Ghana: 'we want oil to be a blessing for all'; Ghana will join the club of global oil producers in either late 2009 or early 2010 when production starts in the Tano Basin of the Gulf of Guinea, off the coast of the Western Region where "significant" oil deposits were discovered last year, reports Tom Mbakwe.
It will start by producing 60,000 barrels a day, and increase to between 250,000 and 300,000 barrels a day by 2012 when at full production. In an exclusive interview with New African, Adu-Gyamfi, a businessman in his own right, said though Ghana has been producing oil for many years from its Saltpond field, the quantity (700 barrels a day) was so insignificant that one couldn't describe Ghana as a genuine oil producer. But this time, with production starting at 60,000 barrels a day, and rising to 250,000-300,000 barrels a day in 2012, "we can now call ourselves an oil producing country", said a proud Adu-Gyamfi.
Ghana's current daily consumption of oil is 60,000 barrels a day, much of it imported from Nigeria. "By producing 60,000 barrels a day ourselves, we will have a guaranteed supply and staple price, but not necessarily cheap pump prices," Adu-Gyamfi hinted.
Last year, after many years of exploration, Ghana finally struck oil in "significant" quantities offshore in the Tano Basin near the border with Cote d'Ivoire.
Three foreign oil companies--Kosmos Energy, (American); Anadarko Petroleum (also American); and Tullow (British)--are working on Ghana's find, located 65km off the Western Region. Of high quality (light crude, the best in the business), the find, estimated at three billion barrels in total, is expected to last 30 years at full production.
Exploration is still continuing--and more could be found. As many as 13 foreign companies are now actively exploring for oil within Ghana's territorial waters, and, as Adu-Gyamfi puts it, "there is the likelihood that more oil will be found".
Kosmos made the first discovery in its Mahogany 1 & 2 blocks, while Tullow made the second find in its Hyedua block. The first two finds are said to flow from the same reservoir. But the third discovery, made by Kosmos in early 2008 in its Odum block, has its own reservoir. The three blocks have since been renamed the "Jubilee Field", to mark Ghana's Golden Jubilee of independence, the year in which the oil discoveries were made.
The companies have agreed to coordinate their production, and have already secured a rig which will cost them $640m in three years, for the operation. In all, 27 wells will be drilled, five of which are already up and running. It costs about $30m to drill one well, and the companies are hoping to spend $400m in the early production phase, and $3.5bn at full production.
Adu-Gyamfi denied claims made by Ghanaian opposition politicians that the nation would get only 10% of the proceeds from the oil, with the remaining 90% going to the foreign companies.
He said instead of 10%, the nation would get a "cumulative share of 51%" of all the revenue accruing from the oil, and challenged anybody who had the least doubt to check the facts from the oil agreements that were deposited in Parliament long before the foreign companies started work in Ghana.
"These agreements begin life at the GNPC," Adu-Gyamfi told New African. "We do the first draft and take it to the Ministry of Energy for study and approval. It then goes to cabinet for study and approval, before it is taken to Parliament for ratification.
"So before a company comes in, it already has the agreement, and when it discovers oil, everybody knows the shares they will get. Everything is laid out before the work begins, so it is not when oil has been discovered that you sit down to negotiate the shares," Adu-Gyamfi explained. "In terms of our agreements, Parliament debated and approved them well before the oil companies started their exploration work. The agreements are now public documents. Anybody can go to Parliament and check."
According to him, the oft-repeated 10% share is just the first tranche of the shares (or in petroleum parlance, "the carried interest") that the nation will get from the oil find. This will be in addition to a 5% royalty fee, and another 3.5% "paid or participating interest" that Ghana will have in the project (this one will be paid for by the state, amounting to $140m). On top of that, the oil companies will pay 35% corporate tax on their profits, in addition to what is called in the business as "additional oil entitlements".
"In all, Ghana will get a cumulative 51% share of all the revenue from the oil," Adu-Gyamfi explained, pointing out that "any model petroleum agreement states that 10% is the carried interest, but that is not all; there are more. To go around and tell people we are getting only 10% is deliberate misinformation."
Ghana has one major oil refinery situated in the port city of Tema with a capacity of 45,000 barrels a day, and a second one is being built by a private consortium in Takoradi to handle what Tema can't refine from the Jubilee Field.
According to Adu-Gyamfi, geological studies show that mainland Ghana might be sitting on large deposits of oil. "The studies show that we have the same sedimentary soil formation as landlocked Chad which has discovered huge deposits of oil. So we are confident that we will discover more oil on mainland Ghana itself. It's exciting news. So far, little exploration work has been done on the mainland. It's a job for the future." A major spin-off of the oil project is gas production, and plans are advanced to build a gas pipeline that will take gas from the Jubilee Field to the Osagyefo Barge (a floating generating plant on the sea off the Western Region). In the meantime, the Ghanaian government is inviting companies with the required expertise to build a gas plant to process the gas to come from the Jubilee Field. "There will be no flaring of gas in the production of Ghana's oil," vowed Adu-Gyamfi.
He revealed that all the oil companies working in Ghana have "decommissioning programmes" in place to ensure that they don't leave the country with environmental problems. The decommissioning plans are vetted and approved by Ghana's Environmental Protection Agency. A decommissioning fund is to be set up.
In February this year, Ghana called an oil and gas conference in Accra attended by all the major oil producers in the world, so that Ghana could learn from their experience, and avoid their mistakes (such as environmental degradation, neglect of host communities, misuse of oil revenue, etc).
"We don't want to go the way some of these countries have gone--in making oil a curse instead of a blessing," Adu-Gyamfi said. "We want to make oil a blessing for all our citizens, and as President Kufuor said at the oil conference, perhaps providence did not give us oil earlier because it wanted us to learn from the experience of our predecessors."
Norway, acknowledged as the world's 'best manager of oil revenues', is being studied by Ghana as a role-model.
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|Date:||Apr 1, 2008|
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