Business News of Monday, 10 December 2012

Source: B&FT

Petroleum bill in limbo

Two years after the commencement of oil production, it is still not certain when the Exploration and Production (E&P) Bill, which provides the legislative framework for exploration and production of petroleum in Ghana, would be passed into law.

“The E&P Bill is in a very rough state. A couple of months ago we had a draft of it and we planned to subject it to some scrutiny and we were stopped by the Ministry of Energy. The explanation was that they haven’t really done much work on it and that it is in a very rough stage,” Dr Steve Manteaw, Chairman of the Civil Society Platform on Oil and Gas, told the B&FT.

“I think because of the number of amendments that had to be done on it they decided at some point to rewrite it entirely and that is why it’s taken too long,” he said.

Responding to why the bill has been on hold at a Citizens’ Summit on Oil and Gas in Accra, Michael Aryetey, Lead Geo-Scientist at the Ghana National Petroleum Corporation (GNPC), said simply that the matter is a “political” one.

“The GNPC deals with technical issues. The Exploration and Production Bill is a policy issue which is outside the domain of the GNPC,” he told the B&FT.

But Civil Society actors are worried over the delay in enacting the bill, arguing that PNDC Law 84, which currently governs the industry, is limited in scope and does not address certain critical issues including the environmentally vital issue of oil spillages.

“The E&P Bill is the bible of the industry. The revenue management and the local content Bills come under E&P. At the present moment the only bill we have passed is the Revenue Management Law. If we have an oil-spill today, does PNDC Law 84 cover spillage?

I don’t think it covers spillage; hence when Kosmos spilled oil mud in our waters, they were haggling with government over the kind of amount they were charged,” Mr Kwame Jantuah, a member of the Civil Society Platform on Oil and Gas, told the B&FT.

“The E&P Bill is an important oil industry bill anywhere you go around the world. Let’s put everything aside and pass that bill because If the Keta and Accra Basins and others start production, what will happen without an E&P Bill?” he asked.

“Indeed, we don’t want to wait till something happens before we realise that the laws that we have currently are not applicable to the situation, as it happened under the Kosmos mud-spillage. So the earlier we pass it the better it will be for all of us,” said Dr. Steve Manteaw.

When passed, the E&P law will replace the Petroleum (Exploration and Production) Act, 1984 (PNDC Law 84) to make way for a more comprehensive legal regime.

It, among other things, seeks to create an enabling environment for increased private sector participation and investment in the petroleum sector, and will strengthen the regulatory framework for healthy competition and quality assurance.

The bill provides for comprehensive regulation of petroleum operations, rights and obligations of contractors and sub-contractors; establishes petroleum resources as the property of the republic; and vests petroleum resources, in their natural state within the jurisdiction of Ghana, in the President on behalf and in trust for the people.

“Data and information obtained by a contractor as a result of petroleum operations and the geological, geographical, technical, financial and economic reports and studies prepared by or on behalf of a contractor in connection with the petroleum operations are the property of the republic," the bill says in part.

When the law is passed, a person who intends to explore, develop or produce petroleum in the country must do so under agreement. The person must act in accordance with the terms of a petroleum agreement between that person, The Republic and GNPC.

The bill further provides that petroleum operations be regulated by the Minster responsible for petroleum. It states that "The Minister or the Authority is to authorise a person to inspect petroleum operations to ensure that the petroleum operations are carried out in accordance with the provisions of this Act and in accordance with the terms and conditions of any petroleum agreement or petroleum subcontract."

Concerns have however been raised, severally, about what some see as sweeping discretionary powers granted the Minister in question by the bill and have called for a re-look.

Executive Director of the African Centre for Energy Policy, Mohammed Amin, told the B&FT that due to the lack of a provision in the bill for a mandatory disclosure of oil contracts, only seven of about 14 contracts signed so far have been published.

“One of the things we need in the new law is the provision of mandatory disclosure so that it would no longer be the discretion of the Minister to decide which contracts to publish,” he said.

“If we agree that disclosing the contracts is a fundamental step in ensuring transparency, then we should go all out and ensure that it is done.”