghana started commercial production of oil, further de-risks Ghana’s hydrocarbon basins, particularly the Tano basin.
“This signals prospective investors to the oil and gas potential of the country. It is therefore important for government to take advantage of the current upstream environment to attract capable companies to sustain oil production,” the statement added.
Dr Amin exits ACEP
The Executive Director, Dr Mohammed Amin Adam has been appointed as the Deputy Energy Minister.
ACEP, in a statement congratulated Dr Amin and charged him to uphold the many good ideas and principles he has upheld over the years to help the sector.
We are proud that his knowledge and in-depth experience in the energy sector, as well as his contribution to the sector's policy environment, have been recognised by the President of the Republic. It is our hope that the effective support to his Minister and the President will assist in delivering the promises made to Ghanaians.
The statement said ACEP would continue to hold the government accountable to ensure that the energy sector is effectively governed.
It said Ghanaians are expectant that the extraction of petroleum resources will translate into socio economic development by applying good governance principle of open and competitive contracting regime, disclosure of contracts and efficient, transparent and independent sector institutions, transparent and accountable governance of the oil revenues and the provision of fuel for reliable and cheaper electricity to power the economic transformation of the country.