Opinions of Wed, 10 Mar 201049
Ghana Holds 54 Percent of the Oil Revenue
Dr. Joe Amoako-Tuffuor is wrong again, is he mad?.
During Rawlings’s administration, the following companies were in Ghana for exploration activities without success: NUEVO 1998, Dana 1999, Hunt oil 1999, Fusion oil and gas from Australia in 1999, Santa Fe, 2000. Unfortunately all the wells drilled by these companies yielded no viable commercial discoveries.
In fact, it is known that, the oil industry worldwide therefore regarded Ghana as a place too risky and expensive and Ghana’s petroleum agreements prepared by GNPC under Tsikata was described as unfriendly. Ghana was stigmatized and labeled as a grave yard for any company to invest in oil exploration.
Under GNPC old agreement signed by Rawlings and Tsikata, it was agreed that Ghana will have 10% of the total revenue with 0% working interest/participation interest in the oil exploration with any company.
It is against this background that Kufour and his administration decided to go for a new and better agreement of 10% working interest and 53.75% share of the oil revenue in total excluding the VAT, NHIL and $800 million worth of Gas to be delivered freely to GNPC.
The working-interest or the participating interest is the percentage input that Ghana has to bear in the costs of the exploration, development, and operation of the jubilee field project which is 10% and, in return, is entitled to a share of the oil revenue or to a share of the proceeds therefrom, which is 53.75% excluding the VAT, National Health Insurance Levy (NHIL) and $800 million worth of Gas to be delivered freely GNPC.
Breakdown of Ghana oil revenue
? Ghana owns 13.75% of the total revenue.
? A Royalty of 5% on the oil total revenue, which increases to 15% base on the price of oil, which is called additional oil entitlement.
? Corporate Tax on all oil total profit is 35%, excluding VAT and NHIL, thus, an additional revenue for Ghana.
? In all, Ghana receives well over 53.75% of the total oil revenue from the jubilee oil field.
Apart from these mentioned above, the GNPC will receive free Gas delivery worth $800 million when sold.
The records show that Ghana under the Phase One of the Jubilee Field project expects to produce 120,000 barrels of oil and 120,000 million standard cubic feet of dry gas per day in 2010.
Production would be increased to 250,000 barrels of oil and 250,000 million standard cubic feet of gas per day under the second phase of the Jubilee Field project which is expected to commence in 2013.
? Now taking 2013 as a base line, assuming the oil price remains at $65/barrel in average,
? Then, total oil revenue per day would be 250,000 × $65 = $16.25 million / day
? Revenue / 30 days (one month) is 16.25.5 × 30 = $487.5 million/month
? Ghana share of 53.75% × $487.5m = $262.03 million / month leaving $225.47million for Kosmos and its partners.
? Ghana share per year is 12 × $262.03m = $3.14 billion coming into Ghana govt every year.
? Plus $800 million worth of gas to be delivered free of charge to GNPC. Kosmos has no share in gas produced.
EXAMPLE OF WORKING INTEREST BREAKDOWN
1. WEST CAPE THREE POINTS BLOCK
? SIZE: 1,761 km2 (435,200 acres)
? WATER DEPTH: 50-1,800 meters (approximately 165-5,900 feet)
? CONTRACT: petroleum agreement
? WORKING INTEREST: 30.875%
? OPERATOR: Kosmos Energy Ghana
? PARTNERS: Anadarko, 30.875% working interest; Tullow Oil plc, 22.896% working interest; Ghana National Petroleum Corporation, 10% participating interest; E.O. Group, 3.5% working interest; Sabre Oil and Gas Limited, 1.854% working interest
2. DEEPWATER TANO BLOCK
• SIZE: 1,106 km2 (273,298 acres)
• WATER DEPTH: 200-2,060 meters (approximately 656-6,758 feet)
• CONTRACT: petroleum agreement
• WORKING INTEREST: 18%
• OPERATOR: Tullow Oil plc
• PARTNERS: Tullow Oil plc, 49.95% working interest; Anadarko, 18% working interest; Ghana National Petroleum Corporation, 10% participating interest; Sabre Oil and Gas Limited, 4.05% working interest.
Peter Nana Antwi Boasiako
London, Romford Essex