Government needs to take action against companies which have acquired petroleum blocks but so far failed to invest in them, the African Centre for Energy Policy (ACEP) has said.
The energy policy think-tank said domestic oil production and revenues could dwindle in the future if government fails to engage companies on the way forward, or cancel those contracts numbering up to 14.
“What is critical is that some companies are holding onto petroleum blocks without doing the work they are supposed to. So, we want the Ministry of Energy to come out clearly on as to the way forward relative to those blocks, so that we can begin to have a conversation about how to get those people to work or cancel the contracts,” ACEP’s Executive Director, Benjamin Boakye, told the B&FT in Accra.
When someone is sitting on a block, he said, it means that they are deferring the possibility of producing oil – “Because they are not doing the work they are supposed to do. It is only when you drill that you can discover oil; so, if they are not drilling they are not discovering oil”.
Mr. Boakye said this at an event dubbed ‘experts roundtable on petroleum contract governance’, which deliberated on findings of a study conducted by ACEP on Petroleum Agreements entered into by Ghana.
Titled Petroleum Contracts Monitor, 2017: A Public Interest Report, the report examines the existing non-producing petroleum agreements to measure their performance against work obligations of the companies involved.
“This report will form the baseline for subsequent monitoring of petroleum agreements in Ghana by ACEP.”
Given that oil production from the Jubilee and TEN Fields is likely to start declining from 2020-2021, he explained, the country could struggle to find replacement if it fails to act now.
“We won’t have any replacement if these companies do not invest in the blocks. Our receivables are going to start dwindling, and this will affect the national budget. So, you always need to be making new discoveries to be able to sustain your production growth and also replace your depleting reserves.
“The ones we are producing now will not last forever; in the next 15 years they will run out, and when they run out what new discoveries are there to replace them?
“So, we need to ensure that the companies which have taken the new blocks actually invest to discover more oil,” he indicated.
On the study, Ben Boakye said: “We are looking at what advocacies we can put forth to ensure we can attract more efficient and capable companies to invest in our oil sector”.
In the area of transparency, he said: “We have seen some actions taken; the ministry has committed to transparency. For example, they have developed the petroleum register to publish contracts and there are now processes in place to ensure that we go for competitive bidding. These are processes that will go a long way to amend the old ways of granting petroleum contracts on first come, first served basis”.
He added that: “Going forward, we need to implement the new Petroleum Exploration and Production Act and introduce competition. This will invite people who have capacity to participate in the sector”.