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Business News of Monday, 17 February 2020

Source: www.ghanaweb.com

Energy Minister faults NDC gas deals for Tullow Oil crisis

Deputy energy minister, Dr. Mohammed Amin Adam, has blamed production crisis on energy deals procured under the erstwhile New Democratic Congress (NDC) administration.

The NDC at its policy dialogue series on Wednesday accused government of wasting national resources insisting it has a far superior record when its tenure is compared to that of the Akufo-Addo government.

Reacting to these claims, the energy boss called the minority out on its Sankofa gas agreement.

The energy boss said the Sankofa gas agreement signed under the NDC government posed a threat to Tullow Oil’s production.

The said agreement, mandates Ghana to draw 154 million cubic feet of expensive gas from Sankofa and about 70 million cubic feet from the free Jubilee field.

According to Dr. Amin Adam, less gas off-take from Jubilee has resulted in the condensation of crude oil, hence reducing the quantity of oil in the Jubilee Field which Tullow operates.

“As a result of prioritizing Sankofa gas over Jubilee gas which President Kufour negotiated for free for Ghana; and TEN gas which is very cheap, we have not been able to maximize the use of our free Jubilee gas; as we arecompelled to off-take more Sankofa gas. We take 70 mmscfd of gas from Jubilee which is free against 154 mmscfd from Sankofa.

“As a result of less gas off-take from Jubilee, oil production from the Jubilee fields has declined. For example, it is estimated that we lose about 15,000 bbls of crude oil per day because of the higher Gas-to-Oil Ratio. Multiply 15,000 bbls by 365 days – 5,475,000 bbls a year assuming no lose production days; multiply by $60 per barrel, it gives you US$328.5 million lost to the Jubilee partners and Ghana”.

Dr Adam added that Ghana is losing money because of NDC Government’s “recklessness” hence Tullow Oil’s decision to lay off 25% of its workers who are mostly Ghanaians.

The last quarter of 2019 saw shares in Tullow Oil plunged to a 16-year low after the company surprised investors by slashing its production forecast.

This low prospects amongst other things resulted in the chief executive and exploration director leave the company.

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