Alex Mould Speaks On Why Ghana Is Richer In Natural Resources Yet Poorer
The West African nation, Ghana, is one of the nations in the world endowed with natural resources which could make its citizens richer and be among the category of developed nations like Malaysia, Singapore, Turkey, Brazil among others, yet the story is differently told since the extraction of the resources started.
Ghana, for centuries, has been extracting natural resources commonly gold, diamond, bauxite and salt. The recent addition is oil and gas which others call ‘black gold’. Ghana has been extracting oil and gas for almost 12 years now, yet no significant development or improvement has been seen, while other nations have been prosperous and developed with just a single or two natural resource(s) like Malaysia and Brazil.
This phenomenon has aggravated many concerned energy experts, developmental economists and ordinary citizens to put pressure on governments and public office holders. The Institute of Economic Affairs (IEA), Ghana, recently published an article titled: ‘Why is Ghana so poor yet rich underneath the soil?’ In the article, they sought to raise very critical issues that need government’s attention and profiled solution on how to maximize our gains from the oil and gas industry.
However, Alex Mould, an Energy and Financial expert, has provided much insight into the economics of the upstream oil and gas industry and why Ghana could not fetch more of the proceeds from the oil and gas production.
The former Chief Executive of Ghana National Petroleum Corporation (GNPC) argued that, for anyone to call on the Government of Ghana, which is holding all natural resources in the country in trust on behalf of Ghanaians, to ask for more proceeds or stake from the operators and partners of the oilfields, “one needs to appreciate and understand the economics of oil and gas exploration.”
He expanded his argument on the note that, to attract any investor into the industry, Ghana and the international oil companies (IOCs) need to agree on a rate of return that commensurates with the risk and which compares to similar projects around the world, for which ‘these investor funds’ are chasing, that is, alternate investments.
“We need to be able to agree on the acceptable cost of development, how it is ammortized over a specified period and the annual Operations and Maintenance (O&M) costs. We need to, then, agree on a rate of return and how windfalls are shared, how and when these windfalls are reviewed.”
IEA’s article referenced a comment by Professor Paul Collier, the Director of the Center for the Study of African Economies at Oxford University, and at a recent lecture, he stated that, the total cost of recovering a barrel of oil from the ground is about US$10. This includes exploration and other costs.
The former Director of Research at the World Bank, former Senior Advisor to Prime Minister Tony Blair on the Africa Commission, Prof. Collier, advised that “the only way poor African countries can turn their oil reserves into prosperity and to develop first-class countries is by collecting the super profits called rents (US$65 – US$10 = US$55 per barrel), investing the rents into the future of their countries instead of allowing ‘foreign investors’ to keep it.”
Apparently, Mr Mould held a different view to the assertion by Prof. Collier. He explained that, the US$10 cost is an exaggeration and a simplification which may be related to the operational cost, but “definitely not the complete cost especially in the first 5 years of the project.
“Jubilee, which is a world class field, had a development cost of about US$12 a barrel and O&M cost of also about US$12, especially in the first 5 years (the recovery of the development cost was spread over 5 years), thus, making total cost was of about US$24/barrel for the first 5 to 6 years at least,” the Energy expert argued.
Additionally, the former GNPC boss said, each year thereafter, there is continuous drilling to sustain production. “Most production profiles fall after 5-10 years. Take, for example, the Eni-operated SGN fields. The production drops from 30,000 to 40,000barrels/day from inception to about 10,000barrels/day after 5 years.
“That is why the economics is on the gas predominantly which remains at 170mmSCF over 20 years.”
In summing his argument, Mr Mould noted that “you will need the production profile and the development /exploration costs, as well as the annual O&M costs plus the incremental annual development cost over the life of the project, to be able to know the split between government and Partners in Contractor group.
“In Ghana, over the life of the field, we approximate almost a 55/45% share respectively.”
Egypt To Launch Licensing Round In September 2019
Egypt’s Ministry of Petroleum and Mineral Resources plans to launch a new bid round in Q3 for natural gas exploration in the western Mediterranean region, according to an Al Ahram report.
The Ministry pointed out to the importance of the seismic survey projects carried out by Egypt in the western Mediterranean and the Red Sea, which opened new horizons for oil companies to explore for gas in these two regions.
Ghana: Price Of Domestic Gas Will Drop Soon – Amin Adam
Ghana’s Deputy Minister for Energy in charge of Petroleum, Dr. Mohammed Amin Adam says the price of domestic gas will soon drop on the markets.
According to him, the government is recalibrating domestic gas prices to be able to achieve the target.
The decision to recalibrate follows various complaints from businesses about the high cost of the commodity which makes it difficult for their businesses to thrive.
While delivering his keynote address at the Ghana mining and Energy Summit in Accra, Dr. Amin Adam said gas prices will be reduced soon.
“We are also recalibrating domestic gas prices. We are doing all this because we know that cheaper sources of power are essential for the growth of our economy; essential for your operation as mining companies and essential if we have to accelerate the development of our country for the benefit of our people,” he said.
He further assured that the era of the constant power outage is over with various government interventions in place.
“We are aware as a government that many business groups have expressed concern about the dumsor matter and we know that in the past, the mining sector faced difficulties mainly from the energy crisis.
I want to assure you that as partners in development, the government promises to work assiduously by ensuring that all businesses are safeguarded and not disrupted by energy challenges. We are facing the challenge head-on; Dumsor is a thing of the past,” he added.
Source: citinewsroom.com
Nigeria: Ikeja Electric Vows To Fulfil Regulator’s Directive
Electricity distributor, Ikeja Electric plans to install approximately 100,000 pre-paid meters under the latest Meter Asset Providers (MAP) initiative.
According to The Guardian, the roll out will be implemented from 17 June, covering the Ikorodu business unit.
This move is in accordance with a directive from the Nigerian Electricity Regulatory Commission (NERC) to bridge the lingering metering gap, which affects the billing system.
To execute the programme, Ikeja Electric has forged a partnership with a meter asset provider, New Hampshire Capital Limited, which will facilitate the provision of the meters to cover three business units including Ikorodu, Abule Egba and Shomolu.
Speaking at the launch, Ikeja Electric’s Acting Chief Commercial Officer, Ugo Obichukwu noted that currently over 400,000 of their customers are unmetered.
This fact according to Obichukwu, is the reason why the company seeks to cover between 70 to 100,000 customers for phase one of the MAP implementation.
He said: “We believe we can meter about 20,000 customers in a month provided we have all our MAPs in place.”
Obichukwu further stated that the company has resorted to an online portal for registration platform to ensure efficiency and so far about 14,000 customers have visited the portal with about 5,000 registering for the first step of registration, know your customer (KYC).
The power distributor advised customers to take advantage of the various repayment options available on the KYC process, underlining that outstanding balance can be rolled over into the customer’s prepaid account and paid in instalments.
Meters procured at different prices
The Guardian has gathered that some customers under the Ikeja Electric network have procured meters at different prices.
However, Obichukwu refuted the claims that his company has been slow in its implementation of the scheme when compared to other distribution companies.
“We have meters already in store. When you sign contract with MAPs, they also source meters either locally or abroad to meet demands, but we are sure to meet our roll out plans,” he added.
Meanwhile, chief executive director of New Hampshire Capital limited, Odion Omonfoman noted that their mandate is to finance and provide meters for customers as third party operators as directed by NERC.
Omonfoman said their 10-year contract with the power distributor commences with the provision of about 276,000 meters over the next 20 to 22 months, adding that the firm’s target would be to install about 10,000 meters at the peak of operation when it starts by next week.
Source: Esi-Africa.com
Ghana: IES Kicks Against IEA’s Proposal For New Oil Contracting Model
An Energy Think Tank in the West African nation, Ghana, Institute of Energy Security (IES), believes a proposal by the Institute of Economic Affairs (IEA) asking the country’s President to adopt a new oil contracting model, in which oil companies are paid for each barrel of oil they recover, is not feasible, given the current situation.
Executive Director of IES, Paa Kwasi Anamua Sakyi argued that
Iran, Iraq, Bahrain, Saudi Arabia and Qatar, which IEA cited as countries practicing the proposed model, produce their oil onshore while Ghana’s oil exploration activities are taking place offshore.
In his view, onshore exploration is not as expensive as offshore exploration, which is more expensive and riskier than the former.
“When it comes to referencing a region’s Petroleum Contracting model to Ghana’s or West Africa’s, for example, one must not lose sight of other parameters.
“For instance, Iraq, Iran, Qatar and some of the oil producing countries in the gulf are basically extracting oil and gas from onshore, compared to Ghana where all of the country’s oil is produced offshore. The cost of producing a barrel of oil onshore is far lower than it costs offshore.
“Again, the countries in the gulf have been in the business of oil extraction for years compared to Ghana. Their oil fields are matured in kind and are, therefore, de-risked. In Ghana’s case, the oil fields are green and associated with risk for lack of data, and so the possibility of hitting a dry-well is high compared to Qatar and the rest,” he added.
In an article titled: “Why Ghana is so poor yet rich underneath the soil‘, the IEA noted that other poor African countries would learn from President Akufo-Addo, if he boldly accepts the new deal, as well as benefit from his example and leadership.
“This will be a mighty legacy, second to none! Africans are counting on you, Sir,” it said.
Paa Kwasi Anamua Sakyi, IES Boss
But commenting on the issue, Paa Kwasi Anamua Sakyi thinks the president should not be in a haste to push for this proposed model.
According to him, the fact that these countries have produced oil for years gives them some form of leverage when it comes to contract negotiations for their technical capability.
He noted that Ghana is still building capacity when it comes to the business of oil exploration and production.
“Aside the technical capacity, the gulf states have their own national oil companies, which have built enough financial muscles to compete with foreign oil companies. This equally offers them some form of advantage when it comes to petroleum contracting.”
He underscored the need for Ghanaians or the president to remember that the economies of the mentioned Gulf States are stronger than Ghana’s.
The IES boss stated that Iran and others “can afford to postpone the recovery of oil, whereas Ghana will be tempted to compromise when it comes to contracting for the sake of dire need of revenues to address economic challenges.”
“We may get to where the IEA is proposing one day. Let’s keep on building GNPC’s capacity, in both financial and technical sense,” he concluded.
Paa Kwasi Anamua Sakyi, IES Boss
But commenting on the issue, Paa Kwasi Anamua Sakyi thinks the president should not be in a haste to push for this proposed model.
According to him, the fact that these countries have produced oil for years gives them some form of leverage when it comes to contract negotiations for their technical capability.
He noted that Ghana is still building capacity when it comes to the business of oil exploration and production.
“Aside the technical capacity, the gulf states have their own national oil companies, which have built enough financial muscles to compete with foreign oil companies. This equally offers them some form of advantage when it comes to petroleum contracting.”
He underscored the need for Ghanaians or the president to remember that the economies of the mentioned Gulf States are stronger than Ghana’s.
The IES boss stated that Iran and others “can afford to postpone the recovery of oil, whereas Ghana will be tempted to compromise when it comes to contracting for the sake of dire need of revenues to address economic challenges.”
“We may get to where the IEA is proposing one day. Let’s keep on building GNPC’s capacity, in both financial and technical sense,” he concluded.
Ghana To Assist Guyana Following Oil & Gas Discoveries
Nana Addo Dankwa Akufo-Addo, President of Ghana
West African nation, Ghana, has made available free technical assistance to the South American country, Guyana, following the latter’s discovery of oil and gas resources offshore.
Speaking at a State Luncheon held in his honour, on Tuesday, June 11, as part of his official visit to Guyana, President of Ghana Nana Akufo-Addo indicated that Ghana, following the recent discovery by Aker Energy, can now be considered as a significant player in the oil industry, having also commenced the production of oil in commercial quantities since 2011.
Since 2018, there have been several high impact discoveries of conventional oil and gas in Guyana, with US oil giant, ExxonMobil, in February 2019, making its 11th and 12th discoveries. 
President David Granger, President of Republic of Guyana
The President, therefore, told his Guyanese counterpart, President David Granger that “we should explore promptly the possibility of establishing a joint vehicle to assist in the effective, initial management of oil and gas revenues.”
President Akufo-Addo continued, “With our experiences, I believe Ghana is well-equipped to share with you the dos and don’ts in the area, and make available fee-free, quality technical assistance to you. Hopefully, the proper management of the new revenues will help finance the spectacular development of Guyana.”
President David Granger, President of Republic of Guyana
The President, therefore, told his Guyanese counterpart, President David Granger that “we should explore promptly the possibility of establishing a joint vehicle to assist in the effective, initial management of oil and gas revenues.”
President Akufo-Addo continued, “With our experiences, I believe Ghana is well-equipped to share with you the dos and don’ts in the area, and make available fee-free, quality technical assistance to you. Hopefully, the proper management of the new revenues will help finance the spectacular development of Guyana.” Trump Administration Sued Over Offshore Safety Rules Rollback
Ten environmental groups on Tuesday sued the Trump administration over recent changes in the Obama-era offshore safety rules put in place in 2016, in the aftermath of the 2010 Deepwater Horizon disaster in the Gulf of Mexico
“[The 2016 Well Control Rule] required drilling operators to implement many of the drilling practices and technology upgrades the Deepwater Horizon panels had determined were necessary to improve safety and avoid a similar disaster. [The Bureau of Safety and Environmental Enforcement (BSEE)] obtained substantial public and industry input, and considered a weighty amount of evidence and scientific studies in evaluating and determining the necessity of each provision in the rule for ensuring safety; in fact, it took BSEE nearly six years to finalize this rule given the substantial amount of information before the agency. BSEE ultimately concluded that the rule would reduce the risks of worker deaths and oil spills, and would provide a net cost benefit to both society and to the oil and gas industry,” the environmental groups said in the complaint to the district court for the Northern District of California.
As previously reported, the U.S. Interior Department last month said it was rolling back offshore well control rules in what it said was a push to reduce regulatory burden. The oil and gas industry groups have welcomed the rollback, while the environmental groups feel the move is a “hand out” to oil companies and will jeopardize offshore safety.
These rollbacks are a step back to the pre-Deepwater Horizon days when the offshore oil industry largely policed itself to disastrous effect. This attempt to roll the dice with offshore safety not only puts workers and our coasts at risk, but violates the law,” said Chris Eaton, Earthjustice attorney.
The Bureau of Safety and Environmental Enforcement (BSEE) early in May released “the final improved Blowout Preventer Systems and Well Control regulations.” BSEE has said that the final revised rule leaves 274 out of the Obama-era 342 original Well Control Rule provisions – approximately 80 percent – unchanged. Sixty-eight provisions were identified as appropriate for revision, and 33 provisions were added to improve operations on the OCS, BSEE said at the time. In their lawsuit on Tuesday, the environment groups alleged that the recent Well Control rule changes by BSEE would be “putting workers’ lives, coastal communities, and the environment at substantial risk,” and would increase the likelihood of offshore drilling accidents and oil spills that harm the health of these ecosystems and species. The plaintiffs have sought a court order declaring the changes to the well control rule unlawful, accusing BSEE of retreating from its own 2016 Well Control Rule without “providing any good reason or rational basis” to do so.
In their lawsuit, the plaintiffs singled out as defendants the BSEE, and Scott Angelle, who is sued in an official capacity as Director of BSEE; The Department of Interior, and David Bernhardt, the recently appointed Secretary of the Interior.
The plaintiffs have alleged that the BSEE May move weakened or substantially rescinded standards on safe drilling practices, containment equipment requirements, blowout preventer shearing requirements, blowout preventer testing and reliability standards, equipment failure, near-miss reporting, and well cementing standards, “giving industry more leeway to police itself,” and with, the lawsuit reads, sole justification to eliminate “unnecessary burdens on stakeholders.”
“BSEE failed in issuing the Partial Repeal final rule to provide any rational justification for the revisions, to acknowledge or explain why it has disregarded its previous factual findings from the 2016 Well Control Rule, or to meaningfully respond to concerns raised by Plaintiffs in comments on the proposed Partial Repeal,” the lawsuit reads.
“BSEE had previously found in the 2016 Well Control Rule that each of the provisions now being repealed or revised in the Partial Repeal is an important component of a drilling safety system. BSEE did not explain how repealing these components is consistent with those previous factual findings,” the plaintiffs said, adding:” BSEE asserted in the Partial Repeal that each repeal in the final rule is necessary to reduce undue burdens on industry. E.g., id. at 21,910. BSEE provided no factual support or analysis to support these assertions.”
In addition, relaxing safety measures when drilling operations are increasing in new high-pressure, ultra-deepwater environments presents heightened and uncertain risks that BSEE failed to consider, the plaintiffs said.
The plaintiffs further said: “The revisions to the safe drilling margin standards, real-time monitoring requirements, surface blowout preventer requirements for floating facilities, and blowout preventer testing interval that BSEE adopted in the Partial Repeal final rule are not logical outgrowths of the vague statements and requests for suggestions in the proposed Partial Repeal. BSEE’s inaccurate assumptions regarding the risks of blowouts, losses of well control, and oil spills caused it to irrationally underestimate the environmental impacts of the Partial Repeal.”
In their lawsuit, the environmental organizations have asked that the court, among other things, declares BSEE’s final Well Control Rule as “arbitrary and capricious, an abuse of discretion, and not in accordance with law in violation of the APA, NEPA, and OCSLA,” and to vacate the BSEE’s Partial Repeal final rule.
The lawsuit was filed by a coalition of the following organizations: Earthjustice, Sierra Club, Natural Resources Defense Council, and Southern Environmental Law Center on behalf of Sierra Club, Natural Resources Defense Council, Healthy Gulf, Center for Biological Diversity, Defenders of Wildlife, Friends of the Earth, North Carolina Coastal Federation, and South Carolina Coastal Conservation League.
Source: offshoreenergytoday.com
Ghana: NPA To Extend Risk Assessment To 66 SHSs With LPG Facilities
Hassan Tampuli(right), CEO of NPA, Simon Osei Mensah(4rd right) Ashanti Regional Minister, Hon. Ama Pomaa (2nd left),Board Member of NPA, Nana Adu Mensah Asare (3rd left) Amakomhene and Frances Awurabena Asiam(left) CEO of Ghana Cylinder Manufacturing Company
Ghana’s downstream petroleum regulator, National Petroleum Authority (NPA), has hinted that it will stretch its risk assessment of LPG facilities in the West African nation to cover about sixty-six senior high schools.
The move, the regulator explained, form part of the ongoing process of implementing the Cylinder Recirculation Model (CRM) policy which is aimed at providing direction for marketing and distribution of LPG in a safe and efficient manner, as well as facilitate an increase in access to LPG nationwide.
Chief Executive Officer of NPA, Hassan Tampuli gave the hint during a stakeholders’ engagement in the Ashanti Region, under the theme: ‘CRM: securing our safety, creating more job’.
The stakeholders’ engagement brought together several interest groups including queen mothers, LPG dealers, CEO of Ghana Cylinder Manufacturing Company Madam Awurabena Frances Asiam, Vice President of LPG Marketers Association Gabriel Kumi, as well as the Ashanti Regional Minister, Simon Osei Mensah.
The CRM seeks to develop a market-driven structure to ensure safety, increased access and adoption of LPG, enhance the capacity of existing regulatory institutions in order to enforce the regulatory requirements of the new market structure, ensure the existence of robust and standard health, safety and environmental practices in the production, marketing and consumption of LPG, ensure the sustainability of supply and ensure local content and participation in the LPG sub-sector in compliance with the Downstream Local Content Policy.
“Among the things earmarked for implementation of the CRM include risk assessment of LPG facilities in 66 second-cycle schools in the country, compliance monitoring of all assessed LPG refilling outlets, second-cycle school facilities and selected facilities (TOR, TFC, GNGC, Quantum terminal and Tema Oil Jetty) in the value chain,” Mr Tampuli said.
Mr Tampuli added that his outfit would convert high risk stations into cylinder distribution/exchange points, build capacity for NPA HSSE staff and industry groups on safety issues and pilot phase implementation of CRM in Obuasi, in the Ashanti Region, and other selected regions.
Job Creation
According to the NPA boss, direct job creation is estimated to be over 4,500 in relation to new jobs under the actors of the new value chain and door-to-door delivery service.
“This does not affect current jobs of LPG Bulk Transporters, LPG Bulk Distribution Companies and LPG Bulk Storage companies,” he said.
Mr Tampuli assured that Cylinder Recirculation model of LPG distribution would be implemented fully.
“The relevant licences will be issued and safety protocols will be keenly observed to ensure the safety of the good people of Ghana, while increasing access to LPG for domestic, commercial and industrial use from the current 25% level to 50% by 2030.”
“This does not affect current jobs of LPG Bulk Transporters, LPG Bulk Distribution Companies and LPG Bulk Storage companies,” he said.
Mr Tampuli assured that Cylinder Recirculation model of LPG distribution would be implemented fully.
“The relevant licences will be issued and safety protocols will be keenly observed to ensure the safety of the good people of Ghana, while increasing access to LPG for domestic, commercial and industrial use from the current 25% level to 50% by 2030.” Nigeria Engages Rosatom On Nuclear Development June 11, 2019 0
The federal government intends partnering with Rosatom to add nuclear energy to Nigeria’s energy mix in bids to address the country’s power challenges.
Speaking to a local publication, The Nation, Rosatom’s central and southern Africa chief executive officer, Dmitry Shornikov, revealed that Nigeria is making steady progress on the matter.
“This is evident by the agreement which the country signed two years ago in relation to this issue. We believe that the federal government’s gesture would culminate in signing more agreements in the immediate future,” said Shornikov.
He added that the agreements would lead to siting of nuclear energy plants and production of electricity in Nigeria. The country is reputed to be the biggest economy in Africa.
Responding to a question about Nigeria’s preparedness to utilize nuclear energy, he underlined that “a whole lot of things must be on the ground before any country can actualize or ‘practicalise’ the use of nuclear energy”.
Shornikov explained: “First, is a well-articulated policy, which spells out the reasons behind the issue of generating nuclear power, the megawatts, which the country intends to generate, the distribution and transmission capacity and others as contained in infrastructural provisions of that country in particular.”
Nuclear energy for growth
According to media, Shornikov indicated that the Nigerian government is in discussions with the Rosatom to establish some grounds for the production of nuclear energy for growth.
“Discussions between Nigerian and the Russian government on the issue have reached an advanced stage and hopefully would lead to success in the long run,” he said.
Nigeria Earned $54.5bn From Crude Oil, Spent $54.6bn To Import Petroleum Products In 2018
Nigeria’s value of petroleum products imports was more than its exports in 2018, according to data released by the Organization of the Petroleum Exporting Countries (OPEC).
The report, Annual Statistics Bulletin (ASB) 2019, stated that the value of exports of petroleum products by the country in 2018 amounted to $54.513 billion while import was $54.645 billion.
While exports grew by $16.53 billion in 2018 from $37.983 billion in 2017, no gain was made as the value of imports already override its exports.
The Nigerian National Petroleum Corporation (NNPC) said recently that the country recorded a total export sale of crude oil and gas of $490.03million in February 2019 alone, which is 32.45 percent higher than the previous month’s sale.
According to the Monthly Financial and Operations Report (MFOR) released in Abuja, crude oil export sales contributed $350.29 million (71.48 percent) of the dollar transactions compared with $240.23 million contribution in the previous month.
The report, the 43rd edition of the NNPC MFOR, explained that the export gas sales amounted to $139.74 million in the month under review, stating that the February 2018 to February 2019 crude oil and gas transactions indicated that crude oil and gas worth of $5.94 billion was exported.
However, the country does not refine its crude oil, rather spends huge money on importation of petroleum products for its over 200 million inhabitants. The country’s population grew 5.3 million within the space of one year alone, 2017-2018, according to OPEC’s ASB 2019.
Nigeria spent N2.582 trillion on fuel importation in nine months, from January to September 2018, rising by 12.9 percent from N2.289 trillion recorded in the first three quarters of 2017.
According to data obtained from the National Bureau of Statistics (NBS) Foreign Trade Statistics for the Third Quarter of 2018, Nigeria’s fuel import stood at N845.12 billion, N720.4 billion for the first and second quarters of 2018 respectively.
Other figures in the ASB 2019 showed that Nigeria made more money from exports of petroleum products within the space of five years in 2014, which amounted to $75.196 billion.
During the crude oil price crash, which started in 2015, the country’s value of exports dropped to $41.168 billion, and got worse in 2016 as the country made a meager $27.295 billion.
However, the country did not gain as such, as its value of imports last year, which amounted to $54.645 billion, was higher than its value of export of $54.513 billion same year.
On the other hand, the country’s value of import in 2014 was $70.778 billion, dropped to $52.525 billion in 2015; $46.552 billion in 2016; $49.508 billion in 2017, and shooting upwards to $56.645 billion in 2018.
Source: shipsandports.com.ng
Tullow Initiates Financing Scheme For Local Suppliers
Tullow Ghana Limited has brought together seven banks and over 250 indigenous suppliers in the oil and gas Industry to facilitate and institute easy access to credit financing and other financial sources in order for them to take advantage of business opportunities created by local content legislation in the industry.
The financing process is in response to various feedbacks the company has received from the local companies who are constrained by the challenges of getting access to credit as well as the cost of capital for undertaking projects in the sector.
This has created the need to assemble a consortium of banks and the companies themselves to discuss the various financing packages the banks are willing to offer the suppliers.
According to Tullow Ghana, it has received many requests from a number of financial institutions willing to offer a variety of financing packages and solutions to local suppliers in the upstream oil and gas industry.
The initiative forms part of Tullow’s shared prosperity philosophy which is based on the principle that a country’s hydrocarbons must be a catalyst for its economic growth and one of the measures to achieve this is to offer opportunities along the supply chain to indigenous enterprises and facilitate easy access to financing for such local players in the oil and gas industry.
This is seen as encouraging to a number of local industry suppliers in the sense that in a capital-intensive industry such as oil and gas, if companies do not have access to credit financing, it becomes difficult for them to participate in the supply chain of the sector.
Director of External Affairs, Social Performance and Local Content of Tullow Ghana, Madam Cynthia Lumor told the Goldstreet Business last week that the initiative forms part of the initial stage of the credit financing process and thus indigenous companies in the sector should look forward to more banks participating in the next engagement.
“Supply capacity building is a big part of local content. When the businesses of suppliers grow, jobs are created which result in more revenue for Government in terms of taxes”, she noted.
The banks that are participating in the initiative are Fidelity Bank, GCB Bank, CAL Bank, Standard Chartered Bank, Barclays Bank, Stanbic Bank and SG Bank.
To qualify to have access to financing, companies must have good balance sheets.
Source : goldstreetbusiness.com
OIL: Adopt New Model Contract -That Pays Oil Companies Per Barrel Of Oil Recovered –IEA
A Public Policy Institute in the West African nation, Ghana, Institute of Economic Affairs (IEA) is advocating for a new model contract which pays oil companies for each barrel of crude oil recovered from the ground or seabed.
According to the independent body, this model will provide huge foreign reserves for Ghana’s development.
Some countries using the model
Several countries, including Iran, Iraq, Bahrain, Saudi Arabia and Qatar, are using this framework.
How the model made Norway rich
Norway, in particular, has accumulated more than $1.06 trillion in their Sovereign Funds, using this framework to create prosperity for their people.
IEA made the call in an article – titled ‘Why is Ghana so poor yet rich underneath the soil?’ – published in Legislative Alert, a bi-monthly publication of the IEA.
2010: Iraq paid Exxon $1.90 per barrel to recover oil. In 2010, Iraq paid Exxon Mobil and Shell $1.90 per barrel to recover oil from the ground. 2019: Iraq pays BP, CNPC $2 per barrel to recover oil
On April 30, 2019, the British Petroleum Company (BP) and China’s CNPC accepted $2 to recover a barrel of oil for the Government of Iraq while Exxon Mobil’s bid of $4.8 per barrel was rejected.
$10 per barrel to recover oil – Prof Collier
IEA recalled that at a recent lecture, Professor Paul Collier, the former Director of Research at the World Bank who doubled as former Senior Advisor to Prime Minister Tony Blair on the Africa Commission, and the current Director of the Center for the Study of African Economies at Oxford University, stated that the total cost of recovering a barrel of oil from the ground is about $10. This includes exploration and other costs.
Prof Collier argued that the only way poor African countries can turn their oil reserves into prosperity and to develop into first-class countries is by collecting the super profits called rents.
How oil companies are fleecing poor countries
This means that at current prices of $65 per barrel, $10 cost per barrel of crude oil recovered from the ground or seabed will lead to savings of $55 per barrel for Ghana.
Prof Collier said countries would then invest the rents into the future of their countries instead of allowing “foreign investors” to keep it.
The IEA noted that other poor African countries will learn from President Akufo-Addo if he boldly accepts the new deal, as well as benefit from his example and leadership. “This will be a mighty legacy, second to none! Africans are counting on you, Sir,” it said.
450 million – 550 million barrels oil discovery
On February 14, 2019, the Ministry of Finance announced what is described as the biggest oil find in Africa, 450 million – 550 million barrels, with potential reserves of nearly 1 billion barrels of oil.
Praise for Akufo-Addo’s disgust for colonialism
“Fortuitously, this new “find” has occurred when Ghana has a President who has shown total disgust for colonialism and its underlying philosophy of extracting Ghana’s natural resources under insidious and oppressive contracts with a few crumbs left to the people of Ghana (the colony).
“At a recent meeting with the President of France, Emmanuel Macron, President Akufo-Addo indicated that this business of giving aid to Ghana while extracting its natural resources should stop.”
‘Ghana beyond Aid’ agenda linked to natural resources, “He stressed the urgent need for Ghana to ‘go beyond aid’ in its efforts to develop the economy,” it said.
Rent-seeking contracts
According to the IEA, the old colonial principle of “providing foreign aid while extracting our natural resources” with “rent-seeking contracts” is never going to develop Ghana.
It cautioned that the past 50 years has seen enough of these different “schemes” by some colonial companies masquerading as “foreign investors”.
“They cannily exploit our creaky and incoherent set of rules to enrich themselves while the Ghanaian remains poor in the midst of plenty,” it stated.
New thinking
The independent public policy institute said the time has come for a new thinking, a new paradigm describing the new oil discovery provides as a “God sent” opportunity for President Akufo-Addo to change Ghana’s course of development for good.
“Recent studies have shown that with courage and wisdom, the new oil find can be used to create prosperity for Ghana, like Norway, a former fishing village, or Dubai, a former desert village occupied by nomadic cattle herders,” it added.
The independent public policy institute advised President Akufo-Addo that for Ghana to use its natural resources to develop all of its people, not some, he should take a cue from these world-class models.
The IEA wants a stop to the writing of colonial contracts with odious obligations which enrich only a few and leave the bulk of the people poor. It described the current insidious contracts with these so-called “foreign investors” as spurious at best and only help the signatories and their friends, not the poor.
“These insidious contracts remain the bedrock or the cornerstone of the Ghanaian economy, which you once referred to as the ‘Guggisberg Economy’, and need to be reformed. “Mr President, here is your opportunity to dismantle one of the critical elements of the ‘Guggisberg Economy’ in order to create a new beginning for Ghana to rise! This is your moment, Sir,” it added.
Source: The Finder
Why Is Ghana So Poor Yet Rich Underneath The Soil?
Nana Addo Dankwa Akufo-Addo, President of the Republic of Ghana
On the 14th of February, 2019, the Ministry of Finance announced what is described as the biggest oil find in Africa, 450 million – 550 million barrels, with potential reserves of nearly 1 billion barrels of oil. Fortuitously, this new “find” has occurred when Ghana has a President who has shown total disgust for colonialism and its underlying philosophy of extracting Ghana’s natural resources under insidious and oppressive contracts with a few crumbs left to the people of Ghana (the colony).
At a recent meeting with the President of France, Emmanuel Macron, President Akufo-Addo indicated that this business of giving aid to Ghana while extracting its Natural Resources should stop. He stressed the urgent need for Ghana to “go beyond aid” in its efforts to develop the economy. The old colonial principle of “providing foreign aid while extracting our natural resources” with “rent-seeking contracts” is never going to develop Ghana. The past 50 years has seen enough of these different “schemes” by some colonial companies masquerading as “foreign investors”. They cannily exploit our creaky and incoherent set of rules to enrich themselves while the Ghanaian remains poor in the midst of plenty. But now, the time has come for a new thinking, a new paradigm.
This new oil discovery provides our President with a “God sent” opportunity to change Ghana’s course of development for good. Recent studies have shown that with courage and wisdom, the new oil find can be used to create prosperity for Ghana, like Norway, a former fishing village or Dubai, a former desert village occupied by nomadic cattle herders.
At a recent lecture, Professor Paul Collier, the former Director of Research at the World Bank, former Senior Advisor to Prime Minister Tony Blair on the Africa Commission, and the current Director of the Center for the Study of African Economies at Oxford University; stated that the total cost of recovering a barrel of oil from the ground is about $10 (ten dollars per barrel). This includes exploration and other costs.
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Prof. Collier argues that the only way poor African countries can turn their oil reserves into prosperity and to develop first class countries is by:
•collecting the super profits called rents ( $65-$10 = $55 per barrel);
•investing the rents into the future of their countries instead of allowing “foreign
investors” to keep it.
Several countries like Iran, Iraq, Bahrain, Saudi Arabia are using this framework. However, Norway in particular, has accumulated more than $1.06 trillion (about one trillion US dollars) in their Sovereign Funds using this framework to create prosperity for their people. In 2010, Iraq paid Exxon and Shell $1.90 per barrel to recover oil from the ground. On 30th April, 2019, the British Petroleum Company (BP) and China’s CNPC accepted $2 to recover a barrel of oil for the government of Iraq while Exxon Mobil’s bid of $4.8 per barrel was rejected.
Mr. President, for Ghana to use its natural resources to develop all of its people, not some, please take a cue from these world class models. We must stop writing colonial contracts with odious obligations which enrich only a few and leave the bulk of our people poor. The current insidious contracts with these so-called “foreign investors” are spurious at best and only help the signatories and their friends not the poor. These insidious contracts remain the bedrock or the cornerstone of the Ghanaian economy, which you once referred to as the “Guggisberg Economy”, and need to be reformed.
Mr. President, here is your opportunity to dismantle one of the critical elements of the “Guggisberg Economy” in order to create a new beginning for Ghana to rise! This is your moment Sir.
Ghana requires a new model-contract which pays oil companies per barrel recovered from the ground or seabed. Like Qatar or Dubai, this model will provide huge foreign reserves for Ghana’s development. Other poor African countries will learn and benefit from your example and leadership. This will be a mighty legacy, second to none! Africans are counting on you, Sir.
Source: Institute of Economic Affairs (IEA), Ghana.
Nigeria: Six Oil Companies Licence Revoked
Nigeria’s Department of Petroleum Resources (DPR) has revoked five OMLs and one OPL, according to reports out of the country.
The DPR cited “noncompliance with statutory regulatory obligations” and said it was acting under a “presidential directive on recovery of legacy debts.”
Companies and licenses affected are Pan Ocean Oil Corp., OML 98 in the Niger Delta onshore; Allied Energy Resources Nigeria Ltd., OML 120 in the Niger Delta and OML 121 in the deep offshore; Express Petroleum & Gas Co. Ltd., OML 108 in the Niger Delta continental shelf; Cavendish Petroleum Nigeria Ltd., OML 110 in the Niger Delta continental shelf; and Summit Oil International, OPL 206 in the Anambra Basin.