IMANI lacks understanding of petroleum economics – Amewu

IMANI Africa’s analysis of the contractual agreement between the Government and Aker Energy, a Norwegian oil firm, of the Deepwater Tano/Cape Three Points (DWT/CTP) block lacked technical knowledge and understanding of petroleum economics.

Mr Peter John Amewu, the Energy Minister, said this when he addressed a news conference in Accra on Friday, to respond to some concerns raised by IMANI Africa, a policy think tank, on Thursday, April 25.

Giving the background of the contractual agreement between the Government and AMERADA HESS Corporation, the Minister said the agreement was signed on February 8, 2006, and covered seven discoveries, namely; Pecan North, Almond, Cob, Beech, Pecan, Paradise and Hickory North.

He said the first five discoveries made were oil wells, while the Paradise and Hickory North were gas.

However, Aker Energy acquired the right of interest of HESS in 2018 and proceeded to continue the latter’s unfinished works of appraisal.

Mr Amewu said Aker Energy after a successful appraisal of the Pecan Field, discovered crude oil in commercial quantities based on existing sub-surface data from seismic, wells drilled and an analysis of the Pecan-4A well result, which was estimated to contain between 450 and 550 million barrels of oil.

Therefore, Aker Energy, on behalf of the partners, submitted the Plan of Development (PoD) of the Pecan oil wells on March 28, 2019, and the document was subsequently given to the Petroleum Commission that had the technocrats and expertise for evaluation.

Mr Amewu said the Petroleum Commission submitted its report on the review of the PoD to him on April 17 and, thus, communicated the shortfalls in the 29 precedent conditions in the PoD to Aker Energy on April 24, for rectification, and was supposed to be re-submitted within 45 days.

The Minister, therefore, declared IMANI’s claim that the Minister had failed to act within 30 days of the submission of Aker Energy’s POD on the DWT/CTP as untenable.

Consequently, Mr Amewu discounted IMANI’s claims that Ghana was on the verge of losing $30 billion, if the Government failed to act diligently on the petroleum agreement with the Norwegian oil firm.

The Minister explained that considering the country’s average crude oil recovery rate of 25 per cent, the DWT/CTP oil block value would be estimated at $7.3 billion assuming a crude oil price of $65 per barrel.

However, the Government was working with Aker Energy to enhance the country’s oil recovery mechanism by leveraging on the Company’s new technology in order to achieve a 40 per cent recovery rate, which would increase the oilfield value to $11.7 billion.

He said the nation had between 55 and 60 per cent stake in the net oil produced per the contractual agreement with Aker Energy and other benefits such as carried interest, payment of corporate taxes and royalties as spelt out in the Petroleum Exploration and Production Act, 2016 (Act 919).

“It must be stated that as a country, we operate within the laws governing petroleum agreements, and therefore any petroleum find, when produced will be shared according to the terms of the applicable petroleum agreement, Mr Amewu pointed out.

The Minister noted 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.