Ghana signs petroleum agreement with ExxonMobil

The Government of Ghana has signed a petroleum agreement with ExxonMobil, for exploration and production rights for the Deepwater Cape Three Point (DWTP) block.

The agreement, which is however, subject to Parliamentary ratification, was initialled for Ghana by Mr Boakye Agyarko, Minister of Energy and Dr Kofi Koduah Sarpong, the Chief Executive Officer, Ghana National Petroleum Corporation (GNPC), while Ms Pamela Darwin, the Vice President - Africa ExxonMobil, signed for her Company.

Under the agreement, ExxonMobil would carry out work programme as operator, and holds 80 per cent interest whereas GNPC holds 15 per cent interest.

Furthermore, ExxonMobil would work with the Government of Ghana to identify a Ghanaian company to potentially hold up to five per cent interest.

Exploration activities, including acquisition of seismic data and analysis, are expected to commence later in 2018.

The DWCTP block, located 57 miles (92 kilometres) off the Coast of the Western Region, measures approximately 366,000 acres (1,482 square kilometres) in water depths ranging from 5,085 feet to 9,350 feet (1,550 metres to 2,850 metres).

ExxonMobil is a renowned global leader in the oil and gas industry and the world's largest publicly held oil and gas Company.

Mr Boakye Agyarko said the terms of agreement were amongst the best compared to other petroleum agreements signed in the past.

"In many respects it is a culmination of key lessons we have learnt as an industry in just over 10 years since Ghana first discovered oil and gas in commercial quantities," he said.

He said it was also a testament to the dynamism and commitment of the Government to transforming the economic fortunes of the nation using industry as a critical catalyst.

The Minister said ExxonMobil's presence in Ghana presented opportunities for considerable technology and skills transfer to Ghanaians through the structures provided for in the petroleum agreement.

He said the Company's exemplary track record in petroleum exploration in frontier provinces was particularly welcomed in the already prolific Tank basin where the contract area is situated.

He said ExxonMobil's willingness to invest resources in undertaking exploration activities offshore Ghana also reflects the growth and attractiveness of the nation's industry.

Mr Boakye Agyarko said this was particularly important following the final ruling of the International Tribunal for the Law of the Sea (ITLOS) in favour of Ghana; adding that, the DWCTP Petroleum Agreement was the first agreement signed following the ruling.

"In this respect, the arrival of ExxonMobil sends a strong positive signal to potential investors around the world that Ghana is truly open for business and has exciting commercial opportunities available in a well-secured maritime environment," he stated.

He said as a total package, the fiscal terms of this Petroleum Agreement were an improvement over past agreements signed before the commercial discovery of oil in 2007.

The Minister said this progression had been greatly supported by an enabling institutional and legislative environment.

He said the comprehensive legal provisions which had been promulgated and redefined since the discovery, include the Petroleum (Exploration and Production) Act, 2016 (Act 919) and the Income Tax Act, 2015 (Act 896).

Mr Boagye Agyarko noted that the agreement marks the first implementation of the mandatory 15 per cent carried interest held by GNPC in line with the provisions of Act 919.

He said alongside royalties, taxes and other payments, bringing significant financial benefits to the nation and a higher quality of net oil than in a number of previous agreements.

Dr Sarpong said the agreement to be executed was innovative in addressing the shortcomings identified in previous agreements.

He said two key examples were the introduction of the Development Loan Agreement and the Default Loan Agreement.

He explained that these innovations were aimed at securing GNPC's financing arrangements during the development to give comfort to the contractor party.

Dr Sarpong said: "GNPC is excited to work with ExxonMobil, a global oil and gas industry leader. Partnering with ExxonMobil presents a great opportunity to GNPC to acquire the requisite knowledge to assist it in its journey to become an upstream operator in the future."

He said GNPC was committed to ensuring a smooth implementation of the agreement once it was ratified by Parliament.

Ms Darwin expressed excitement over the agreement; adding that, they were looking for the best for both parties.

She said the agreement was a significant milestones in the history of ExxonMobil.

At the event were Mr Robert P. Jackson, the United States Ambassador to Ghana and Mr Freddie Blay, GNPC Board Chairman.