Routine FPSOs Shutdowns Worrying – PIAC

The Public Interest and Accountability Committee (PIAC) has recommended that the Petroleum Commission work with partners in the country’s oil fields to put in place a well-coordinated framework for routine shutdowns and maintenances to minimise disruption of production and gas exports.

According PIAC, the spate of routine shutdowns and maintenance of the FPSO vessels could compound external factors in the oil and gas industry, such as decline in global demand and price, to affect the country’s petroleum revenues.

The Committee for instance cited a 14-day shut-down from April 22 to May 5, 2019 at the TEN Field for maintenance work and inspection. This, it noted, affected the field’s average daily production and output – hence the recommendation to reduce impacts of oil production and output.

This came up during a review meeting held at Koforidua in the Eastern Region with members of the Institute of Financial and Economic Journalists (IFEJ) and other media practitioners. The review centred on the 2019 semi-annual report on the management and utilisation of petroleum revenues and PIAC’s monitoring report of Free SHS.

GNGC indebtedness

In a presentation, the Chairman of PIAC, Nobel Wadzah, raised concern about the indebtedness of Ghana National Gas Company (GNGC) to the Ghana National Petroleum Corporation (GNPC), indicating that as at June 30, 2019 the gas company’s indebtedness to GNPC stood at US$263,949,220.

He said the Volta River Authority’s (VRA) inability to meet its debt service obligation to GNGC has rendered GNGC incapable of settling its debts to GNPC, adding that the trend is starving the Corporation of needed funds to position it as a viable commercial oil entity in the industry.

Mr. Wadzah also pointed out that there was no payment from the GNPC into the Petroleum Holding Fund (PHF) in respect of gas revenue during the first half of 2019, even though 8,458,153.40 MMBtu of raw gas was supplied to the National Gas Company from the Jubilee and TEN Fields.

“PIAC reiterates its call for GNGC to discontinue the practice of retaining gas revenues. Receipts from the sale of gas must be applied to defray the cost of raw gas supplied by GNPC – for lodgment in the PHF in accordance with Sections 2 & 3 of the PRMA, and in line with sound business practice,” he stressed.

Oil production & receipts

The volume of crude oil produced in the country between November 2010 (start of production) and June 2019 amounted to 349,330,993.53 barrels.  Total petroleum receipts for the period is US$5.32billion. Of the sum, US$2.04billion (38%) went to Annual Budget Funding Amount (ABFA); US$1.64billion (31%) to GNPC; US$1.15billion (22%) to the Ghana Stabilisation Fund (GSF); and US$484.68million (9%) to the Ghana Heritage Fund (GHF).

The PIAC Chairman revealed that an amount of US$155.53million, being excess over the cap of US$300million placed in the GSF was not transferred into the Sinking and/or Contingency Funds during first-half of 2019. To this regard, he said the Committee has requested that the needful to be done or the cap be adjusted to accommodate the excess.