ACEP's statement on two oil contracts secretly rushed through parliament

GOVERNMENT OF GHANA GIVE AWAY JUICY OIL BLOCKS AHEAD OF HIGH

TRANSPARENCY STANDARDS IN THE PENDING PETROLEUM LAW - ACEP

PRESS RELEASE

Accra, 21st March 2014. The Africa Centre for Energy Policy (ACEP) is worried at the rate at

which Ghana is throwing out promising oil blocks to relatively inexperienced oil companies.

Unfortunately, these contracts are being awarded at the blind side of Ghanaians, who are the

primary owners of Ghana’s oil and gas resources.

Today, Parliament has approved two new oil contracts under certificate of urgency. These

contracts which were approved by Parliament were laid before the House on 27th February 2014.

The contracts were however approved less than 6 hours after the notice of the motion for the

approval was given. This contradicts parliament’s own standing order 80(1) which provides that

a motion can be moved after 48 hours have elapsed from the time of notice.

The first of these contracts is over the Expanded Shallow Water Tano Block between the

Government of Ghana, GNPC, CAMAC Energy Ghana Limited and Base Energy Ghana

Limited. The second contract over the Central Tano Block Offshore is between the Government

of Ghana, GNPC and AMNI International Petroleum Development Company (Ghana) Limited.

We are well aware of Parliament’s role in resource contract ratification as prescribed in article

268 of the 1992 Constitution. This we believe was intended to protect the interest of Ghana and it

was based on the belief that Parliament could do due diligence on these contracts. Why

Parliament agreed to approve these two new oil contracts under certificate of urgency defies not

only constitutional logic but also has huge implications for our oil wealth.

We think that the rush of oil contract ratifications and the secrecy in the award of these contracts

are attempts at avoiding the scrutiny of these contracts by citizens, which thereby undermines the

democratic rights.

Apart from the above contracts, Government has also issued the right of first refusal to Miura

Petroleum Limited and its partner Gondwana Petroleum to negotiate a new contract over the

Offshore Cape Three Points South Block.

What is more disturbing about all these contracts is that the oil blocks that are being awarded are

located in known areas of the Tano Basin on which substantial 2D and 3D seismic data are

already available, including a number of discoveries in the area. Experience in most oil

producing countries suggest that oil blocks from known areas are awarded through open and

competitive process because such areas have been de-risked and provide opportunity for the state

to negotiate better terms. This is not the case in Ghana as promising oil blocks are “given away”

on selective basis to questionable companies that have no capacity, thus putting Ghana at a

disadvantage.

The beneficial ownership behind these companies is also not known. Parliament’s Energy and

Mines Committee has also not demonstrated a scrutiny of the beneficial owners in its report to

Parliament and especially the financial capacity of the local firms. Unlike the AGM contract

from which the Committee disclosed the beneficial owner of MED Songhai, the same has not

been done for these new contracts, raising questions on who the owners are. For instance, the

Committee provides that Base Energy, the local Ghanaian company on the Expanded Shallow

Water Tano Block, is owned by Energy West Limited (75%) and African Soft Limited (25%).

AMNI International Petroleum Development Company (Ghana) Limited is owned by AMNI

Nigeria (70%) and an indigenous Ghanaian company, WCW International Company Limited

(30%). But this information does not satisfy the disclosure requirement of beneficial owners.

Whilst Ghanaian participation in oil operations is commendable and consistent with the Local

Content Regulations (LI2204), Government should as a matter of democratic principle disclose

their beneficial ownership information in the spirit of transparency. This in our view prevents

fronting for foreign and Ghanaian interests.

We wish to observe that the path Ghana is taking is not in the interest of our country especially

when Government is determined to rush petroleum contracts ahead of a progressive petroleum

law whose process it had begun. Perhaps, this explains the delay in passing the new Petroleum

bill since 2012, which in our view is more urgent than the current oil contracts. Ironically, the

new petroleum bill was supposed to have prevented the kind of rush and secrecy we are

witnessing in Ghana today.

Ghana must show an example of a country determined to break away from the oil curse. We

recall how two earlier contracts, AGM and Cola Natural resources, were not debated in

Parliament late last year. Now, we are approving two new oil contracts under certificate of

urgency. Where is the transparency we are hoping for? Where is parliament’s credibility?

We wish to renew our earlier call for a moratorium on all new petroleum licensing until the new

Petroleum (Exploration and Production) Bill is passed into law.

Signed

Mohammed Amin Adam

Contact: Benjamin Boakye – Director of Programmes - 0233772929

Nasir Alfa Mohammed – Senior Policy Manager – 020 813 8143