Opinions Mon, 18 Apr 2016

RE. Ghana has ‘unwisely mortgaged’ its oil for 20 years - Otabil

I am at a loss as to what Mr Mensah-Otabil meant by claiming Ghana had mortgaged its oil for 20 years? The claim simply doesn't make much sense to me, and I am in the team leading the FTOS-GH/PSA Campaign against the obnoxious Hybrid Bill now before Parliament. We in the Campaign appreciate any focus on the deplorable oil situation in Ghana at present but statements which obfuscate rather than shed light on the issue are not helpful.

First, which oil? It cannot be from new Tweneboa-Enyenra-Entomme (TEN) or the Offshore Cape Three Points (OCTP) integrated oil and gas ENI led project. So what oil exactly is Mr Mensah-Otabil referring to? I presume that from the Jubilee Oil Fields and so this rejoinder shall focus only on that.

There are two parties to a mortgage - the mortgagee (the one who provide the financing) and the mortgagor (the one that acquires the asset or property or takes cash (loan) and use his/her assets as security, in this case Ghana per Otabil). Does Otabil mean Ghana has given away its rich Jubilee oil reserves for some cash tokens, or revenue which are not being invested wisely ? Clearly, the directors and shareholders in KOSMOS and Tullow, who are the mortgagees, must be rubbing their hands in glee and smiling all the way to their banks to cash their fat dividends and go on around-the-world cruises on luxury Norwegian cruise-liners!

Now, wait a moment! The contract or MPA between Tullow cum KOSMOS and Ghana doesn't qualify to be described as a mortgage. It is a pure Concession System which handed over control and ownership of the oil reserves - Ghana’s assets - to Foreign Oil Companies (FOCs), much against the letter and spirit of the existing PNDC Laws 64 and 84 that still regulate the Upstream oil production in the country. It is these two laws that the NDC is trying to replace with E & P Bill, with a new-fangled Hybrid system which tries to combine the Concession System with the PSA System. Of course, GIGS and we in the FTOS-Gh/PSA Campaign have examined the 2014 E & P Bill and seen through the gaping holes and declared it a Trojan Horse which must be rejected outright! It is to the credit of the relentless campaign against the new but obnoxious E&P Bill that no less a person than the Dep. Minister of Petroleum Mr Dagadu, the official tasked with putting that Bill and having it passed by hook or crook, had admitted that the opposition to the Bill had stalled its passage since 2014 (see www.graphic.com.gh/business/business-news/59731-haggle-over-type-of-oil-contracts-delays-e-p-bill.html). We can only say hurray for that! A small victory for the suffering masses! Imagine what we could achieve if ten thousands line up behind us.

In a mortgage, the mortgagor secures a property financed by the mortgagee at the end of the contract period, or retains his/assets after repaying the loan secured against the asset advanced as security. The Jubilee Fields contract signed by the NPP under Kufour doesn't allow Ghana to secure or retain any oil assets after the presumed 20 years lifespan of the Jubilee Fields, as happens under the Production Sharing Agreement (PSA) system. In fact, the oil, and all assets being acquired, have been handed over to the FOCS even though Ghana is actually contributing to the development of the Fields too! What we have here is thus worse than a mortgage! It is a garage sale out of our oil resource on the cheap for a pittance! Ever heard of the householder who sold an old painting lying in the attic for years for a few dollars at the flea market only for the buyer to discover that it was an original by one of the famous masters worth zillions of dollars? Yeah! That’s what has happened to Ghana!

Or, is Otabil claiming the 17% share of the revenue in oil being received so far has been mortgaged to some [foreign] interests, like the Chinese who are the new pawn men in town, which we are not aware of, and the proceeds are not being invested wisely? Come again, Mr Otabil!

This claim needs more than this brief rejoinder to explore in its entity. Methinks, Ghanaians haven't as yet woken up to the fact that we have a more grievous situation on our hands even though it is no news now that we have lost so far $6.04bn in 5 years of oil production from the Jubilee Fields alone.

Andy C.Y. Kwawukume


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Columnist: Kwawukume, Andy C.Y.