Minister "kills" oil pact

he Minister of Energy, Dr. Joe Oteng-Adjei, has virtually abrogated a Petroleum Agreement (PA) amongst the Government of Ghana (GoG), Ghana National Petroleum Corporation (GNPC), AKER ASA and Chemu Power Company Limited in respect of the South Deep Water Tano Contract Area. The minister’s action was contained in a letter dated December 30, 2009 which was addressed to the President of AKER ASA Group.

The Petroleum Agreement (PA) under reference was unanimously ratified by Ghana’s Parliament at its 20th sitting on November 5, 2008 after it (PA) had had the appropriate approvals of the Ministry of Energy, Cabinet and the GNPC Management and Board as required by the laws of the land. The text of the resolution was, subsequently, formally forwarded to the Attorney General for appropriate action by the Clerk of Parliament in an official correspondence dated November 13, 2008.

Records available to The New Crusading GUIDE indicate that since the ratification of the Petroleum Agreement (PA), AKER ASA, which is a Norwegian company and a big player in the global oil industry, and its Ghanaian subsidiary, AKER GHANA LTD, have been engaged in the most extensive 3D seismic data acquisition programme ever to be undertaken in the history of oil exploration in Ghana. Millions of dollars have been spent on that endeavour. The companies have also duly discharged all their tax obligations to the State of Ghana.

However, upon the assumption of office by the Mills administration, some leading government and party officials, including Dr. Joe Oteng-Adjei, began to raise ‘red flags’ about the processes leading to the consummation of the petroleum agreement, especially the connection between AKER ASA and its local (Ghanaian) partner, CHEMU POWER COMPANY LIMITED. DR. OTENG-ADJEI AND HIS COLLEAGUES ALSO CONTENDED THAT THERE WERE SOME ‘LEGAL DEFECTS’ WITH THE PA BECAUSE SECTION 23(15) OF THE PETROLEUM (EXPLORATION AND PRODUCTION) LAW 1984 (PNDC L84) CLEARLY REQUIRED THAT A GHANAIAN REGISTERED COMPANY OUGHT TO HAVE BEEN THE SIGNATORY TO THE PA, AND NOT AKER ASA.

The Norwegians, confronted by this legal hurdle raised by Dr. Oteng-Adjei and company, initially proposed to rectify the situation by making both AKER ASA and AKER GHANA co-parties to the Petroleum Agreement (PA); a solution which they believed to be “natural and most efficient” until otherwise decided by the Parties. The Norwegians, however, indicated their readiness to take on board any reasonable preferences of GNPC and the Minister in confirming AKER GHANA’s status as the performing party to the Petroleum Agreement (PA).

There is evidence to show that the GNPC wrote to Dr. Oteng-Adjei on February 24, 2009 to explain the situation AND RECOMMENDED THAT THE SOLUTION TO THAT ‘LEGAL DEFECT’ LAID IN AKER ASA TRANSFERRING AND/OR ASSIGNING THE PA TO AKER GHANA LIMITED, THE ENTITY THAT WOULD BE OPERATING THE PA. “THIS ASSIGNMENT IS PERMITTED UNDER THE PROVISIONS OF ARTICLE 25 OF THE PETROLEUM AGREEMENT”, the GNPC letter signed by the then Managing Director, M.O. Boateng advised the Minister. “Indeed Aker Ghana Limited has commenced work under the Petroleum Agreement and currently has a seismic vessel on location in its contract area to acquire approximately 2,600 square kilometers of 3D seismic data which exceeds the 1,500 square kilometers negotiated in the Petroleum Agreement”, added Mr. Boateng.

He continued: “AKER ASA HAS BEEN INSTRUCTED TO EFFECT THIS ASSIGNMENT AND AKER ASA WILL BE SUBMITTING THE DEED OF ASSIGNMENT TO GNPC AND THE HON. MINISTER FOR ENERGY FOR APPROVAL AS REQUIRED UNDER THE PETROLEUM AGREEMENT”.

In reaction to this development, AKER ASA and AKER GHANA wrote to the GNPC on February 26, 2009, saying that in view of their understanding that the GNPC preferred AKER Ghana to be confirmed a party to the Petroleum Agreement through an assignment “THEREFORE WE HEREBY CONFIRM THAT WE AGREE TO FORMALLY ASSIGN AKER ASA’S POSITION AS A PARTY UNDER THE PETROLEUM AGREEMENT TO AKER GHANA, AS INSTRUCTED BY GNPC”.

However, the Ministry of Energy in a letter dated April 8, 2009 and signed for the Minister by Dr. M. Apiagyei Gyamfi, Director for Petroleum, informed the GNPC Boss that “the matter has been put on hold until all issues concerning the process of awarding the block to Aker ASA and Chemu Power Company Limited are addressed”.

The Minister himself in a letter dated May 12, 2009, and addressed to the Ghana Office of the Aker ASA, requested the latter to “MAKE AVAILABLE AS A MATTER OF URGENCY ALL DOCUMENTATION IN RESPECT OF THE RELATIONSHIP ESTABLISHED BETWEEN AKER ASA AND THE GHANAIAN COMPANY, CHEMU POWER WHICH IS A PARTY TO THE AGREEMENT”.

“SUCH DOCUMENTATION INCLUDES CORRESPONDENCES LEADING TO THE JOINT SUBMISSION OF THE APPLICATION FOR THE ACREAGE AS WELL AS AGREEMENTS ON THE RELATIONSHIP THAT WAS ESTABLISHED BETWEEN THE TWO COMPANIES. PLEASE TREAT AS URGENT”, Dr. Oteng advised entreated.

The Norwegians subsequently complied with the Minister’s request and in a letter dated May 19, 2009, provided a chronology of their activities in Ghana and their relationship with Chemu Power, relative to the processes towards the signing of the Petroleum Agreement (PA).

In spite of all that and contrary to the advice given by the GNPC and other legal authorities, both local and international, Dr. Oteng-Adjei wrote to the Norwegians on December 30, 2009, indicating that after having given extensive consideration to the Petroleum Agreement (PA), their company (Aker ASA) “purported to enter into with the Government of Ghana (GoG) and Chemu Power”, the Ministry of Energy was unable to give its consent to the assignment request put in by the Norwegians.

Hear him: “As you are aware the Petroleum (Exploration and Production) Law clearly requires a Ghanaian-registered company to be the signatory to the Petroleum Agreement. THE ASSIGNMENT YOU HAVE REQUESTED IS LEGALLY IMPOSSIBLE IN VIEW OF THE UNDERLING FAILURE OF COMPLACENCE WITH THE LAW”.

The Minister, apparently motivated by some allegations peddled by Anadarko and its allies in January, 2009; allegations which had been positively debunked by GNPC, indicated to the Norwegians that it had been established that, “based on an application that preceded yours, negotiations had been at an advanced stage for a Petroleum Agreement with another consortium of companies and the negotiations were not concluded simply because the consortium would not accede to a demand to include a particular ‘local partner’”.

“In the interest of transparency and fairness, therefore, I am allowing that consortium to be given the chance to conclude the negotiations they had begun”, he underscored.

The Minister then intimated that “considering that you had undertaken some data acquisition, I am, by copy of this letter, asking GNPC, as the owner of such data, to reimburse you the costs of the data”.

“We look forward to future opportunities to have you participate in petroleum exploration activities in Ghana”, concluded Dr. Oteng-Adjei.

Meanwhile, unconfirmed information reaching our editorial desk indicates that the decision of the energy minister could end up in costly litigation and international arbitration which could have dire consequences for the investment climate in Ghana’s oil industry.