Impose Performance Benchmarks on Petroleum Contracts – Gov’t Told

The Africa Centre for Energy Policy (ACEP) has called for the need for performance benchmarks to be imposed on all phases of petroleum contracts in the country before they are signed.

This, according to the Energy think tank will ensure that only companies that had the capacity to deliver were given the contracts.

Speaking at a news conference in Accra on Monday, the Executive Director of ACEP, Ben Boakye disclosed that 13 out of the 15 companies that signed for the oil blocks have since not delivered on their agreement signed with government due to lack of technical and financial capacity.

“Almost all the contractors are still holding on their blocks for lack of performance. Out of the 15 non-producing blocks, only two have delivered on their contractual obligations. These Companies include HESS which has recently been acquired by Aker and ENI Block4 which the new that the ENI bought from the Government of Ghana. This shows that Companies that are giving excuses are not capable of extracting the blocks,” he disclosed.

A Petroleum Monitor report released by ACEP indicates some of the companies had refuge in the preliminary ruling of the International Tribunal for the Law of the Sea (ITLOS) which placed an injunction on field operations in the disputed area until the determination of the case between Ghana and Ivory Coast.

However, the story has not changed almost two years after the ruling of the tribunal in favor of Ghana.

Review Existing Petroleum Agreements

Mr. Ben Boakye in his recommendations called on government to review existing Petroleum Agreements (PA) and their deliverables to ensure that those who are not complying with their minimum work obligations are sanctioned.

“Future Petroleum Agreements should detail out the specific activities for each phase with timelines to ensure that contractors progress along with a defined activity chart which will feed into the assessment for extensions. This will reduce the tendency for companies to wait until the end of a particular phase before they rush to site to work,” he added.

He also urged the Ghana National Petroleum Corporation (GNPC) to be firm and demand compliance from the companies.

“If contractors fail to deliver on their work programme at any particular time, the GNPC should demand the payment of the unspent balance of the minimum expenditure requirements,” he stressed.