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Renegotiate agreement with AGM/Aker for oil exploration, parliament directs Energy Minister

BY: Musah Yahaya Jafaru
Prof. Mike Oquaye — Speaker of Parliament
Prof. Mike Oquaye — Speaker of Parliament

Parliament last Friday directed the Minister of Energy, Mr John-Peter Amewu, to renegotiate the government’s amended agreement with AGM/Aker Energy for oil exploration in the Deep South West Tano Oil block.

The Minority had raised questions about the government’s proposal to amend the original 2013 deal, arguing that it will reduce Ghana’s holding in the block from 43 per cent to 18 per cent.

The Minority, which had described the amended deal as a “rip-off”, also said the nation would lose $10 billion as a result.

The Minority, therefore, called for the withdrawal of the agreement to prevent what it said would be a short-changing of the people.

It also questioned the basis for which Quad Petroleum, a company that was registered less than a year ago, was to be allocated five per cent stake as a local partner in the agreement.

Following consultations among the leadership of the two sides, the House agreed that the deal would be approved but the government was asked to amend it to ensure that GNPC’s interest in the block was increased from three to 10 per cent.

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Parliament gave Mr Amewu six months to return to the House and brief the members on the steps he had taken to renegotiate the amended agreement.

Minority push

Speaking at a news conference at the Parliament House in Accra, the Minority Leader, Mr Haruna Iddrisu, urged President Nana Addo Dankwa Akufo-Addo "to direct for the withdrawal of this agreement since the agreement in its form and character was inimical to the interest of the state.

"We also call on civil society and all well-meaning Ghanaians to resist this attempt to short-change the citizens and resist this blatant mismanagement of the nation's critical natural resources," he urged.

Mr Iddrisu asked the government to adopt measures that would make the country's petroleum resources beneficial to Ghanaians and not the other way round.

"Instead of protecting the public purse and ensuring that the citizenry benefit from the country's petroleum resources, the current government has demonstrated beyond reasonable doubt that it is more concerned about protecting foreign interest to the detriment of the national interest," he alleged.

Terms of agreement

Mr Iddrisu, who is the National Democratic Congress (NDC) Member of Parliament (MP) for Tamale South, said rather than improving or maintaining the original agreement executed between the Government of Ghana represented by the GNPC and GNPC Explorco on one side, and AGM Petroleum Ghana Limited, on September 10, 2013, the government had reduced Ghana's stake from 43 per cent to 18 per cent (a reduction of 58 per cent), he contended.

Mr Iddrisu said the import of what he described as the "sell-off" to AGM/Aker Energy was huge, as there was a potential loss of over 250 million barrels of recoverable oil production equivalent (net to Ghana), which was almost the size of the entire Jubilee Field.

"The Minority Caucus finds this re-negotiation as a rip-off, especially as the GNPC has already invested over $30 million in acquiring data and reducing Exploration risks over the Block, thus making it attractive prior to the entry of AGM/Aker Energy into the same Block," he said.

Besides, Mr Iddrisu said there was commitment by the AGM/Aker Energy to pay for (or carry) GNPC on the costs of the first two exploration wells, which the current government was forfeiting.
That, he said, amounted to the forfeiture of free funding of about $62 million.

Mr Iddrisu said the existing Petroleum Agreement (PA) gave Ghana a potential 43 per cent stake; made up of carried and Participating Equity interests of 25 per cent and a commercial interest of 24 per cent of the remaining 75 per cent.

However, he said, the government had taken a retrogressive step by rolling back the gains through what it described as a renegotiated agreement with AGM/Aker Energy.

He said the new terms of the agreement, as hurriedly presented to Parliament for ratification, had the following: -Royalty: 10 per cent; GNPC carried interest, 15 per cent; GNPC additional Interest, three per cent; GNPC Explorco, zero per cent and enhanced tax reliefs.

'Rip-off’

Mr Iddrisu said from the foregoing, the renegotiated agreement "is a complete rip-off and a betrayal of the people's trust bestowed in this NPP government."

He said the impact of the "sell-off" of almost 25 per cent of Ghana's equity interest to AGM/Aker Energy in an area that had a potential of about one to two billion barrels of recoverable reserves (after applying a recoverable factor) of oil "is anybody's guess."

Mr Iddrisu reiterated that the GNPC had already invested more than $30 million in acquiring data and reducing exploration risks over the block with bank loans to make the Block attractive, prior to the entry of AGM/Aker Energy into the block.