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Business News of Thursday, 26 August 2021


Ghana needs to maximize profit on its 700 million oil barrels in the ground – Manteaw

Chairman of the Civil Society Platform on Oil and Gas, Dr Steve Manteaw Chairman of the Civil Society Platform on Oil and Gas, Dr Steve Manteaw

Chairman of the Civil Society Platform on Oil and Gas, Dr Steve Manteaw, has said that Ghana has about 700 million barrels of oil left in the ground.

He explained that the country will have to produce all of them and maximise its profit before moving away from fossil fuel to renewable energy.

To that end, he said, the decision to make the Ghana National Petroleum Corporation (GNPC) take over the oil blocks of Aker Energy is an excellent decision that must be supported.

Dr Manteaw explained that almost all the multinational oil companies are leaving Ghana because their countries are moving from fossil fuel to renewable energy.

To thate end, he said if the GNPC is not empowered to produce the oil, it will mean that the natural resource will be left in the ground and will not benefit the nation.

The Ghana National Petroleum Authority ( GNPC) through its Exploration and Production Company Limited (GNPC Explorco) intends to buy 37% stake in Deep Water Tano/Cape Three Points (DWT/CTP) operated by Aker Energy Ghana Limited and 70% stake in the South Deep Water Tano (SDWT) operated by AGM Petroleum Ghana Limited.

To that end, Energy Minister, Dr. Matthew Opoku Prempeh has requested parliament to make an approval that will enable the GNPC to purchase stakes in oil blocks of Aker Energy and AGM Petroleum.

This transaction has divided the front of Civil society Organisations in Ghana with some saying the deal is bad whereas others including Dr Manteaw are for it.

Dr Manteaw told journalists on the sidelines of a forum held on Gender Mainstreaming into Ghana’s Extractive sector organised by the Ghana EITI and the World University Service of Canada, Ghana (WUSC) in Aburi in the Eastern Region that “We made a strong recommendation to government to help GNPC to acquire operatorship capability and to increase its stakes in the oil bocks. We also thought that GNPC was not putting its resources to efficient use. Again we recommended that GNPC was encouraged to focus on its core mandate – exploring and producing oil for this country.

“Let me make the point that some say we have had the opportunity. But I think we haven’t really had the opportunity to nurture GNPC to that role. The first opportunity we gave the GNPC was under the AGM contract where somewhere along the line GNPC was expected to transition as a mere equity holder to the operator of the field. But somehow, we amended that contract when Aker acquired it and gave Aker a lot of incentives to be able to encourage that company to produce the oil in the block.

“I thought that was wrong and I spoke against it at the time.

“Now, we are lucky at a time almost all the multinational oil companies are leaving, we have this unique opportunity to increase our stake in Aker. We are talking about seven hundred million barrels of oil in the two blocks.

“Some of my colleagues argue that, the valuation used a higher value of about 65 dpb, that we are not likely to achieve that price in the medium to long term and therefore, it makes the transaction disadvantageous to Ghana. So I decided to look at the minimum range which is 50dpb. We acquired the block at per barrel rate of 50 dollars and we know that the breakeven price for the crude is 30 dollars, on each barrel of oil we are making dollar profit.

“If you multiply that by the seven hundred million barrels in the ground, does it give us profit or do we lose as a country? That is my basis for assessing whether we should do this or not. In terms of whether the price has been inflated or not, I am not in the position to say anything except to say that to every transaction there is a cost side and there is the benefit side.

“We will look at the cost, look at the benefit and see whether by investing X amount you are going to get X plus One, X plus two and that informs you whether you should proceed or back out.”

He added “Let me emphasize that the right thing to be done is that the international oil companies are all under pressure to divert their investment from fossil fuel into renewable energy.

“There are EU Foundations that support some NGOs in Ghana who are in line with the EU to push for the transition from fossil fuel to renewable energy. Unfortunately for Ghana, we are an emerging oil-producing country, these international oil companies have been able to maximise their benefits, they have made a lot of profits from extracting hydrocarbons and now they are investing these profits in renewables.

“If we were to abandon our fossil fuel in the ground the only option we have as a country is to go and borrow to invest in renewables. I don’t support that.

I would rather that in the interim, between now and the next 60 to 80 years that the EU projects the transition will last, let GNPC move in there to produce oil. Let us make all the money we can and then have a national strategy that reprioritises the ABFA and invest in renewable energy.”