A Member of the Public Interest and Accountability Committee (PIAC), Dr Steve Manteaw, is urging the government to make a full disclosure of the details of the petroleum agreement between Ghana and ExxonMobil.
According to him, because the government entered into the agreement on behalf of Ghanaians, it is necessary for the details to be made public.
Speaking on the topic, “The New Exploration and Production (E&P) Law vis-à-vis the ExxonMobil Agreement” at a PIAC-Institute of Financial and Economic Journalists (IFEJ) workshop at Koforidua over the weekend, Dr Manteaw said it was unfortunate that the government has kept details of the deal under wraps.
Section 10 (3) of the E&P Act, Act 919 (2016) on petroleum agreement states, “A petroleum agreement shall only be entered into after an open, transparent and competitive public tender process.”
Section 10 (9) of the same Act states, “Despite subsection 3, the Minister may, in consultation with the Commission, determine that a petroleum agreement may be entered into by direct negotiations without public tender, where direct negotiations represent the most efficient manner to achieve optimal exploration, development and production of petroleum resources in a defined area.”
Again, Section 56 (1) of the Act states, “The Commission shall establish and maintain a register of petroleum agreements, licenses, permits and authorization as prescribed and 56 (2) states further, “The register shall be open to the public.”
“In spite of the transparency provisions we have in the E&P law, Act 919 (2016), we are still behaving in an opaque manner in the negotiation of contracts. The direct negotiations carried out between the government and ExxonMobil have been somewhat opaque and as we speak we don’t know our paid interest, we also don’t know what our royalty levels negotiated.
“The contract that has been negotiated between Ghana and ExxonMobil was negotiated in the name of the people of the Republic of Ghana and therefore they deserve to know what has been negotiated in their name,” Dr Manteaw observed.
According to him, the government did not follow the E&P Act, Act 919 (2016) in negotiating the petroleum agreement with ExxonMobil before granting the license to the oil company to operate at ultra-deepwater located at the Jubilee Oil Field.
Before the passage of the E&P Act, Act 919 (2016) Ghana operated under the Provisional National Defense Council (PNDC) Law 84 and licenses and permits were carried out under an open-door negotiated deal.
“We decided to do what the whole world does and so passed that law as it moved us from direct negotiations to open competitive bidding. The E& P Act, Act 919 (2016) was not followed by the government in the ExxonMobil Petroleum Agreement,” he said.
The government, before awarding the contract, put out a contract notice that touted the expertise, track record, technological acumen, financial capacity of ExxonMobil but the PIAC member said, “these necessarily do not suggest that Ghana would get the best offer from the company. It is when such agreements are pitched against similar companies such as BP, Shell and the Chinese oil giants among others that the country will obtain the best deal.”
Dr Manteaw, who is also the Chairman of the Civil Society Platform on Oil and Gas advised governments to desist from cajoling investors into the country’s oil fields.
“At the early stages of our oil discovery, because we did not know what we had, it was really difficult to attract investment so we cajoled companies, gave them very attractive incentives for them to come in.
But having made a discovery suddenly, we have de-risked the area so we need not cajole them any longer and that is why in passing law 919, we provided that as a default position the way we issue licenses is open competitive bidding so the government can get a good deal.
Among the merits of open competitive bidding include preventing the abuse of the use of discretion as well as helps to secure optimum contractual outcome for the country vis-à-vis technical and financial capacity of whoever wins the contract.
Ghana reached an agreement with ExxonMobil early this year and the government is anticipating increased activities in the oil and gas industry.
Energy Minister, Boakye Agyarko has said the deal brokered was set to trigger further investments in the short to medium term.
He said, “ExxonMobil is coming in with the highest standard of safety, financial accounting and all that we need to get as a country.”
The company is expected to start its operations fully after Parliament ratifies the deal.
Under the deal, ExxonMobil is expected to carry out the work programme as operator and holds 80 percent interest while the Ghana National Petroleum Corporation (GNPC), acting on behalf of the government holds 15 percent interest.
Per the terms of the agreement, ExxonMobil will work with the government to identify a Ghanaian company to potentially hold up to 5 percent of the interest.