Ghana approves Deepwater Cape Three Points West Block deal

  • Business & Finance

Ghana’s Parliament has ratified the petroleum agreement between the government of Ghana, Ghana National Petroleum Company (GNPC), A-Z Petroleum Products Ghana Limited and Eco Atlantic Oil and Gas Limited.

Ghana approves Deepwater Cape Three Points West Block dealThe agreement is in respect of the Deepwater Cape Three Points West Block, which is approximately 944 square kilometers area located in the Tano Cape Three Points Basin in the Western Region.

The agreement is for a total of 25 years , subject to the discovery of oil within the first seven years during the exploration period and the contract expires after seven years if no commercial discovery is made.

The exploration period has been segmented into three stages, that is, the initial exploration period which is the first two and a half years, the first extension period which is the next two years, and the second extension period which is expected to take a year and a half.

The contractor, at each stage of the seven-year exploration period, is expected to drill one exploration well at a cost of US$65 million.

In the event of commercial discovery in the proposed contract area, the state is expected to benefit from 12.5 per cent royalty from oil, 20 per cent royalty on gas (both domestic and export) 13 per cent GNPC carried interest, 20 per cent GNPC additional interest, 4.35 per cent explorco commercial interest and 35 per cent corporate income tax.

Chairman of the Committee on Mines and Energy, Dr.Kwabena Donkor,who moved the motion for adoption of the committee’s report on the agreement, said the committee observed that the petroleum agreement made provisions for the effective participation of the GNPC in the management of petroleum operations with respect to the block.

“This provision empowers GNPC to control spending and ensure that all approved work programe and development plans are complied with,” he said.

He informed members of the background information of all four applications.

Ghana approves Deepwater Cape Three Points West Block deal

Minister of Energy and Petroleum, Emmanuel Armah Buah, in a contribution said: “Government had always adhered to the Constitution, the GNPC laws, petroleum commission Acts, Environmental Protection Acts, Impact Assessment Acts, among other regulations, in giving out petroleum exploration rights to oil companies.”

He acknowledged however that the concerns raised by the Sekondi legislature was a legitimate one and would be considered by the government because the country had moved from the pre-oil discovery regime to the post-oil discovery regime.

Member of Parliament for Sekondi, Papa Owusu Ankomah, on his part also raised concerns over the manner in which the country’s oil blocks are given out to petroleum companies for the exploration and production of hydrocarbon resources.

“It was about time the government began to use open and competitive bidding processes to select companies to explore crude oil in the country’s basins,” he stressed.

“Gone are the days when companies had to be persuaded to explore oil on our blocks. Now there is ample evidence of the country’s hydrocarbon potentials but the government has delayed so much in changing this process of selecting companies to explore our oil resources,” he said.

The former Attorney General said the present structure where petroleum companies were selected without resorting to open bidding did not allow the country to get value for money.

He urged the government to take a serious look at the process of giving out the blocks to make it more transparent.

Press Release, July 21, 2014
Related news

List of related news articles