Energy Economist asks 17 questions about Aker Energy Deal
A Petroleum Economist and Political Risk Analyst Dr Theo Acheampong has waded into the ‘controversial’ Aker Energy deal by asking about 17 questions regarding the deal.
Policy Think Tank MANI-Africa and Ministry of Energy seem to be at war over the 450-550 million barrels of oil discovered by Aker Energy in the Pecan South-1A well in the Deepwater Tano Cape Three Points (DWT/CTP) block offshore Ghana.
According to IMANI-Africa, the Petroleum Agreement (PA), covering the new discovery, worth more than $30 billion, expired in 2014 and by law, did not automatically fall under the company’s PA with the government.
At a media engagement in Accra, Senior Vice President of IMANI, Kofi Bentil, asked the government not to approve Aker Energy’s Plan of Development submitted for approval last month, in its current form.
According to Mr Bentil, the new discoveries, by law, ought to be negotiated under a new PA as stipulated by the Petroleum (Exploration and Production) Act, 2016 Act 919 but the government seemed uninterested in the gains.
He said if the government failed to clarify circumstances surrounding the agreement with Aker Energy, IMANI and its associates would go to court to seek declaration on the ownership on the discovery.
But the Energy Minister, John-Peter Amewu, at a news briefing in Accra, described the claims by IMANI as total falsehood.
In providing some background information on the agreement, Mr. Amewu said the PA covering the DWT/CTP contract area operated by Aker Energy was executed on 8thFebruary, 2006, between the Government of Ghana -GNPC, AMERADA HESS Corporation, Lukoil-and FUELTRADE subsequently formed in 2015.
He disclosed that Fueltrade’s participating interest was set at 2% for which it paid about US$9 million with a performance guarantee of US$2 million.
“The contract area has 7 discoveries namely pecan north, almond, cob, beech, pecan, paradise and hickory north. The first five are oil discoveries while paradise and hickory north are gas discoveries. Aker Energy acquired the interest of AMERADA HESS Ghana Limited in February 2018 and proceeded to continue the unfinished works under the programme of appraisal to HESS,” he added.
The Energy Minister criticised IMANI for misinforming Ghanaians on a potential loss of US$30 billion to the country, if the government failed to negotiate a new petroleum agreement.
“IMANI tried to alarm Ghanaians about a potential loss of US$30 billion to the country if the government failed to negotiate a new petroleum agreement with new terms with the DWT/CTP partners. This is absolutely false,” he said.
Below are Dr. Theo Acheampong’s questions:
BEGGING QUESTIONS ON OIL AND GAS INDUSTRY
1. When was the original Hess Agreement ratified by Parliament for the Deepwater Tano Cape Three Points (DWT/CTP) block offshore Ghana, and what was the total exploration period duration?
2. When did exploration cease; and did the Minister of Energy give any extensions, when and why?
3. At the time of Hess’ exit in June 2018, what was the status of the seven (7) discoveries namely Pecan North, Almond, Cob, Beech, Pecan, Paradise and Hickory North?
4. Were these seven (7) discoveries all appraised and what was the result of the appraisal for each of the discoveries?
5. Did Hess declare commerciality on any of the discoveries? If so, which of the discoveries and when were these commercialities declared for each discovery?
6. What was the status of the Pecan discovery at the time of Hess’ exit? How many wells had been drilled? Was any well drilled during the appraisal period?
7. What are the current dimensions of the production and discovery area for the Deepwater Tano Cape Three Points (DWT/CTP) block offshore Ghana?
8. What was the objective of the four-well new drilling programme by Aker approved by the Petroleum Commission for Pecan-4A, Pecan South and Pecan South East?
9. What are the exact locations of the four new ‘appraisal’ wells and what is the status of the appraisal report?
10. Is there any pressure communication between the reservoirs of the Pecan4A and Pecan South and main Pecan field — that is, is this an extension of the same field, and if it is not, then is that now what the petroleum agreement defines as a discovery?
11. What is the position of the Petroleum Agreement, E&P law and other regulations on the classification of exploration or appraisal wells including new exploration activity during the appraisal period?
12. What were the factors that led to Hess’ decision to sell its equity in the field, and why did it fail to submit a Plan for Development and Operations (PDO)?
13. What is the format for submission of a Plan for Development and Operations (PDO)?
14. Did the new operator follow this prescribed format when it submitted its PDO on 28 March 2019?
15. What is the procedure/process for approving a PDO?
16. Who is telling the truth: is the basis for IMANI’s $30bn gross valuation of the Deepwater Tano Cape Three Points (DWT/CTP) block right given the known reserves and resources?
17. What is the procedure for extension of petroleum agreements?
Tanzania approves $309m for Stiegler’s Gorge contractor
The Tanzanian government continues to provide support for the development of the Stiegler’s Gorge Hydropower project on Rufiji River, with the latest being the issuance of an advance payment totaling $309.645 million to Egyptian company- Arab contractors to enable the construction of the project.
According to the Citizen, the advance payment forms part of 15% of the total cost of the project, furthermore, clause 14.2 of the signed contract stated that the 15% advancement payment has been portioned at 30% local and 70% foreign currency (US Dollar).
Permanent Secretary Ministry of Energy Dr Hamis Mwinyimvua elaborated: “What is being paid…is 70% foreign portion of the advance payment. The local portion (30%) will be settled once contractual processes are finalised by the contractor.”
The Citizen reports that on 15 April 2019, CRDB and UBA banks issued Advance Payment and Performance Guarantees to the Contractor-the joint venture of Arab Contractors and Elsewedy Electric S.A.E as per the project requirements.
“The issued guarantees triggered the next milestones of the project including settling of the advance payment by the client which is happening today,” said Dr. Mwinyimvua.
The minister added: “I’m very confident that the advance payment settled today will enable the contractor now to fully mobilize and immediately begin implementation of the works as agreed.”
Meeting environmental requirements
Earlier this year Tanzania’s National Environmental Management Council approved the construction of the planned 2,100MW hydroelectric dam and assured that it will not have adverse impact on the local ecology.
“We are determined to make sure that all water sources in Morogoro, Iringa, Dodoma, Njombe, Mbeya and Ruvuma regions are well protected and sustained,” said the director general of the Council, Dr Samuel Gwamaka.
The development of this hydropower project has been surrounded by a lot of criticism from various stakeholders because of its location close to the Selous Game Reserve.
However, addressing the concerns, President John Magufuli previously said: “After all, only 3.5% of the total area in the reserve will be used for hydro-electric power generation. However, wildlife will get enough drinking water compared to the past.”
Ghana: $95 million was ‘wasted’ without a single oil discovery – Dr Amin reveals
Dr.Mohammed Amin Adam, Deputy Minister for Energy
A Deputy Minister for Energy in-charge of Petroleum, Dr Mohammed Amin Adam, has revealed that Ghana spent a total of US$95 million dollars between 2013 and 2016 for drilling oil wells but none resulted in the discovery of crude oil in commercial quantities.
According to him, 13 petroleum contracts were signed between the previous government and oil investors with US$880 million set aside for exploration works.
Dr Amin Adam explained that it was for that reason the current administration decided to change its strategy to pursue aggressive exploration in order to increase the country’s oil reserves and production before the Jubilee Oilfield got exhausted.
He disclosed this at a news conference in Accra, to respond to some concerns raised by IMANI Africa, a policy think tank, on alleged omissions and/or commissions on the part of Government in respect of the Petroleum Agreement between government and Aker Energy.
“All the oil discoveries in Ghana were petroleum contracts signed under the government of President J. A. Kufuor and those that were signed from 2013 to 2016, which is the highest number of petroleum contracts signed by government of Ghana, as I speak to you, not a single well has been drilled,” he said.
This, he said, would increase the country’s revenue from oil production in order to speed up the country’s infrastructural development and improve the welfare of the people.
The Deputy Minister said the nation had between 55 and 60 per cent net oil stake in the DWT/CTP oil block as agreed in the petroleum agreement with Aker Energy.
IMANI Africa, a policy think tank, on Thursday, April 25, stated at an advocacy programme raised concerns about various omissions and/or commissions on the part of the Government in respect of the Plan of Development submitted by Aker Energy covering the Deepwater Tano/Cape Three Points (DWT/CTP) contract area.
Responding to why the Ghana National Petroleum Corporation (GNPC) failed to acquire the 10 per cent participating interest in the DWT/CTP block in 2015, Dr Adam said although funds were allocated for that purpose the GNPC Management at that time failed to seize that opportunity.
Therefore, when Aker Energy acquired the right of interest of HESS in the DWT/CTP, the nation lost the opportunity to acquire the 10 per cent participating interest.
More so, the Management of the GNPC had used the funds meant for that purpose in guaranteeing for the Karpower deal and other transactions, which did not fall under its mandate.
Dr Adam called for investigations into reasons that motivated the GNPC to use the funds for the 10 per cent participating interest in guaranteeing for the Karpower project.
Aker Energy Deal: Senior Journalist faults IMANI-Africa; urges them to apologize
Abdul Malik Kweku Baako
A seasoned Journalist and Editor of the New Crusading Guide, Abdul Malik Kweku Baako has asked IMANI Africa to apologise for creating an impression of a conflict of interest in Aker Energy deal.
Policy think tank, IMANI Africa, at a press conference in Accra on Thursday, April 25 accused the Chief Executive Officer of the Ghana National Petroleum Corporation (GNPC), Dr K. K. Sarpong, of engaging in a conflict of interest situation in a US$4.4 billion petroleum agreement between Ghana and Aker Energy Ghana Limited.
Vice President of IMANI Africa, Mr Kofi Bentil, alleged that Dr Sarpong “and his family own Fueltrade,” one of the local partners of the Deepwater Tano/ Cape Three Points (DWT/CTP) Petroleum Agreement, with a two per cent stake.
Aker Energy is the operator of the field with a 50 per cent stake and recently submitted a US$4.4 billion plan of development to the government for approval to allow for development and production activities to start.
With Dr Sarpong being the CEO of GNPC, another partner of the DWT/CTP with a 10 per cent stake, Mr Bentil said it was ethically wrong for a company he and his family own to also be a partner of the field.
“It does not look right. We put it out here publicly because we want clarification.
“We are not against Ghanaian participation in our oil industry but protecting the public purse includes avoiding such conflicts,” he said at the press conference.
“It is a zero sum game; what Ghana has, Aker does not have. So, if it is true that the company is negotiating with itself or there are powers on both sides, I think it is a matter of concern and we need some answers concerning that one,” he added.
Reacting to the alleged conflict of interest raised by IMANI on Joy FM on Saturday, April 27, Kweku Baako said: “IMANI has been doing a good job and without organization, like that, we wouldn’t have been where we are today but with the issue of K.K Sarpong, IMANI and Kofi Bentil goofed.”
“There is a hint of innuendo there even though you say allegedly.”
Bulk oil distributor, Fueltrade has also refuted claims by Senior Vice President of IMANI Africa that it is owned by the CEO of the Ghana National Petroleum Corporation (GNPC), K. K. Sarpong.
Fueltrade in a press release denied Dr Sarpong’s involvement in the company.
The statement said “Fueltrade Ltd wishes to state that its shareholders are Messrs Chris Chinebuah and Dzifa French Cudjoe, who have the full legal and beneficial interest in the company.
“Fueltrade categorically states that it is not legally or beneficially owned by Dr. K. K. Sarpong and/or his family.”
The company questioned why IMANI, with all the time it had before the press conference did not verify their claims with the Registrar-Generals office but went ahead to spew such falsehood.
They are “convinced that Imani Africa and Kofi Bentil did not undertake any verification because they set out to act and speak with malice and/or reckless disregard for the truth, in order to achieve a collateral purpose.”
But Vice President for IMANI Africa also denied that the polity think tank accused Dr K.k Sarpong wrongly.
According to him, it was a question they put forward for the needed clarification to be given to the public on the subject.
Russia Meets Ukraine, Belarus, Poland To Discuss Tainted Oil
Russia is holding talks with Ukraine, Poland, and Belarus over a contamination of its crude oil that had Poland, Slovakia, Ukraine, and Belarus shut down their sections of the Druzhba pipeline earlier this week, Reuters reports.
The discussion will focus on the removal of tainted oil from the pipeline.
The problem has strained relations between Moscow and Minsk as Belarus was the first to report the problematic oil last week, warning that it could damage refinery equipment. The oil was contaminated with organic chlorine, a substance used in oil production to boost output but dangerous in high amounts for refining equipment. The amounts of the chemical were found to be at levels much higher than the maximum allowable amount.
A TASS report from yesterday quoted Russian Deputy Prime Minister Dmitry Kozak as saying that Belarus would be provided with clean oil on Monday, adding that “A considerable portion of poor quality oil has already been evacuated to tanks in the territory of Russia.”
The official also said, “The issue of compensation has not been raised so far. The issue was put forward regarding the need to increase indicative balances for oil product supplies to the domestic market. Discussion is in progress.”
Though a rare occurrence, oil contamination could have longer-lasting effects on European refineries as not all of them have enough oil in storage to keep operating as usual. Germany’s refining industry is fine for the time being with ample supplies, but Polish refiners could face some challenges in finding alternative crude oil supplies.
The Druzhba pipeline that runs from Russia to Germany with branches into countries along the way has the capacity to transport up to 1 million barrels of crude daily. Yet the contamination has also been found in tanker cargoes loaded at the Ust Luga port.
According to Reuters trading sources, at least five vessels belonging to Rosneft, Surgutneftegaz, and Kazakh companies have set sail from the terminal with contaminated cargo. The buyers of the cargoes include Total, Trafigura, Vitol, and Equinor.
Source: Oilprice.com
Total profit falls despite output growth
French oil and gas company Total recorded a 4 percent decrease in first quarter profit while its production grew by 9 percent.
Total on Friday posted an adjusted net profit of $2.8 billion for the first quarter of this year, a 4% decrease when compared to $2.9 billion in the same period last year.
Commenting on the results, Chairman and CEO Patrick Pouyanne said: “Markets remained volatile with Brent averaging $63/b in the first quarter, down 6% from last year, while natural gas prices were down 11% in Europe and 30% in Asia. Adjusted net income was $2.8 billion this quarter, down 4%, and return on equity held steady at 12% this quarter.
“With strong growth in production that reached 2.95 Mboe/d, up 9% year-on-year, the Group’s cash flow (DACF) increased by more than 15% year-on-year to $6.5 billion (B$), driven by the ramp-up in cash-accretive projects, including Egina in Nigeria, lchthys in Australia and Kaombo in Angola.”
Total’s production was also positively impacted by increase in portfolio effect linked in particular to the integration of Maersk Oil’s assets. It was negatively affected by the natural decline of the fields and to planned maintenance, notably in Qatar.
According to Total, since the start of the second quarter 2019, Brent has traded at around $70/b in a context of compliance with OPEC quotas, disrupted production in Venezuela and uncertainty in Libya. The environment remains volatile, however, with uncertainty around the evolution of non-OPEC supply and the impact of global economic growth on demand.
The company maintains its spending discipline in 2019 with a net investment target of 15-16 B$, cost savings of 4.7 B$ and an average production cost of $5.5/boe.
Production growth should exceed 9% in 2019, thanks to the ramp-up of projects started in 2018 and the startups this year of Kaombo Sul in Angola, lara 1 in Brazil, Culzean in the UK and Johan Sverdrup in Norway. To take advantage of the favorable cost environment, the Group is working to launch profitable projects, including Mero 2 in Brazil, Tilenga & Kingfisher in Uganda and Arctic LNG 2 in Russia.
Chevron earnings hit by lower oil prices
Michael Wirth, Chevron CEO.
Oil major Chevron saw its first quarter 2019 earnings slip when compared to the prior-year period due to lower oil prices and weaker downstream margins.
Chevron on Friday reported earnings of $2.6 billion for the first quarter 2019, compared with $3.6 billion in the first quarter of 2018.
Foreign currency effects decreased earnings in the 2019 first quarter by $137 million.
Sales and other operating revenues in first quarter 2019 were $34 billion, compared to $36 billion in the year-ago period.
Michael Wirth, Chevron’s chairman of the board and chief executive officer, said: “Upstream production volumes were up 7 percent from a year ago, primarily in the Permian Basin and at Wheatstone in Australia. The company’s net oil-equivalent production exceeded 3 million barrels per day for the second quarter in a row. First quarter earnings declined from a year ago, largely due to lower crude oil prices and weaker downstream and chemicals margins.”
Chevron’s worldwide net oil-equivalent production was 3.04 million barrels per day in first quarter 2019, an increase of 7 percent from 2.85 million barrels per day from a year ago.
U.S. upstream operations earned $748 million in first quarter 2019, compared with $648 million a year earlier. The increase was primarily due to higher crude oil production partially offset by lower crude oil and natural gas realizations.
The company’s average sales price per barrel of crude oil and natural gas liquids was $48 in first quarter 2019, down from $56 a year earlier. The average sales price of natural gas was $1.64 per thousand cubic feet in first quarter 2019, down from $2.02 in last year’s first quarter.
Net oil-equivalent production of 884,000 barrels per day in first quarter 2019 was up 151,000 barrels per day from a year earlier. Production increases from shale and tight properties in the Permian Basin in Texas and New Mexico, and major capital projects and base business in the Gulf of Mexico, were partially offset by normal field declines and the impact of asset sales.
Capital and exploratory expenditures in the first three months of 2019 were $4.7 billion, compared with $4.4 billion in the corresponding 2018 period.
It is worth mentioning that Chevron recently entered into a definitive agreement with Anadarko Petroleum Corporation to acquire all of the outstanding shares of Anadarko in a stock and cash transaction valued at $33 billion, or $65 per share.
However, the U.S. oil firm Occidental Petroleum has entered into a race with Chevron by also offering to buy Anadarko.
Anadarko said it would carefully review Oxy’s Wednesday bid and advised shareholders not to take action regarding the bid.
IMANI Africa justifies stance on Aker Energy oil discovery
Franklin Cudjoe
Policy think tank, IMANI Africa says there is no need for it to apologise over its recent comments on the Aker Energy oil discovery in Ghana.
IMANI at a press briefing indicated that the country could lose 30 billion dollars due to the nature of the agreement covering the discovery and pointed to a potential conflict of interest involving GNPC Boss, Dr K.K Sarpong.
Government has denied the allegations and Dr K.K Sarpong and Fuel Trade have asked for an apology.
However, speaking to the issue, President of IMANI Africa, Franklin Cudjoe said they do not have to apologise for asking questions about the deal.
“What are we apologizing for? For asking a question? How do you apologize for asking a question from which someone has provided an answer? It is not a falsehood at all,” Mr. Cudjoe said.
In justifying the position of the policy think thank, Mr. Cudjoe said: “First of all, let us know that, the Petroleum Agreement expires in 2036 but the programme of development that Aker submitted is based on an extension of the term of the current concession they had [from 2036 to 2049] and that is when Aker projects that they will cease production of the wells.”
Dr. KK Sarpong had early on asked IMANI Africa to apologise for peddling falsehood against him over Ghana’s agreement with Aker Energy.
IMANI had alleged that Dr. Sarpong had ties with Fuel Trade, a partner agency of Aker Energy citing a clear case of possible conflict of interest against him.
But in a statement, KK Sarpong insisted that the allegations levelled against him were untrue because the involvement of Fuel Trade in the Aker agreement was sealed even before he was appointed.
“I wish to state emphatically that neither I nor my family own Fuel Trade as claimed by IMANI Ghana. Consequently, I, Dr.KK Sarpong, Chief Executive of GNPC cannot be accused of conflict of interest in dealing with Aker Energy as stated by IMANI Ghana. Indeed, Fuel Trade’s 2% stake in the Deepwater Tano Cape Three Points Block was acquired in 2014 long before my appointment in 2017 as Chief Executive of GNPC.”
Describing the act as unacceptable, he further chided IMANI for not doing proper background checks before publicly accusing him.
Mr. Sarpong thus demanded a retraction and a subsequent apology from the policy think thank or it risks facing a possible legal action.
“It is surprising to me that IMANI Ghana, a think tank of its sort could not carry out due diligence on the ownership of Fuel Trade Limited before arriving at its erroneous conclusion, causing me serious embarrassment and jeopardizing my standing in the international business community. No doubt, I have incurred immense economic, political and social coast by IMANI Ghana’s unjustifiable claim.
“This, I find unacceptable and hereby demand a retraction of the said claim and an unreserved apology from IMANI Ghana and its Deputy Director, Mr. Kofi Bentil within two weeks. The retraction should be given as much prominence as the press conference. Meanwhile, I reserve my rights to seek legal redress.”
Source: citinewsroom.com
Exxon Mobil’s first-quarter profit misses estimates on lower oil, gas prices
Exxon Mobil Corp on Friday reported a 49 percent fall in first-quarter profit that missed forecasts due to lower oil and gas prices and weakness across its major businesses that outweighed modest production gains.
The largest U.S. oil producer saw its first loss in its refining business since 2009 due to higher maintenance costs and what it called the worst refining margins in a decade.
Exxon also saw lower profits in chemicals and oil and gas production.
“It was a tough market environment for us this quarter,” Exxon Senior Vice President Jack Williams said on a call with analysts.
First-quarter profit fell to $2.35 billion, or 55 cents a share, from $4.65 billion, or $1.09 a share, a year ago.
Cash flow from operations of $8.3 billion was offset by capital spending and dividend payments of $10.4 billion.
“They had a large $2 billion cash flow shortfall that I don’t think investors will be comfortable with,” said Jennifer Rowland, analyst with Edward Jones.
She added that the share repurchases carried out by other oil majors seemed unlikely for Exxon. She expects the company to invest heavily and outspend cash flow for the next few years.
Shares were down about 2.8 percent in morning trading on Friday.
Irving, Texas-based Exxon also took a $115 million impairment charge in its U.S. oil and gas operations.
Analysts had expected Exxon to earn 70 cents per share, according to Refinitiv Eikon estimates.
Maintenance and production curtailments in its Canadian oil production, as well as weak oil and natural gas prices, pushed profits down in its oil and gas unit by 10.3 percent, the company said.
“Clearly this is a weak set of results,” RBC Capital Markets said in a client note, adding that, given the company’s solid fourth-quarter performance, it had seemed Exxon was turning a corner. “Clearly, the corner is further away than we expected and we expect this to lead to underperformance in the near term.”
Exxon’s oil and gas production rose 2 percent overall to 4 million barrels per day (bpd), up from 3.9 million bpd in the same period the year prior.
The company’s growing output in the Permian Basin, the largest U.S. shale basin, was a bright spot, rising to 226,000 barrels of oil equivalent per day in the first quarter, up 19 percent from the previous quarter and doubling the production level from the year prior.
Exxon is running 46 drilling rigs in the basin and plans to increase to 55 rigs by the end of the year.
A takeover battle between rival oil major Chevron Corp and Occidental Petroleum Corp for Anadarko Petroleum Corp has prompted speculation about other Permian Basin mergers and acquisitions.
“I would be surprised if over time we did not pick up some more Permian acreage,” Williams said when an analyst asked about possible acquisitions, but added that Exxon “doesn’t need to.”
The refining business lost $256 million in the first quarter, compared with a profit of $940 million in the same period last year. Exxon said refining margins were “improving” this quarter on higher gasoline demand.
Its chemicals business earned $518 million, down 53 percent from profits of $1.1 billion during the same period last year, while its upstream business, which pumps oil and gas, had a profit of $2.9 billion, down 18 percent.
Exxon Mobil’s first-quarter profit misses estimates on lower oil, gas prices
Exxon Mobil Corp on Friday reported a 49 percent fall in first-quarter profit that missed forecasts due to lower oil and gas prices and weakness across its major businesses that outweighed modest production gains.
The largest U.S. oil producer saw its first loss in its refining business since 2009 due to higher maintenance costs and what it called the worst refining margins in a decade.
Exxon also saw lower profits in chemicals and oil and gas production.
“It was a tough market environment for us this quarter,” Exxon Senior Vice President Jack Williams said on a call with analysts.
First-quarter profit fell to $2.35 billion, or 55 cents a share, from $4.65 billion, or $1.09 a share, a year ago.
Cash flow from operations of $8.3 billion was offset by capital spending and dividend payments of $10.4 billion.
“They had a large $2 billion cash flow shortfall that I don’t think investors will be comfortable with,” said Jennifer Rowland, analyst with Edward Jones.
She added that the share repurchases carried out by other oil majors seemed unlikely for Exxon. She expects the company to invest heavily and outspend cash flow for the next few years.
Shares were down about 2.8 percent in morning trading on Friday.
Irving, Texas-based Exxon also took a $115 million impairment charge in its U.S. oil and gas operations.
Analysts had expected Exxon to earn 70 cents per share, according to Refinitiv Eikon estimates.
Maintenance and production curtailments in its Canadian oil production, as well as weak oil and natural gas prices, pushed profits down in its oil and gas unit by 10.3 percent, the company said.
“Clearly this is a weak set of results,” RBC Capital Markets said in a client note, adding that, given the company’s solid fourth-quarter performance, it had seemed Exxon was turning a corner. “Clearly, the corner is further away than we expected and we expect this to lead to underperformance in the near term.”
Exxon’s oil and gas production rose 2 percent overall to 4 million barrels per day (bpd), up from 3.9 million bpd in the same period the year prior.
The company’s growing output in the Permian Basin, the largest U.S. shale basin, was a bright spot, rising to 226,000 barrels of oil equivalent per day in the first quarter, up 19 percent from the previous quarter and doubling the production level from the year prior.
Exxon is running 46 drilling rigs in the basin and plans to increase to 55 rigs by the end of the year.
A takeover battle between rival oil major Chevron Corp and Occidental Petroleum Corp for Anadarko Petroleum Corp has prompted speculation about other Permian Basin mergers and acquisitions.
“I would be surprised if over time we did not pick up some more Permian acreage,” Williams said when an analyst asked about possible acquisitions, but added that Exxon “doesn’t need to.”
The refining business lost $256 million in the first quarter, compared with a profit of $940 million in the same period last year. Exxon said refining margins were “improving” this quarter on higher gasoline demand.
Its chemicals business earned $518 million, down 53 percent from profits of $1.1 billion during the same period last year, while its upstream business, which pumps oil and gas, had a profit of $2.9 billion, down 18 percent.
Statement: Energy Ministry’s response to IMANI’s ‘false’ claims
PRESS STATEMENT READ BY THE HON. MINISTER OF ENERGY AT A PRESS CONFERENCE HELD AT THE MINISTRY OF INFORMATION ON 26th DAY OF APRIL 2019
BACKGROUND
Ladies and Gentlemen, yesterday, a public advocacy think-tank – IMANI held a press conference at which it sought to challenge what it thinks are various acts of omissions and/or commissions on the part of the Government of Ghana in respect of the plan of development (PoD) submitted by Aker Energy for and on behalf of all the contracting parties in the Petroleum Agreement (PA) covering the Deep Water Tano/Cape Three Points (DWT/CTP) contract area.
The Ministry of Energy has called this press conference to set the record straight, particularly to the extent that IMANI put out total falsehoods.
The PA covering the DWT/CTP contract area operated by Aker Energy was executed on 8thFebruary, 2006between the Government of Ghana -GNPC, AMERADA HESS Corporation. Lukoil and FUELTRADEsubsequently farmed in 2015. Fueltrade’s participating interest was set at 2% for which it paid about 9 million USD with a performance guarantee of 2 million USD.
The contract area has 7 discoveries namely pecan north, almond, cob, beech, pecan, paradise and hickory north. The first five are oil discoveries while paradise and hickory north are gas discoveries.
Aker Energy acquired the interest of AMERADA HESS Ghana Limited in February 2018 and proceeded to continue the unfinished works under the programme of appraisal to HESS.
IS GHANA LOSING $30 BILLION?
Imani tried to alarm Ghanaians about a potential loss of $30 billion to the country if the government failed to negotiate a new petroleum agreement with new terms with the DWT/CTP partners. This is absolutely false.
Aker Energy, on behalf of its partners announced after a successful appraisal of the Pecan Field discovery, a significant oil find as captured below: “Based on existing subsurface data from seismic, wells drilled and an analysis of the Pecan -4A well result, the existing discoveries are estimated to contain gross contingent resources (2C) of 450 – 550 million barrels of oil equivalent (mmboe)”.
How did IMANI arrive at valuation of the field at $30 billion?
It simply multiplied the assumed price of $65 per barrel by 450 million barrels. This exposes the weaknesses in IMANI’s analyses as well asits poor understanding of petroleum economics.
The 450 million barrels of oil equivalent are gross contingent resources, which are the potential resource available all of which cannot be recovered under current technology. IMANI wants us to believe that all the 450million barrels of oil equivalent will be produced but fails to explain how that can be.
In Ghana, our average crude oil recovery rate is 25%. At this rate, the field value will be estimated at $7.3 billion assuming a price of $65 per barrel. We are working with Aker Energy to enhance oil recovery mechanismto achieve a recovery rate of 40%, which will be the highest in Ghana’s oil and gas history and which occurrence will appreciate the value to $11.7 billion. This will be a significant gain for both Ghana and the partners.
IS GHANA LOSING MONEY AS CLAIMED BY IMANI?
It is curious how IMANI reasoned that Ghana stands to lose $30billion if we do not negotiate a new petroleum agreement. There is no basis for a new petroleum agreement. This is because the work that was done by Aker Energy formed part of an appraisal programme based on the existing petroleum agreement.
These works: the drilling of Pecan 4a, Pecan South and Pecan South Eastwells were part of the appraisal programme submitted by Hess and inherited by Aker Energyand partners but had to be postponed for two and a half years as a result of the provisional ruling of the Special Chamber of the International Tribunal of the Law of the Sea (ITLOS), that amounted to an injunction, freezing new drilling activities within the disputed area part of which was the Pecan field. This provisional ruling, which was delivered on 25th April 2015, affected 69% the current DWT/CTP contract area and parts of other contract areas as well.
Following this development, the then Minister for Petroleum reached an agreement with the parties to the DWT/CTP contract area that the PoD should be submitted 10 months after the final ruling on the ITLOS case. This was also further delayed by 8 months in order to include the results of the entire Pecan appraisals in the PoD.
The continuation of the appraisal programme has led to a significant gain for Ghana because it has established a new find which forms part of the existingPecan oil pool missed by HESS.
IMANI stated with certainty in its presentation that there was no dynamic communication, without providing a shred of evidence.As we speak now, we can confirm that the wells drilled encountered the same geological reservoir system as the Pecan field. AKER Energy is still evaluating how the wells are connected.
Therefore, we wonder the basis for IMANI’s conclusion that there is no dynamic communication between the wells. IMANI was also not truthful when it stated that AKER drilled HICKORY WEST as an exploration well. HICKORY WEST has not been drilled.
It must be stated that as a country we operate within the laws governing petroleum agreements, therefore any petroleum find when produced will be shared according to the terms of the applicable petroleum agreement.
The DWT/CTP PA provides a crude oil sharing mechanism in addition to other benefits such as taxes, of which under the existing agreement, Ghana’s share is estimated at about 55-60% of the net oil produced. It is important to state thatthese benefits are spread over the field life.Therefore, for anybody to contend that these were exploration wells drilled outside the exploration period hence any petroleum find from these works require a new petroleum agreement with new terms is grossly misinformed.
The finds from these appraisal wells drilled just confirmed the areal extent of the original pecan discovery. That is why their names are Pecan 4A, Pecan South 1A and Pecan South East 1A; showing their relation.
IMANI’s CURIOUS TRENDS
IMANI’s CLAIM OF FAILURE BY GOVERNMENT TO OBTAIN ADDITIONAL SHARES
GNPC Explorco was given the opportunity to exercise its right to acquire a 10% commercial interest in the block. GNPC Explorco failed to exercise the right when it was due in 2015. We are equally curious why GNPC did not exercise this right at the time. Records show that provision was made in the GNPC budget for 2015 and repeated in 2016 for the acquisition of this interest. However, for whatever reason, the then GNPC administration did not apply the funds to pay for the interest.
POD ISSUES
AKER ENERGY’S POD & ACTIONS TAKEN SINCE IT WAS SUBMITTED
Aker Energy submitted a Plan of Development & Operations (PoD) to the Ministry of Energy on the 28th day of March, 2019. On receipt of the PoD, the Ministry of Energy wrote to the Petroleum Commission requesting it to review the PoD and make a recommendation to the Honourable Minister of Energy.
The reference of the PoD to the Commission was done pursuant to Section 28(1) of the Petroleum (Exploration and Production) Act, 2016; Act 919 which provides “The Minister shall not approve a plan of development and operation unless…the Minister has received recommendation from the Commission and relevant agencies…”
The Petroleum Commission, proceeded to do a thorough review of the PoD and submitted an Advisory Paper to the Hon. Minister of Energy by a letter dated the 17th day of April, 2019.
In reviewing the PoD, the Petroleum Commission relied on the provisions of Sections 27 and 28 of Act 919 and also Article 8.11(a)-(l) of the Deepwater Tano/Cape Three Points (DWT/CTP) Petroleum Agreement. The provisions of the law and the PA cited constitute 29 conditions-precedent/checklist that had to be satisfied by Aker Energy’s PoD for same to be passed as approved on the recommendation of the Petroleum Commission.
Based on a thorough study and review of the Aker Energy’s PoD, the Commission came to the conclusion that Aker Energy’s PoD cannot be approved in its present form. As indicated earlier, the Commission by a letter dated the 17th day of April, 2019 transmitted an Advisory Paper made up of the reasons why the PoD cannot be approved; to the Honourable Minister stating among others that Aker Energy must be made to review the PoD to comply with the necessary provisions of the law and the DWT/CTP PA.
The Honourable Minister, considered the Petroleum Commission’s Advisory Paper and agreed with all the reasons it gave. Subsequently, by a letter dated the 24th day of April, 2019 communicated to Aker Energy that its PoD cannot be approved in its present form further to which it was directed to review the PoD based on the reasons which were attached to the letter and submit a revised PoD within 45 days of its receipt of the letter.
These are matters of record, yet Imani, without checking whether any such steps had been taken since the PoD was submitted claimed at its press conference yesterday that even though it is aware that a recommendation had been made to the Honourable Minister, it did not know whether Aker Energy had been written to. Imani’s fear as it claimed yesterday was that if the Honourable Minister does not write to Aker Energy, the 30-day time limitation by which any failure to direct a revised PoD to be submitted, will mean that the PoD shall be deemed approved. Well, the Ministry of Energy received the PoD on the 28th day of March, 2019 and wrote to Aker Energy on the 24th day of April, 2019 directing it to submit a revised PoD in 45 days because its PoD cannot be approved in its present form. A simple calculation of the passage of time between 28th March, 2019 and 24th April, 2019 shows that it was 28-days within the 30-day limitation. In any event, a PoD is a very important document and it is only fair, just and equitable that in asking for it to be reviewed, the reasons must be cogent and well-reasoned.
Aker Energy has as of the 24th day of April, 2019 received the decision of the Ministry of Energy for it to submit a revised PoD and thus, the fear of Imani as expressed is most unfounded. A simple phone call to the Ministry of Energy will have allayed this fear but alas! Imani failed to do this and sought to lead the people of this country astray in a move bereft of true facts and proof.
For the avoidance of doubt it is provided at Article 8.13 of the DWTCP/PA thus:
“After thirty (30) days following its submission, the Development Plan shall be deemed approved as submitted, unless the Minister has before the end of the said thirty (30) day period given Contractor a notice in writing stating:
that the Development Plan as submitted has not been approved; and
the revisions proposed by the Minister, to the Development Plan as submitted, and the reasons thereof….”
The Petroleum Commission rightly advised the Honourable Minister of this time limitation in its Advisory Paper and the Honourable Minister fully agreed with that advice and accordingly wrote with the full reasons why the Aker PoD ought to be revised and submitted. Once again, Imani did not check with the Ministry of Energy whether it is aware of this provision and if so, what it was doing about it?
It is disappointing that Imani has acted in the manner it has in this matter, especially when there had been an engagement with them a few weeks ago on these matters and the knowledge they have that the Ministry of Energy is open for all manner of enquiries and engagements.
IRREGULAR EXTENSION
IMANI accuses AKER Energy of having unilaterally determined in the Plan of Development when it will cease production without permission from Government. It also alleges that AKER has extended the period of the Petroleum Agreement from 2036 to 2049. This is not true. Extension of the period of a Petroleum Agreement is the preserve of Parliament. Not even the Minister for Energy has the power to grant such extension.
CONDITIONS-PRECEDENT IN PLAN OF DEVELOPMENT
IMANI stated that a contractor cannot give pre-conditionsin a Plan of Development. A simple check by IMANI would have indicated that the Petroleum commission had already made this observation to the Hon Minister in a letter dated 17th April 2019 and this has already been communicated to the contractor, Aker Energy. It is in fact only the Minister who give conditions precedent when approving a PoD under Section 27 (7) of Act 919.
REQUEST TO RENEGOTIATE ALREADY FAVOURABLE TERMS
IMANI sought to create the impression that the old law under which the DWT/CTP PA was signed in 2006 had favourable terms, hence the passing of the new Petroleum Law Act 919. A historical review of oil producing countries will show that countries that are frontier usually provide favourable terms to attract investors. As they mature, and their basins are geologically de-risked, and they resort to fiscal graduation to capture more benefits. Ghana is no exception.
Notwithstanding this, we wish to state categorically that AKER ENERGY and the Government of Ghana are not in negotiation over the DWT/CTP PA, and the impression created that the PA is being renegotiated to give AKER Energy favourable terms is false.
The reference to the letter signed by the former Energy Minister is in respect of a different South Deep Water Tano (SDWT) Petroleum Agreement commonly known as the AGM block. The attempt to relate the current AKER Energy project to a different agreement is therefore misleading if not mischievous.
AKER ENERGY CONDUCTING EXPLORATION AND APPRAISAL IN THE CONTRACT AREA AND HAS SUBMITTED A PLAN OF DEVELOPMENT
AKER Energy drilled Pecan South and Pecan South East in March and April 2019 before submitting a Plan of Development. This is allowed under the Petroleum Agreement. However, these were not drilled as exploration wells. They were drilled as appraisal wells.
Article 8.19 of the PA provides that any area which forms part of a discovery area in respect of which a contractor has given the Minister a separate notice indicating that such discovery merits appraisal or confirmation that same merits appraisals, need not be relinquished, contrary to what IMANI is claiming; and shall be drilled as appraisal wells. This is where the issue of dynamic communication comes in.
FUEL TRADE LIMITED – CONFLICT OF INTEREST
IMANI alleges that Fuel Trade is owned by Dr. K.K. Sarpong/ his family. Dr. K.K. Sarpong has already denied this allegation in a press release yesterday.
However, we wish to inform you that Fuel Trade came into the Petroleum Agreement during the NDC regime at the time that Dr. K.K. Sarpong did not know if ever he would be the CEO of GNPC. We wish to state that we have not renegotiated the AKER Petroleum Agreement and we are at a loss how Dr. K. K. Sarpong could be the chief negotiator over what does not exit.
THANK YOU
Amewu shoots down IMANI’s claim; says Ghana rather gains in Aker Energy deal
Ghana’s Minister for Energy John-Peter Amewu, says Policy Think Tank IMANI-Africa goofed when it sought to question portions of the contractual agreement between the government of Ghana and Norwegian Oil firm, Aker Energy.
IMANI-Africa at a public advocacy program on Thursday, 25th April, 2019 challenged what it says were various acts of omissions on the part of the Government of Ghana in respect of the plan of development submitted by Aker Energy and on behalf of all the contracting parties in the Petroleum Agreement (PA) covering the Deep Water Tano/Cape Three Points (DWT/CTP) contract area.
But the Energy Minister John-Peter Amewu at a news briefing in Accra Friday described the claims by IMANI as total falsehood.
In providing some background information on the agreement, Mr. Amewu said the PA covering the DWT/CTP contract area operated by Aker Energy was executed on 8thFebruary, 2006 between the Government of Ghana -GNPC, AMERADA HESS Corporation, Lukoil and FUELTRADE subsequently farmed in 2015.
He disclosed that Fueltrade’s participating interest was set at 2% for which it paid about 9 million USD with a performance guarantee of 2 million USD.
“The contract area has 7 discoveries namely pecan north, almond, cob, beech, pecan, paradise and hickory north. The first five are oil discoveries while paradise and hickory north are gas discoveries. Aker Energy acquired the interest of AMERADA HESS Ghana Limited in February 2018 and proceeded to continue the unfinished works under the programme of appraisal to HESS” he added.
Is Ghana losing $30 billion?
The Energy Minister criticised IMANI for misinforming Ghanaians on a potential loss of $30 billion to the country if the government failed to negotiate a new petroleum agreement.
“IMANI tried to alarm Ghanaians about a potential loss of $30 billion to the country if the government failed to negotiate a new petroleum agreement with new terms with the DWT/CTP partners. This is absolutely false” he said.
Mr. Amewu revealed that Aker Energy, on behalf of its partners announced after a successful appraisal of the Pecan Field discovery, a significant oil find as captured below “Based on existing subsurface data from seismic, wells drilled and an analysis of the Pecan -4A well result, the existing discoveries are estimated to contain gross contingent resources (2C) of 450 – 550 million barrels of oil equivalent.
How did IMANI arrive at valuation of the field at $30 billion?
In questioning the valuation of the field at $30 billion, the Energy Minister said IMANI simply multiplied the assumed price of $65 per barrel by 450 million barrels.
“This exposes the weaknesses in IMANI’s analyses as well as its poor understanding of petroleum economics. The 450 million barrels of oil equivalent are gross contingent resources, which are the potential resource available all of which cannot be recovered under current technology. IMANI wants us to believe that all the 450million barrels of oil equivalent will be produced but fails to explain how that can be” Amewu said.
He added that “In Ghana, our average crude oil recovery rate is 25%. At this rate, the field value will be estimated at $7.3 billion assuming a price of $65 per barrel. We are working with Aker Energy to enhance oil recovery mechanism to achieve a recovery rate of 40%, which will be the highest in Ghana’s oil and gas history and which occurrence will appreciate the value to $11.7 billion. This will be a significant gain for both Ghana and the partners”.
He announced that there was no basis for a new petroleum agreement as claimed by IMANI because the work that was done by Aker Energy formed part of an appraisal programme based on the existing petroleum agreement.
“It must be stated that as a country we operate within the laws governing petroleum agreements, therefore any petroleum find when produced will be shared according to the terms of the applicable petroleum agreement” said Amewu.
The Minister in his concluding presentation denied allegations by IMANI that Fuel Trade is owned by the Chief Executive of the Ghana National Petroleum Authority Dr. K.K. Sarpong and his family.
AECF launches $20m solar fund for Ghana, Nigeria and others
The Africa Enterprise Challenge Fund (AECF) in partnership with United Kingdom Government has launched the Household Solar Round 2 competition worth $20,600,000 (£16m).
The competition seeks to accelerate access to transformative solar home systems to the rural poor households in Ethiopia, Somalia, Ghana, Nigeria, and Senegal.
“The increasing demand for electricity, high cost of power generation and limited supply of electricity to rural areas in sub-Saharan African is a narrative that constantly repeats its self across the continent,” said Dr Christian Rogg, Head of Office, DFID Ethiopia.
“Although the situation persists, initiatives promoting household solar systems through the private sector have started to offer affordable solutions to rural communities for lighting and economic use.”
In Ethiopia, approximately 11 million rural households do not have access to electricity, making the off-grid market attractive for private sector.
In his speech, H. E. Dr Frehiwot Woldehanna, State Minister of Water, Irrigation and Electricity, said: “We are committed to working with AECF and DFID to support companies provide access to electricity to our rural populations. Rapid growth and transformational development requires reliable energy production, supply and efficiency. Without adequate and reliable supply of energy, no industrialisation, agricultural value additions, job creation, economic and sustainable growth are achievable.”
AECF explained that the REACT Household Solar-Round Two funding will provide a mix of interest free loans, repayable grants and technical assistance to the private sector. As a critical component of Africa Clean Energy (ACE) Programme, the competition seeks to increase the supply of household systems to rural markets at affordable costs, facilitated through innovative financing models, operating and distribution models such as PAYGO and micro-financed interventions.
“Renewables provide just 18% of Africa’s current power generating capacity, therefore developing off-grid alternatives could create many more opportunities and transform millions of lives. Solar home systems are a simple solution that do not appear in the macro-economic statistics yet they have the ability to transform the lives of millions of school children,” Daniel Ohonde, CEO, The AECF.
Over the past seven years AECF has funded private sector companies that take advantage of market drivers like mobile network and data services, mobile payment systems, growing micro- finance networks and an appreciation of social collateral to accelerate access to solar home systems in rural sub-Saharan Africa. Read: SANEDI encourages green loans to develop renewable projects
“With REACT Household Solar Round One investing a total of $7 million in 10 companies spread across 4 countries, the additional funding for Round Two will enable AECF to continue investing in private sector companies to deliver business models which accelerate access to transformative solar home systems to rural markets in sub Saharan Africa,” Daniel Ohonde, CEO, AECF.
GNPC Boss denies IMANI-Ghana’s claim; demands retraction and apology
The Chief Executive Officer of Ghana National Petroleum Commission (GNPC) Dr. K. K Sarpong, has denied a claim by IMANI- Ghana citing him for potential conflict of interest over an agreement between the GNPC and a private firm.
His denial follows a news conference by the policy think tank Thursday, where it called on government to take proactive steps to protect the state’s interest recently discovered oil wells in the Deepwater Tano Cape Three Points (DWT/CTP) block offshore Ghana.
At the said event, the IMANI Vice President, Kofi Bentil, alleged that the GNPC boss may be involved in a potential conflict of interest situation after he connected Dr. K.K Sarpong with Fueltrade Ghana Limited, the private firm which holds a 2% interest the DWT/CTP block.
Kofi Bentil said if this interest still obtains, the position of Dr K.K. Sarpong as head of GNPC which is the government’s chief negotiator on oil matters, raises questions.
However, the GNPC Boss has described the claim as false.
“…I wish to state emphatically that neither I nor my family own Fuel Trade as claimed by IMANI Ghana,” Dr. K.K Sarpong stated in a statement Thursday.
According to him, the 2% stake Fueltrade holds in the new discovery, was acquired in 2014, pre-dating his appointment as Chief Executive of the state entity in 2017.
He expressed surprise that a credible organisation as IMANI Ghana, could not carry out due diligence on the ownership of Fueltrade Limited “before arriving at its erroneous conclusion, causing me serious embarrassment and jeopardising my standing in the international business community.”
The “unjustifiable claim” he indicated, had caused him “immense economic, political and social cost which he described as “unacceptable” and thereby “demand a retraction of the said claim and an unreserved apology” from IMANI and Kofi Bentil not later than “two weeks”.
Source: Myjoyonline.com