Business News of 2014-04-04

Companies with no experience getting oil contracts - ACEP

The Africa Centre for Energy Policy (ACEP) has expressed worry about how contracts were being awarded to companies with no experience in oil at the Jubilee Oil Fields in Ghana.
According to the Executive Director of the Centre, Dr Mohammed Amin Adam, Ghana for instance was currently processing a new contract for a company owned by the son of a renowned Ghanaian international diplomat.
“They have no experience at all about oil. And these are the types of contracts we are signing today. And for me I am losing hope in our country as far as giving out oil blocks are concerned,” the energy expert said.
Dr Adam who was speaking at a roundtable meeting with some journalists in Accra, on issues concerning the oil and gas sector said the only justification given by the Ministry of Energy and Petroleum was that, these were better contracts than the previous ones because they offer high local content,
“But you know what is happening? If they come in, they get their Ghanaian front men, and give them 20percent, 30percent, but as soon as discovery is made, they get those Ghanaian guys to sell their stake to foreign companies of their choice.”
Dr Adam explained this was happening because Ghanaians are carried on through the contracts since they don’t have the money.
“They carry them through. The Ghanaians don’t make any financial commitments; all the costs are paid by the foreign contractor. And so when there is a discovery they tell you this is the time to sell to this company so I get my money, because if they buy themselves, it would be very obvious”.
“Have you wondered why today, there is no Ghanaian local company operating at the jubilee fields?, Dr Adam questioned.
He said the EO Group, a Ghanaian company for instance sold to Tullow and today there was no Ghanaian local company there. “This is what is going to happen to all the new contracts we are signing.”
“I am in favour of Ghanaians taking share of that but I think that fronting is frowned upon by the local content regulation and punishable. I want to urge you to go out and research, look at the background of the people we are giving our contracts to,” he told the journalists.
He said what was even worrying was that juicy blocks where all the substantial seismic data were available were the ones which were being given out. “So what is their investment?” he asked.
Of the total hydro carbon potential of Ghana, only 17percent has been licensed as of now.
“I want an investor who would be given a block in an unlicensed area, to invest in technology, to gather seismic data based on which Ghana can find new discoveries and not areas GNPC can easily get partners to develop those areas with people who would provide technology.
This is what GNPC should have done and not package those blocks and give to Nigerian companies who have no experience as far as offshore oil production was concerned, he said.
The roundtable meeting with the journalists was on the theme, “Gas Commercialisation as a Solution to Ghana’s Energy Crisis – Myth or Reality.
It was organised by the International Institute of ICT Journalism - Penplusbytes in partnership with Revenue Watch institute - Natural Resource Charter, for 32 journalists and editors who have successfully completed a “Strengthening Media Oversight over Extractive Industries” training programme.
Source: graphic.com
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