Revenue inflows from the sale of oil slowed down in the first half of 2015 as a result of a decline in petroleum revenue streams and global crude oil prices.
Oil revenues decreased from US$562.48 million in the first half of 2014 to US$274.47 million in the same period under review in 2015, indicating a drop of 56 per cent.
Government’s main source of revenue from the petroleum sector in the year under review were royalties Carried and Participating Interest (CAPI) from the Jubilee Field, as well as surface rental and interest earned on its Petroleum Holding Funds (PHF). All the revenue streams ,however, recorded a decline compared to inflows from the same period in 2014.
According to the 2015 Semi- Annual report of the Public Interest and Accountability Committee (PIAC), the State’s Carried and Participating Interest (CAPI) in the Jubilee fields raked in US$197.78 million, representing 72.06 per cent of the total petroleum receipts during the first half of 2015 compared to US$296.17 million received during the same period in 2014.
The half year 2015 CAPI of US$197.78 million represented a 33 per cent decline in petroleum revenue from CAPI. With respect to surface rental, an amount of US$356,794 was received during the period under review compared to US$673,050 received at end of June 2014.
Royalties to the state from the Jubilee Field also reduced from US$28,822,220.42 in 2014 to US$17,093,575 in 2015. No royalties was received from the Saltpond oil field in 2015, although it paid US$151,986.14 to the government in the same period under review.
No inflows went into the PHF in the first half of 2015, but interest earned on the existing funds added US$18,718 to government revenues.
In terms of falling crude oil prices, the average achieved Jubilee crude oil price during the first half of 2015 was US$57.31 per barrel as against a projected benchmark price of US$99.38 per barrel representing a negative variance of 42.3. This also contributed to the decline in revenue inflows.
Impact
The 2015 Budget Statement estimated that an amount of US$1.236 billion was expected as government revenue from the petroleum sector in 2015. Out of this, 50 per cent of the budgeted amount of US$618.19 million was expected to be received during the first half of the year. The actual revenue, therefore indicate that there was approximately a 56 per cent shortfall of US$343.72 million.
According to the PIAC report, the shortfall ultimately affected the Annual Budget Funding Amount (ABFA) for the first quarter, and as a result, US$56.69 million was withdrawn from the Ghana Stabilisation Fund (GSF) during the second quarter to compensate for the shortfall in quarter one.
“A total amount of US$188.73 million representing approximately 69 per cent of total petroleum revenue that accrued to the State during the first half of 2015 was allocated to the ABFA. The actual allocation to the ABFA during the period under review (US$188.73) represents approximately 52 per cent of US$360.91 million being the projected ABFA for the first half of 2015,” the report said.
The decline in revenues also affected the Ghana Petroleum Funds (GPF) as according to PIAC, for the first time since the coming into force Petroleum Revenue Management Act (PRMA), no transfers were made into the Funds.
Crude oil production
The volume of crude oil produced from the Jubilee field during the first half of 2015 was 19,088,843 barrels (averaging 105,463 bopd) compared to 18,679,896 barrels produced during the same period in 2014.
The production volumes achieved during the period under review represents a 2.2 per cent increase over the volumes produced over the same period in 2014. This brings the total volume of crude oil produced from the Jubilee field since commercial production began in 2010 to 143,606,353 barrels.
Total production from the Saltpond field for the first half of year 2015 was 27,513 barrels compared to 37,443 barrels over the same period in 2014 representing approximately 27 per cent decline in production.
The sale of the first three cargoes of crude oil (25th-27th) lifted from the Jubilee field by the Ghana Group for the period yielded an amount of US$163.76 million. An additional amount of US$101.34 million was also realised from the sale of the 23rd and 24th liftings carried out in December 2014 but paid in January 2015 bringing the total revenue accrued from the sale of crude oil to US$274.47 million.
Outstanding payments
A statement issued by the committee, which has oversight responsibility over the management of the country’s petroleum resources, said a surface rental bill of US$67,438.36 dating back to February 2013 payable by Oranto/Stone Energy remained outstanding.
“Surprisingly, there was no record of it in the Bank of Ghana (BoG) half year report even though the payment did not reflect in the list of Surface Rentals paid in the first half of 2015,” the statement said. — GB
Similarly, no royalties was received from the Saltpond Offshore Producing Co. Ltd (SOPCL) in the first half of 2015, although it produced about 27,513 barrels of oil.
“The committee has found that a minimum of US$37,129, being three per cent of revenues, ought to have been paid by SOPCL as royalties to the State,” it said.
According to PIAC, government must take steps to recover all these revenues due it stressing that, “immediate steps must be taken by the Ghana Revenue Authority (GRA) and/or BoG to compel SOPCL to pay any outstanding royalties that had fallen due to the State prior to the suspension of its operations. In the same vein, Oranto/Stone Energy must be compelled to pay the outstanding surface rental invoice that has been pending since February 2013 with accumulated interest.” GB