The CSOs coalition, known as the Coalition on Extractive Governance, have criticized Aker Energy’s sale of Pecan oil field for $1 and thus, expressed concerns about Aker Energy’s handling of the situation.
The CSOs highlighted Aker Energy’s perceived default on a US$200 million loan for investment in the Pecan field, which ultimately resulted in the company selling the asset for a nominal fee of US$1.
The coalition emphasized that Aker Energy can only recoup its earlier investment if AFC succeeds in developing the field and generating revenue from oil sales. Meanwhile, this turn of event has left the CSOs questioning the fate of the once highly valued oil blocks, now seemingly abandoned or pawned for meager gains.
During a press conference in Accra, the 32-member coalition emphasized that the sale of Aker’s interest to AFC and the subsequent submission of the Plan of Development (PoD) to the government have raised further questions.
The CSOs alleged that Aker, despite selling its interest, is attempting to retain involvement in the Pecan field development through surrogates and collaborations with Ghanaian entities, potentially seeking undue benefits.
Adding to the complexity of the situation, the coalition revealed an intriguing detail, noting that Aker Energy purchased a Floating Production, Storage, and Offloading vessel (FPSO) for US$35 million in 2021. However, the previous owners of the FPSO intended to bill Ghana a staggering US$1.7 billion for the same vessel in their submitted Plan of Development. While the Ministry of Energy raised preliminary objections to the FPSO’s cost, the CSOs documented the absence of a proposed fair value for the vessel.
Concerns Expressed by Technocrats Regarding the Age of the FPSO
The CSOs coalition highlighted concerns expressed by technocrats regarding the age of the FPSO and the recommended caution surrounding its use. They highlighted that typical FPSOs have an average payback period of 5-7 years, with lease periods commonly lasting ten years. Given the minimum production period of 25 years for the field, the coalition questioned the justification for employing a 14-year-old FPSO.
With a keen eye on the developments, the CSOs pledged to demand transparency regarding the ministry’s judgment before granting approval. They called for complete information on the AFC transaction, clarification on the actual amount constituting petroleum costs, and a thorough audit of the US$200 million expenditure that was initially deemed recoverable at the start of production.
Furthermore, the CSOs urged the GNPC to state its position on the Aker and AFC transaction, specifically addressing why the corporation did not pre-empt the sale of the asset for an upfront payment of US$1, considering their willingness to pay US$1.3 billion upfront (later reduced to US$1.1 billion by parliament in 2021).
The coalition also called for full disclosure of the justification for using the 14-year-old FPSO in a field with a projected production period of 25 years, as well as access to Aker Energy’s Plan of Development from both the Petroleum Commission and the government.
The Norwegian government, the CSOs coalition asserted, should take a vested interest in Aker Energy’s conduct in Ghana to prevent any negative implications for the country. “Ghana, being a host to the Extractive Industries Transparency Initiative (EITI), a global transparency initiative, should be mindful of its reputation and ensure that transparency and accountability prevail in its energy sector,” it said.
As the controversy surrounding Aker Energy’s offshore block sale continues to unfold, stakeholders in Ghana’s energy industry eagerly await further disclosures and actions to shed light on the intricacies of the transaction and uphold transparency in the nation’s oil and gas sector.
Background
In a development that has sparked controversy and raised eyebrows in Ghana’s energy sector, Aker Energy, the Norwegian oil company, has entered into a US$1 upfront payment agreement for the sale of one of its offshore petroleum blocks.
The agreement has reignited questions surrounding the prior intentions of the Ghana National Petroleum Corporation (GNPC) to purchase shares in the very same blocks. The transaction has prompted scrutiny and fueled concerns among civil society organizations (CSOs) regarding the pricing and transparency of the deal.
It is necessary to revisit the failed bid by the Ghanaian government and GNPC to acquire ownership in the South Deepwater Tano and Deepwater Tano Cape Three Points (DWT/CTP) offshore blocks, both controlled by Aker Energy. Parliament authorized the GNPC to allocate up to US$1.1 billion, to be borrowed on behalf of Ghana, for the purchase of the blocks. However, Aker Energy demanded a total of US$1.65 billion from the GNPC, which ignited a fierce debate on the perceived overpricing of the assets.
The controversy surrounding the bid prompted a coalition of CSOs committed to accountability in the energy sector to challenge the transaction, citing data that suggested the oil blocks were vastly overvalued. Following a series of deliberations, one of the blocks, South Deepwater Tano, was eventually returned to Ghana without cost. However, the Deepwater Tano Cape Three Points block, home to the Pecan field, is now reportedly controlled by AFC Equity Investment, a subsidiary of the Africa Finance Corporation (AFC).
READ ALSO: Bawumia Is A Joker- Amaliba