The Petroleum Commission, the regulator of Ghana’s upstream activities, moved to terminate petroleum agreements of four (4) contractors in 2021 due to non-performance, according to the Public Interest and Accountability Committee (PIAC).
This brings the country’s total petroleum agreements to fourteen (14), since no new petroleum agreement has been signed or ratified by Parliament, with the four contractors being Swiss African Oil Company Limited (SWAOCO), UB Resources, Brittania U, and Sahara Energy Fields Ghana. All 4 companies accounted for about 73 per cent of an outstanding Surface Rental of $2,579,170.22.
Three of the companies had their effective date of petroleum agreements in 2014: UB Resources (September 17, 2014 with license in the offshore Cape Three Points South); Brittania U (July, 17, 2014, with license in the Southwest Saltpond Block); and Sahara Energy Fields Ghana (September 17, 2014 with license in the Shallow Water Cape Three Points). Swiss African Oil Company Limited was the only company with an effective date of March 11, 2016. In all, termination dates of all of these contracts were dated April 27, 2021.
The details of the termination of these contractors was, however, not disclosed in the report, except for the fact that they were non-performing. This brings to question, the licensing processes adopted in ensuring the right contractors are awarded the contracts, as almost all of those contractual agreements terminated were signed in 2014.
Of course, their failure to have been able to progress in the various development stages of the fields they won could be attributed to several reasons. Again, this brings to question, the duty of the Ghana Negotiating Team (GNT) for the country on whether due diligence was applied to ascertain the ability of these four companies in exploration activities.
Most IOCs Resume Operations
In doubt, consider the fact that, the COVID-19 pandemic affected the operations of upstream producers for more than two years, according to the PIAC report. However, the PIAC report notes that,“Most IOCs have resumed their project planning, execution, risk management and associated preparatory activities as well as drilling campaigns.”
Despite the fact that, these contractors’ licenses was terminated, investments in the upstream sector has not stalled: “Notwithstanding a slow recovery from the COVID-19 pandemic, Ghana in 2021 witnessed some injection of investment by IOCs. In April, Tullow Oil for instance, commenced implementation of its long-term Business Plan to unlock the full potential from the Jubilee and TEN fields through a multi-year, multi-well drilling programme.
“Additionally, discussions with prospective investors are ongoing to promote Ghana as an attractive destination for investment, technology, and a hub for refined petroleum products in the West African sub-region through the implementation of the Petroleum Hub project.”
PIAC Report
The PIAC report noted that, as at December 2021, the Ghana Negotiation Team (GNT) was in the process of concluding negotiations with Eni Ltd. in partnership with Vitol Upstream Tano Ltd., CNOOC International Ltd., Resource Base International Ltd., KOKA Energy Company Ltd. and First E&P towards executing substantive Petroleum Agreements. Upon execution, these Petroleum Agreements are expected to receive Parliamentary ratification to have legal backing, PIAC noted in the report.
Almost a year since ExxonMobil relinquished its interest in DWT/CTP block, it has not been re-awarded to a new contractor. However, the PIAC report noted that, “the Petroleum Agreement is still in force with the remaining partners being GNPC and GOIL taking responsibility for the contract area. [And that], the 80 percent interest relinquished by ExxonMobil has reverted to the State pending the necessary arrangements for re-award to a new contractor party(s)…”
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