Hon. Albert Kan-Dapaah (MP) outgoing Minister for Energy, this afternoon briefed the media about the missing tanker affair. (see full text of his statement). 
Ladies and Gentlemen of the Media,
On Monday March 31, 2003, Government issued a press statement informing the good people of Ghana about an unfortunate incident that had occurred over the weekend with respect to the Saltpond Oil Fields.
I am of course referring to the report on the movement of the oil tanker MT Asterias I with an approximate cargo of 73,701 barrels of crude oil valued, at current prices, at about US$2 million. We have, in keeping with our practice of transparency and good governance already tasked the appropriate agencies to commence investigations into the matter.
We were very mindful of the potential criminal nature of the incident and therefore when we brought the matter into the public domain by the initial press statement, a conscious decision was taken to recognise the need to avoid interfering with the due process of investigations.
Nevertheless and although it is premature to do so, we have been compelled by the various insinuations and innuendos that are being cast by sections of society and peddled even on the international arena to take this opportunity to provide the requisite clarifications and trust that you will receive all the requisite information that you need to have a fuller understanding of the whole affair and of course judge for yourselves if there has been any element of misconduct on the part of Government.
Ladies and Gentlemen: the facts with respect to the missing tanker including a chronology of events are as follows:
The Saltpond Field is located some 12 kilometers offshore the Saltpond Basin of Ghana. It spans an area of 5 square kilometers and was discovered in 1970 by Signal/Amoco Group. It was developed and put into production in 1978 by Agripetco. The estimated recoverable reserves were 4.9 million barrels of oil and 34 billion cubic feet of gas. Production started at 4,800 barrels of oil per day. All gas produced with the oil was flared (burnt).
The field was shut-in in 1985 when production had declined to 580 barrels per day. The cumulative production at the time of shut in was 3.57 million barrels of oil and 14 billion cubic feet of gas had been flared. It was estimated that the remaining reserves is about 1.2 million barrels of oil (mmbo) and 20 billion cubic feet of gas. The platform(rig) named “Mr. Louie” that was used in the production was left at the location to be decommissioned.
In 1998, a presentation was made to GNPC then headed by Mr. Tsatsu Tsikata, by a Nigerian service company, ‘Oil Data’ on how GNPC could revitalise the field at minimal capital cost. In January and February 2000 however, Mr. Tsatsu Tsikata, on behalf of GNPC, purported to enter into a number of contractual arrangements with Lushann International Energy Incorporated of USA owned principally by Mr. Quincy Sintim-Aboagye a Ghanaian resident in the United States of America for the redevelopment of the Saltpond Fields. These were:
- 1) An Agreement whereby the GNPC Management sub-contracted the redevelopment of the said field to Lushann International.
2) A Joint Venture Agreement (JVA) entered into by GNPC and Lushann Eternit Energy Limited, (Ghana) a registered subsidiary of Lushann Eternit Energy Limited (Nigeria) which is also a subsidiary of Lushann International Energy Incorporated (USA) to form a company, Saltpond Offshore Producing Company Limited (SOPCL) for the purpose of redevelopment of the Saltpond Field in which GNPC had 40% and Lushann 60%.
3) A deed of transfer of ownership of the said production platform to SOPCL for the purposes of using it as a collateral for a loan.
I must point out that none of the these purported agreements above were approved by the GNPC Board or the Ministry of Energy as required by the Petroleum Exploration and Production Law, PNDC Law 84 of 1984 and the GNPC Establishment Law, PNDC Law 64 of 1983.
On assumption of office in 2001 the NPP Government set up a committee to review these arrangements, the terms and conditions of which it was dissatisfied with. The Committee concluded that a proper Petroleum Agreement complying with the relevant laws of Ghana should be negotiated and entered into.
For your benefit, let me clarify the previous package as follows:– The GNPC interest of 40% equity in the SOPCL joint venture provided for a 60% - 40% sharing of oil after all deduction including production deductions and debt service payments had been made. There was no explicit statement about Government taxes nor royalties. In addition, the assets of GNPC on the field at the time, in the form of production rig, oil wells, seismic, geological and engineering data were all valued at a measly US$500,000.
There was absolutely no provisions for the payment of Royalty, Carried Interest, Training Allowance and Annual Surface Rentals which are more or less mandatory under the Petroleum Laws of Ghana.
Lushann initially fiercely resisted all these on grounds that they had a legally binding contract with GNPC. However, when Government insisted that no enforceable arrangement could be entered into outside of the framework of the Petroleum Regime Lushann agreed to subject their agreement to the appropriate prerequisites.
A Draft Petroleum Agreement incorporating terms which are much more improved and favourable to Ghana has since been negotiated pending Cabinet approval and Parliamentary ratification. The new Agreement provides for the following among others:
- a) Government Royalty ……. 3%
b) GNPC Carried Interest ….. 15%
c) Government Income Tax …… 30%
d) Annual Training Allowance …… US $50,000 per annum.
e) Annual Rental of ……… US $50 per sq km/year.
In effect Government now stands to benefit technically from a total interest of 72% as against a 40% originally contracted.
In addition the assets of GNPC on the field in the form of the rig, wells, data, structures etc. is now valued at $10 million dollars as against the original US $500,000 dollars. This is treated as a loan to the Joint Venture which was to be repaid from the sale of crude oil or with oil equivalent.
To further secure the interest of the State, the Board of the Joint Venture Company (SOPCL) has been reconstituted with the Chairmanship in the hands of GNPC.
Lushann will also be responsible for the decommissioning of the rig after production. This is a very vital responsibility, which was curiously omitted from the original agreement.
It should be noted that prior to assumption of office by the NPP Government Lushann had already entered the fields and started work over on the wells. For technical reasons, the company was allowed to continue with its operations having agreed in principle to enter into a proper petroleum agreement.
Meanwhile test production of oil from the field started in June 2002 and by December 2002 had produced 32,093 barrels which was sold by the Joint Venture to meet expenses after Government’s royalty entitlement had been settled. Production continued through to the 25th of March, 2003 when the wells were shut in with an accumulated production of 73,701 barrels in the MT Asterias 1. It is important that at this point I provide a clearer insight as to the utilisation of oil tankers such as the MT Asterias I at the Saltpond Oil Fields. As oil is extracted from the fields, it is pumped directly via a floating hose into the tanker, which is moored at about 200 metres from the oil production platform. The tanker thus serves as temporary storage for the oil produced. Whenever the tanker is full, it is disengaged and another one immediately connected to receive more oil. The Oil from the disengaged tanker is then sold commercially on the market.
Meanwhile, pending the issuance of the operating petroleum license and to ensure the proper accounting for the sale of any crude oil from the Saltpond fields, it was agreed that a bank account with a reputable bank in Ghana, or an acceptable international bank into which proceeds of the oil could be paid, be opened before disbursements are made in accordance with the terms of the Petroleum Agreement and the Joint Venture Agreement.
Lushann Eternit explained to the management of GNPC that, it was their plan to refinance the loan they took from Continental Trust Bank (CTB) of Nigeria with finance from HSBC Bank with whom they had had preliminary discussions and that plans were far advanced to open an account with the London Branch of that Bank. GNPC agreed and asked them to forward the relevant account opening and mandate forms for study and execution. This was in February 2003.
Regrettably, instead of the HSBC forms, Lushann Eternit forwarded to GNPC account opening and mandate forms from Continental Trust Bank of Nigeria (CTB). This was naturally refused. GNPC again in the spirit of protection of the interest of the state, went ahead to obtain forms from the Ghana International Bank, London (GIB) and invited Lushann Eternit to complete the formalities for the opening of the account. A meeting was to have been held on Friday March 28, 2003 on the matter. At the request of Lushann the meeting was rescheduled to Wednesday April 2, 2003. The account, to which various stakeholders would be signatories, is yet to be opened.
Sadly we have been overtaken by the events of the weekend.
At about 10.00 p.m. on Friday, 28th March, 2003, the GNPC representative on the production platform telephoned the Director of Operations of GNPC to advise that the storage vessel had disengaged and set sail eastwards with the accumulated crude oil. The Director of Operations immediately informed his Managing Director and the Chairman of the GNPC Board.
GNPC immediately informed the Eastern and Western commands of Ghana Navy to assist in arresting the vessel, which had no authority to set sail.
The Chairman of GNPC further contacted the Chief of Staff, Office of the President, as well as the Director of Military Intelligence and informed them of what had happened, and requested them to contact the Ghana Navy to ensure that they acted on GNPC’s request promptly.
At about 11 p.m. on Friday night both the Director of Military Intelligence and the Chief of Staff confirmed that the message had been passed on to the Navy and that the Navy had dispatched patrol boats both from the Western and Eastern Naval Bases to search for the vessel.
The Captain of MT Astrias 1 refused to answer all radio calls from the Rig.
On Saturday, 29th March, 2003, at about 1.00p.m., when the Ghana Navy reported that they had not been able to sight the vessel, GNPC sought the assistance of the Ghana Air Force to assist in locating the vessel on the high seas. They willingly and immediately dispatched an Air Force plane on the mission.
At about 4 p.m. on Saturday, the management of GNPC and the out-going Minister of Energy Hon. Albert Kan-Dapaah went to the Interpol office in Accra where a formal complaint was lodged. The office promised to initiate moves immediately to help in tracking the vessel.
In the morning of Tuesday, April 1, 2003 GNPC received a copy of a letter addressed to the MD of SOPCL dated 31st March, 2003 informing him that Ocean and Oil, the owners of the MT Asterias 1, had exercised lien over the cargo in the vessel for non-payment of accumulated charter fees amounting to US$1,915,428.61. This information was immediately furnished to Interpol. This has since been confirmed this morning by Reuters Newswire.
In the course of the day, i.e. Tuesday, April 1, 2003, Mr. Quincy Sintim-Aboagye also faxed a copy of the same letter for the attention of GNPC, attaching a copy of a letter dated 31st March, 2003 that had been written to Ocean and Oil by Lushann alleging theft.
Finally we would like to note that our interest in the affair is the protection of the State’s interest in the operation of the Saltpond Oilfields through the GNPC/Lushann Joint Venture.
The crude oil that has been taken away by the tanker belongs to the Joint Venture. GNPC on behalf of Government manages the state’s interest of any proceed of sales of the crude oil from the fields. It would have been the case that had the oil been properly disposed through the joint venture, the SOPCL would have received funds to meet its operational and production expenses including the servicing of loans obtained by the company after payment of royalties of 3% of the gross value (approximately US$60,000) to Government.
Of course as shareholder, if the company were to make profits at the end of the financial year we would have been entitled to the payment of dividends as well as for the value of the assets on the field.
We call on all to be circumspect in their utterances on the matter especially as the investigations are not completed.
For now however, we hold the technical managers of the project, Messrs Lushann Eternit, fully responsible for this loss. Accordingly the Attorney-General has been tasked to commence action to place a temporary lien on Lushann’s assets in Ghana.
Hon. Albert Kan-Dapaah (MP) outgoing Minister for Energy, this afternoon briefed the media about the missing tanker affair. (see full text of his statement).
Ladies and Gentlemen of the Media,
On Monday March 31, 2003, Government issued a press statement informing the good people of Ghana about an unfortunate incident that had occurred over the weekend with respect to the Saltpond Oil Fields.
I am of course referring to the report on the movement of the oil tanker MT Asterias I with an approximate cargo of 73,701 barrels of crude oil valued, at current prices, at about US$2 million. We have, in keeping with our practice of transparency and good governance already tasked the appropriate agencies to commence investigations into the matter.
We were very mindful of the potential criminal nature of the incident and therefore when we brought the matter into the public domain by the initial press statement, a conscious decision was taken to recognise the need to avoid interfering with the due process of investigations.
Nevertheless and although it is premature to do so, we have been compelled by the various insinuations and innuendos that are being cast by sections of society and peddled even on the international arena to take this opportunity to provide the requisite clarifications and trust that you will receive all the requisite information that you need to have a fuller understanding of the whole affair and of course judge for yourselves if there has been any element of misconduct on the part of Government.
Ladies and Gentlemen: the facts with respect to the missing tanker including a chronology of events are as follows:
The Saltpond Field is located some 12 kilometers offshore the Saltpond Basin of Ghana. It spans an area of 5 square kilometers and was discovered in 1970 by Signal/Amoco Group. It was developed and put into production in 1978 by Agripetco. The estimated recoverable reserves were 4.9 million barrels of oil and 34 billion cubic feet of gas. Production started at 4,800 barrels of oil per day. All gas produced with the oil was flared (burnt).
The field was shut-in in 1985 when production had declined to 580 barrels per day. The cumulative production at the time of shut in was 3.57 million barrels of oil and 14 billion cubic feet of gas had been flared. It was estimated that the remaining reserves is about 1.2 million barrels of oil (mmbo) and 20 billion cubic feet of gas. The platform(rig) named “Mr. Louie” that was used in the production was left at the location to be decommissioned.
In 1998, a presentation was made to GNPC then headed by Mr. Tsatsu Tsikata, by a Nigerian service company, ‘Oil Data’ on how GNPC could revitalise the field at minimal capital cost. In January and February 2000 however, Mr. Tsatsu Tsikata, on behalf of GNPC, purported to enter into a number of contractual arrangements with Lushann International Energy Incorporated of USA owned principally by Mr. Quincy Sintim-Aboagye a Ghanaian resident in the United States of America for the redevelopment of the Saltpond Fields. These were:
- 1) An Agreement whereby the GNPC Management sub-contracted the redevelopment of the said field to Lushann International.
2) A Joint Venture Agreement (JVA) entered into by GNPC and Lushann Eternit Energy Limited, (Ghana) a registered subsidiary of Lushann Eternit Energy Limited (Nigeria) which is also a subsidiary of Lushann International Energy Incorporated (USA) to form a company, Saltpond Offshore Producing Company Limited (SOPCL) for the purpose of redevelopment of the Saltpond Field in which GNPC had 40% and Lushann 60%.
3) A deed of transfer of ownership of the said production platform to SOPCL for the purposes of using it as a collateral for a loan.
I must point out that none of the these purported agreements above were approved by the GNPC Board or the Ministry of Energy as required by the Petroleum Exploration and Production Law, PNDC Law 84 of 1984 and the GNPC Establishment Law, PNDC Law 64 of 1983.
On assumption of office in 2001 the NPP Government set up a committee to review these arrangements, the terms and conditions of which it was dissatisfied with. The Committee concluded that a proper Petroleum Agreement complying with the relevant laws of Ghana should be negotiated and entered into.
For your benefit, let me clarify the previous package as follows:– The GNPC interest of 40% equity in the SOPCL joint venture provided for a 60% - 40% sharing of oil after all deduction including production deductions and debt service payments had been made. There was no explicit statement about Government taxes nor royalties. In addition, the assets of GNPC on the field at the time, in the form of production rig, oil wells, seismic, geological and engineering data were all valued at a measly US$500,000.
There was absolutely no provisions for the payment of Royalty, Carried Interest, Training Allowance and Annual Surface Rentals which are more or less mandatory under the Petroleum Laws of Ghana.
Lushann initially fiercely resisted all these on grounds that they had a legally binding contract with GNPC. However, when Government insisted that no enforceable arrangement could be entered into outside of the framework of the Petroleum Regime Lushann agreed to subject their agreement to the appropriate prerequisites.
A Draft Petroleum Agreement incorporating terms which are much more improved and favourable to Ghana has since been negotiated pending Cabinet approval and Parliamentary ratification. The new Agreement provides for the following among others:
- a) Government Royalty ……. 3%
b) GNPC Carried Interest ….. 15%
c) Government Income Tax …… 30%
d) Annual Training Allowance …… US $50,000 per annum.
e) Annual Rental of ……… US $50 per sq km/year.
In effect Government now stands to benefit technically from a total interest of 72% as against a 40% originally contracted.
In addition the assets of GNPC on the field in the form of the rig, wells, data, structures etc. is now valued at $10 million dollars as against the original US $500,000 dollars. This is treated as a loan to the Joint Venture which was to be repaid from the sale of crude oil or with oil equivalent.
To further secure the interest of the State, the Board of the Joint Venture Company (SOPCL) has been reconstituted with the Chairmanship in the hands of GNPC.
Lushann will also be responsible for the decommissioning of the rig after production. This is a very vital responsibility, which was curiously omitted from the original agreement.
It should be noted that prior to assumption of office by the NPP Government Lushann had already entered the fields and started work over on the wells. For technical reasons, the company was allowed to continue with its operations having agreed in principle to enter into a proper petroleum agreement.
Meanwhile test production of oil from the field started in June 2002 and by December 2002 had produced 32,093 barrels which was sold by the Joint Venture to meet expenses after Government’s royalty entitlement had been settled. Production continued through to the 25th of March, 2003 when the wells were shut in with an accumulated production of 73,701 barrels in the MT Asterias 1. It is important that at this point I provide a clearer insight as to the utilisation of oil tankers such as the MT Asterias I at the Saltpond Oil Fields. As oil is extracted from the fields, it is pumped directly via a floating hose into the tanker, which is moored at about 200 metres from the oil production platform. The tanker thus serves as temporary storage for the oil produced. Whenever the tanker is full, it is disengaged and another one immediately connected to receive more oil. The Oil from the disengaged tanker is then sold commercially on the market.
Meanwhile, pending the issuance of the operating petroleum license and to ensure the proper accounting for the sale of any crude oil from the Saltpond fields, it was agreed that a bank account with a reputable bank in Ghana, or an acceptable international bank into which proceeds of the oil could be paid, be opened before disbursements are made in accordance with the terms of the Petroleum Agreement and the Joint Venture Agreement.
Lushann Eternit explained to the management of GNPC that, it was their plan to refinance the loan they took from Continental Trust Bank (CTB) of Nigeria with finance from HSBC Bank with whom they had had preliminary discussions and that plans were far advanced to open an account with the London Branch of that Bank. GNPC agreed and asked them to forward the relevant account opening and mandate forms for study and execution. This was in February 2003.
Regrettably, instead of the HSBC forms, Lushann Eternit forwarded to GNPC account opening and mandate forms from Continental Trust Bank of Nigeria (CTB). This was naturally refused. GNPC again in the spirit of protection of the interest of the state, went ahead to obtain forms from the Ghana International Bank, London (GIB) and invited Lushann Eternit to complete the formalities for the opening of the account. A meeting was to have been held on Friday March 28, 2003 on the matter. At the request of Lushann the meeting was rescheduled to Wednesday April 2, 2003. The account, to which various stakeholders would be signatories, is yet to be opened.
Sadly we have been overtaken by the events of the weekend.
At about 10.00 p.m. on Friday, 28th March, 2003, the GNPC representative on the production platform telephoned the Director of Operations of GNPC to advise that the storage vessel had disengaged and set sail eastwards with the accumulated crude oil. The Director of Operations immediately informed his Managing Director and the Chairman of the GNPC Board.
GNPC immediately informed the Eastern and Western commands of Ghana Navy to assist in arresting the vessel, which had no authority to set sail.
The Chairman of GNPC further contacted the Chief of Staff, Office of the President, as well as the Director of Military Intelligence and informed them of what had happened, and requested them to contact the Ghana Navy to ensure that they acted on GNPC’s request promptly.
At about 11 p.m. on Friday night both the Director of Military Intelligence and the Chief of Staff confirmed that the message had been passed on to the Navy and that the Navy had dispatched patrol boats both from the Western and Eastern Naval Bases to search for the vessel.
The Captain of MT Astrias 1 refused to answer all radio calls from the Rig.
On Saturday, 29th March, 2003, at about 1.00p.m., when the Ghana Navy reported that they had not been able to sight the vessel, GNPC sought the assistance of the Ghana Air Force to assist in locating the vessel on the high seas. They willingly and immediately dispatched an Air Force plane on the mission.
At about 4 p.m. on Saturday, the management of GNPC and the out-going Minister of Energy Hon. Albert Kan-Dapaah went to the Interpol office in Accra where a formal complaint was lodged. The office promised to initiate moves immediately to help in tracking the vessel.
In the morning of Tuesday, April 1, 2003 GNPC received a copy of a letter addressed to the MD of SOPCL dated 31st March, 2003 informing him that Ocean and Oil, the owners of the MT Asterias 1, had exercised lien over the cargo in the vessel for non-payment of accumulated charter fees amounting to US$1,915,428.61. This information was immediately furnished to Interpol. This has since been confirmed this morning by Reuters Newswire.
In the course of the day, i.e. Tuesday, April 1, 2003, Mr. Quincy Sintim-Aboagye also faxed a copy of the same letter for the attention of GNPC, attaching a copy of a letter dated 31st March, 2003 that had been written to Ocean and Oil by Lushann alleging theft.
Finally we would like to note that our interest in the affair is the protection of the State’s interest in the operation of the Saltpond Oilfields through the GNPC/Lushann Joint Venture.
The crude oil that has been taken away by the tanker belongs to the Joint Venture. GNPC on behalf of Government manages the state’s interest of any proceed of sales of the crude oil from the fields. It would have been the case that had the oil been properly disposed through the joint venture, the SOPCL would have received funds to meet its operational and production expenses including the servicing of loans obtained by the company after payment of royalties of 3% of the gross value (approximately US$60,000) to Government.
Of course as shareholder, if the company were to make profits at the end of the financial year we would have been entitled to the payment of dividends as well as for the value of the assets on the field.
We call on all to be circumspect in their utterances on the matter especially as the investigations are not completed.
For now however, we hold the technical managers of the project, Messrs Lushann Eternit, fully responsible for this loss. Accordingly the Attorney-General has been tasked to commence action to place a temporary lien on Lushann’s assets in Ghana.
