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Business News of Saturday, 29 February 2020

Source: Dickson Boadi, contributor

Akufo-Addo’s government genuinely has little understanding of the petroleum industry – Alex Mould

Alex Mould, former CEO of GNPC Alex Mould, former CEO of GNPC

Former Chief Executive of the Ghana National Petroleum Corporation (GNPC), Alex Mould says the comments made by the Ministry of Energy (MoE) in their response to his earlier article on Aker clearly indicates their little or lack of knowledge in the management of the petroleum industry.

A press statement issued by Mr Mould on Saturday said “it is truly sad to think that the Energy Ministry and for that matter President Akufo-Addo’s government genuinely has so little understanding of this industry”

The MoE in a response to Mr Mould last Monday said the amendments to the Petroleum Agreements of Aker Energy and AGM were to provide regulatory certainty and incentives to support the realization of Aker's Pecan Project and increase investment in the AGM block respectively.

"These incentives have already yielded positive results for the country as AGM recently announced crude oil discoveries following an accelerated drilling campaign," the MoE statement said.

But the former GNPC Boss in another opinion piece released today said he noted that government does not achieve “regulatory certainty” by amending a single petroleum agreement.

“It does so by amending the regulations that have industry-wide application. This was pure favouritism. However, it will lead to a stampede of International Oil Companies looking for similar treatment (and perhaps that is what MoE wants).

“The rules were clear; the problem was simply that Aker sought special extra-legal treatment and MoE was willing to bend over backwards to please Aker. When it talks about “incentives to support the realisation of Aker’s Pecan Project” Government is either unforgivably naïve or disgracefully dishonest (or both)” he emphasized.

According to him, there was little chance that Aker would walk away from the DWT-OCP Block because the government refused to give it extraordinary exploration rights.

“If Aker did walk away it would simply lose its rights and would not be entitled to compensation. Any moderately seasoned negotiator would have called Aker's bluff immediately.

Addressing government’s claim that the amendments were intended to achieve an ‘… increase [in] investment in the AGM Block’, he said that again was false.

“If the intention was to increase investment, then the SDWT Amendment agreement would capture Aker’s enhanced work and expenditure commitments. No such commitments are given in the Amendment Agreements.

“MoE is claiming (with no shame) that amendments to a Petroleum Agreement ratified on 22 December 2019 led to an oil discovery 6 months earlier in June 2019?! Even if MoE is referring to the Amendments it presented to Parliament in April last year the claim makes no sense. At the time that Aker started drilling in June, Parliament had not ratified any amendments.

“I should also point out that the 2 wells Aker drilled in June were not in any way “accelerated”. They were wells due in the Initial Exploration Period under the original PA. And since MoE is promising an accelerated drilling campaign it should tell the public when the next well is expected. Can MoE deny that Aker’s current programme does not include any new drilling before the third quarter of 2021? Is this the ‘acceleration’” he quizzed.

Touching on local content, Mr Mould, who is also a former Executive Director of Standard Chartered Bank said per the amendment, Aker can rewrite the Development Plan (Including the local content provisions) without reference to the Minister. “It can (for example) reallocate costs and contracts away from local to Norwegian subcontractors as long as this does not increase overall costs. How then can MoE’s power to approve Development Plans be said to protect local content?

“This surrender of policymaking power by a minister is truly extraordinary. I cannot imagine that Aker would enjoy such treatment in Norway. I cannot believe that Aker would dare to suggest to the Ministry of Petroleum and Energy (“MPE”) in Norway that it should be entitled to unilaterally override the terms of a ministerial approval. What then is the point of the Minister approving a development plan? How could any minister propose such self-emasculation to Parliament? How can we the people entrust the protection of our national commercial interests to a minister who is so subservient to private companies?)” he bemoaned