As a follow up to our Press Statement on the Petroleum Exploration and Production Bill 2013, released on 28th July, 2014, the Ghana Institute of Governance and Security (GIGS) is challenging the following under-listed organizations and their executives to come out and tell Ghanaians how much revenue would eventually accrue to them from the Jubilee Fields which is considered to hold 2 billion barrels of oil and 5000 billion cubic feet of gas worth estimated conservative value of US$175 billion, that is, (2 billion x US$75) + (5000 billion x US$5.00 per 1000 cubic feet), under the hybrid system -THE MODERN CONCESSION - they are championing and collaborating with the World Bank, IMF, Oxfam America, Revenue Watch Institute, Star Ghana, to force down the throats of Ghanaians.
The World Bank and IMF have estimated theirs to be US$19.390 billion and US$20.269 billion respectively, using a long term base price of US$75 per barrel when the field becomes exhausted. We at GIGS have also estimated ours using the same base price of US$75 per barrel and US$ 5 per 1000 cubic feet for gas as indicated above to be between US$83.475 billion, representing profit oil only (47.70% of total estimated revenue), and US$ 86.94 billion, representing Royalties and Profit oil (49.68% of total estimated revenue) as the “Minimum Government Take,” excluding Profit Taxes, under the simplest Production Sharing Agreement. Note: Under this simplest Production Sharing Agreement, Ghana is not contributing a cent towards exploration, development and daily operating costs.
These conservative estimated revenue figures accruing to Ghana under the PSA fall within the 42%-60% “Minimum Government Take” range set by the US Government Accountability Office (GAO), that should accrue to any host government from total production revenue by allowing its oil and gas resources to be exploited under any fiscal arrangement or contract [(DCMNR 2006) Department of Communication, Marine and Natural Resources, Dublin, Ireland].
If the Modern Concession formula was not being manipulated by the Foreign Oil Companies, as the case is now to their advantage, Ghana should at least earn US$66.8675 billion including taxes, representing 38.21% of the total estimated revenue of US$175 billion, though this falls short of the base Minimum Government Take of 42%.
The price of light crude oil since production began in 2010, has been fluctuating between US$100 and US$120 and is currently around US$105 per barrel.
The World Bank and the IMF estimates are 11.08% and 11.58% of the total estimated production revenue of the US$175 billion respectively as the ‘Minimum Government Take’, under the current prevailing system – the Modern Concession which makes Ghana to also contribute toward development and daily operating cost. Ghana currently is required to be paying US$150 million or more yearly to the lead operator Tullow as her share of daily operating and technical costs for participation in the project contrary to international practice. The total operating cost plus capital cost that Ghana is expected to pay over the next ten years average roughly US$180 million per year.
This is a clear and absolute example of robberies in the name of investment Mr. Kofi Annan complained against, but our elite technocrats and political leaders do not seem to realize it. The passage of the current Petroleum Exploration and Production Bill which is in the pipe-line would amount to complete perpetuation of these robberies and a death sentence on Ghana’s economic emancipation and independence, reducing us to modern day slavery status. We say a BIG NO to selling Ghanaians down the river all over again.
The organizations being challenged are:
1. Africa Centre for Energy Policy (ACEP).
2. Ghana’s Oil and Gas Technical Committee.
3. Institute of Economic Affairs
4. Centre for Economic Policy Analysis
5. Oxfam America
6. The 135 CSO Platform on Oil and Gas
7. Oil Watch Ghana
8. Ghana National Petroleum Corporation (GNPC)
9. Energy Commission
10. Petroleum Commission
11. IMANI Ghana
13. Friends of the Earth
14. Friedrich Ebert Foundation
15. Select Committee on Energy and Petroleum
16. Select Committee on Finance
17. Ministry of Finance
18. Ministry of Energy and Petroleum
We challenge them, in addition, to publish the list of countries in Africa producing oil in recent times under the Modern Concession.
Ghanaians are waiting for your answers. Please DO NOT take forever to respond.
Senior Research Officer
Oil & Gas, GIGS
Note: This article takes precedence over our earlier publication due to the revision and evaluation of the Gas deposits.
26th August, 2014.