Oil industry has "gone bad," contracts poorly done – Researcher

Ghana’s oil and gas sector has gone “bad” four years after the West African country started commercial exploitation of the commodity.

That is the verdict of Samuel Kwawukume, Senior Research Officer in oil and gas at the Ghana Institute of Governance and Security.

Mr Kwawukume who has authored a book on Ghana’s oil sector said: “Four years down the line, things have gone bad with us.”

“We have started as a nation badly: we are doing almost everything wrongly. The way we are treating our oil and gas–excuse me to say–there is no country today in the 21st century handling its oil and gas the way we Ghanaians are handling it,” he told Morning Starr’s Kafui Dey on Starr 103.5FM Wednesday.

In his view, the mistakes of the past are still being repeated, thus putting the country’s oil and gas sector in a detrimental position. “On a TV3 platform on oil and gas, it’s all over the net that Hon KT Hammond [former Deputy Energy Minister] had admitted that there were lots of mistakes in awarding contracts and I want to say that those mistakes are still being committed: they have never changed.

“Some of us saw it at that same time that what we were doing was wrong so that has impacted very strongly on us as a nation and that has created a whole lot of problems for this country Ghana, and if we’re not careful, if the reforms that we are saying should be done or should be carried out are not carried out, it will continue like this and there will be no way out of it,” he warned.

He said many of the contracts and agreement signed between the Republic of Ghana and international oil firms were wrongly done ab initio thus worsening the problem.

“The contracts and the agreements were poorly done….The fiscal regime or the provisions that were contained in those contracts as set by GNPC [Ghana National Petroleum Corporation] or by [the] Ministry of Energy [were] what we call the royal tax system. And to be very honest with you, there’s no country on today’s planet where oil is discovered [and] agreements and contracts contain royalty tax system. The best practice in today’s time since 1960 is the production sharing agreement,” Mr Kwawukume said.

He said though “oil has always been a mover of economies all over the world, when oil was discovered in Ghana, the expectations were very high that oil was coming in to change our fortunes overnight. Some of us didn’t see it so. And far back in 2009 before we started producing oil, we started writing to say ‘no’, please the expectations were just too high.”