Dr. Mohammed Amin Adam (left) speaking to Michael Creg Afful(right)
I had the opportunity to visit Houston, Texas, USA, to cover the Offshore Technology Conference which began on Monday, 6th May and ended on Thursday, 9th May, 2019. It was my first time of visiting one of the most powerful nations in the world, USA, and I had wonderful experience.
Houston is the oil and gas hub of the US and so as a journalist who reports on energy, the visit gave me the opportunity to meet with some players in the sector who one would hardly come by. Except the closed door meetings, I participated in most of the events planned by the Ghanaian delegation led by the Energy Minister John Peter Amewu.
My most cherishing moment was our visit to Halliburton and TGS, the world’s leading seismic data gathering company. I left these two places excited because I learnt a lot from there. It was the visits that got me to know that the two have offices in Ghana. TGS has been working for Ghana’s National Oil Company (GNPC) to acquire seismic data on Ghana’s oil fields, and I learnt this on the visit.
Ghana empaneled speakers like Hassan Tampuli of NPA, Dr Ben KD Asante of Ghana Gas, Patrick Akpe Kwame Akorli of GOIL, Senyo Hosi of Chamber of Bulk Distribution Companies (CBOD), Egbert Faibille of Petroleum Commission, Jan Arve Haugan of Aker Energy, Ms Randi Cruiz of ExxonMobil, Joe Mensah of Kosmos Energy, Kweku Andoh Awotwi of Tullow Ghana Limited and James Yamoah of GNPC for the ‘Ghana Day’, a forum that had Ghana’s Upstream, Middle and Downstream sectors discussed.
The event brought together Ghanaians in diaspora and investors who were looking for new areas to explore oil business. The ‘Ghana Day’ forum was opened with a speech by the Minister for Energy, John Peter Amewu, who made a strong case for Ghana’s nascent oil and gas sector, citing stable political and friendly regulatory environment as key attractive elements to woo investors. In view of this, he extended an invitation to investors to consider Ghana as their most preferred place to invest in the oil and gas sector, assuring them that their investments would be secured, given the level of political stability Ghana has enjoyed over the years.
Interestingly, as it is said that everything that has a beginning has an end, the programme ended successfully. But one would ask: How did Ghana benefit from the conference? I caught up with the Deputy Minister for Energy in-charge of Petroleum, Dr Mohammed Amin Adam, who shared his perspective as to how Ghana from the conference.
Prospects of OTC
“OTC has offered us opportunity to network, learn from peer countries about how they are developing their energy industry so that we can also apply the best practices that we come across in our industry as well. And countries that have developed their industries faster have certainly linked on to others that have done it well. And so like us, we are looking at countries that have advanced in the development of their energy industries that have benefited much from the exploitation of their resources, and I can assure you that we are going to move our industry forward,” Dr Amin Adam said.
This year’s OTC, Dr Amin Adam said, was exemplary for Ghanaian leadership “because we had, for the first time, the ‘Ghana Day’ and the Ghanaian leadership marketing the potential of Ghana, the prospects and opportunities that investors are looking for. We received a massive endorsement for our strategy, and given the attendance at the ‘Ghana Day’ forum, the level of interest investors have in Ghana is high.”
In his view, investors are always looking at places where the security of their investments would be assured, before they invest their monies. Additionally, he said investors look for availability of labour force. These, key influencers, Dr. Amin Adam noted, are what Ghana can boast of.
“We have a stable democracy…It is proven that we have significant amount of untapped resources and, then, also, our people are hardworking, well-designed Ghanaians and, therefore, these are the ingredients every investor is looking for. To the effect that Ghana can boast of these to get this, positions us to get the level of partnership that will inure to the benefit of the people of Ghana and also, our partners, the investors.”
Aggressive Strategy
“Our strategy, as you may know for the oil and gas industry, is what we call the ‘aggressive exploration strategy’, because we believe that if we do not make new commercial discoveries, our oil industry will not exist six to ten years to come, because we are depleting and not replacing. The rate of depletion is higher than the rate of replacement, and you need a high replacement ratio to sustain production. This is why we are embarking on aggressive exploration and so, you know that we are doing the bidding round to attract the type of companies that will come and invest in Ghana, that will come and explore for oil,” he explained.
Dr Amin Adam, John-Peter Amewu, Patricia Asaam, Kwame Jantuah and TGS officials in a group photograph at TGS’s Headquarters in Houston, Texas, USA.
Apart from plans to attract new investors, Dr Amin Adam indicated that the Ministry is also discussing with the existing producers to tap into the resources within their contract areas that have not formed part of the current production.
He said, “We are also trying to look for secondary techniques of oil recovery to maximize production from the existing producing fields. And so, yesterday, we had another Ghana Forum here, talking to investors to come and invest with the view to supporting our strategy. When we do this, we are able to increase our resources, and through that increase and sustain production, we will have more revenue coming over sustained period of time, and that should support our economy in terms of financing the development needs of our people, and also supporting the industrial agenda of our President, Nana Addo. And so, the OTC, for me, is an enormous opportunity for us, and we are hoping that we will get the best.”
Positive signs
According to Dr Amin, the interest shown in Ghana’s oil and gas sector by major oil companies such as ExxonMobil, BP, Aker Energy as well as Qatar Petroleum, is an indication that Ghana’s oil and gas has a brighter future. Responding to a question on the 57 applications the Energy Ministry received for the ongoing licensing bid round, Dr Amin Adam posited that “yes, the interest is very high, and the interesting thing is that, some of the companies that have invested are those that are showing interest in Ghana, and Exxon Mobil is already in Ghana. We are negotiating with CNOOC, BP, Aker Energy is in Ghana, Qatar Petroleum applied to participate in the bid, and we are holding bilateral discussions with them. And so, the level of interest is very high and very interesting, because of the number and quality of companies that are showing up, and the future is bright for Ghana’s oil and gas industry.”
Capacity building for CSOs
Touching on the recent controversy that greeted the 450-550m barrels of oil discovery by Aker Energy, Dr Amin argued that the argument some of the civil society group postulated clearly demonstrated their lack of understanding about petroleum agreement.
He, therefore, stressed the need for civil society groups and think tanks that speak about energy issues, to be empowered through capacity building programmes to enable them have grasp on petroleum agreement.
“Well, I think that we need to provide more education to our think thanks and the NGOs that are interested in debating oil and gas issues, because you know that some of the views that are expressed are not well-informed.
“For example, if you want to assess the physical benefits that a country will thrive from an oil and gas project, you don’t do that by just adding the percentages of just the physical terms. You add royalty to carried interest to additional interest. You don’t do that. What you do is to run modules…cost benefit analysis, and that will determine…because just as you want to benefit, there is also cost you pay because there is risk. And so, for example, if you have Explorco having a commercial interest, they are going to pay for it. It is not free. So, the question you ask is: if you use that money to invest in agriculture, what will be the rate of return to the economy versus using it to invest in an oil project that is not likely to succeed, especially if there is no discovery in the contract area yet?” he quizzed.
“So, the risk is very high compared with the risk of investing the money in another area. And given that we are a developing country and we don’t have so much money, we will want to invest in areas that have lesser risks than areas that have higher risks. And so, what you will want to do is to transfer the risk to the investor or investors that are risk takers so that when they make the discovery, then, you can get your rent, you can get your free interest and you can also get your taxes.
“And so, that is the most important thing. But, if you just add the percentages…and I tell you, there are many petroleum agreements signed in Ghana with higher percentages but they have not led to any discovery. And this is why I keep saying that 100 percent of zero is zero. But, if you are getting investors that are asking for incentives and also for them to be given a little more of the interest in order to bring the area into discovery and eventually, into production, I think that, that is the sensible thing you have to do.
“What we are failing to understand is that, Ghana is still a frontier country, and only less than twenty percent of our hydrocarbon basins are licensed. And so, if you have only twenty percent of your basins licensed, it means that you are not yet a mature province.
“And the level of production in Ghana is just 200,000 barrels a day compared to two million to 2.4 million barrels a day. So, what any serious government will do will be how to attract investments. As a policy, there are two competing policies countries should be looking up to. One is how to attract investments if you are a frontier nation, and the second one is how do I maximize revenue.
“You may not be able to have all the two at the same time because you are a frontier nation, and so, your focus, as a frontier nation, should be how to attract investments, because it is when you attract the investments that you will mature your profit and then you graduate to maximization. ”And so, that is the policy every serious government that understands the dynamics of the industry will do, and that is exactly what this government is doing,” he explained.
Unlike the other sectors of the economy which is easy to understand, Dr Amin pointed out that the energy sector is more technical, stressing that there was the need for continuous education for Ghanaians to have better understanding.
“I think we should understand that we are dealing with an industry that is so technical and so it is too simplistic for propagandists, who want to mislead the people, to just add percentages. They don’t tell the people that the additional interest is not exercised until the oil discovery and so at the time there is no oil discovery, you have twenty percent, not thirty-five. But, if they tell the people that the government is reducing our interest share from thirty-five to twenty percent, they falsely carry the people away.”
Assurance
Dr Amin assured Ghanaians that the Akufo-Addo administration would make sure that it does what is better for Ghanaians in the oil and gas industry for the development of the good people of Ghana.
Michael Creg Afful is the Editor of energynewsafrica.com. He was adjudged the 2018 Best Energy Reporter
