The Institute of Economic Affairs (IEA) has opposed the government's move to extend the petroleum licenses of Tullow Oil and its partners beyond their original expiration date of 2036.

According to the institute, the extension reflects bad faith and a lack of transparency and accountability.

The government has signed a Memorandum of Understanding (MoU) with Tullow to extend the validity of its drilling licenses to 2040.

In a statement released on June 16, 2025, the IEA noted, "The Institute of Economic Affairs (IEA) has followed with keen interest recent reports that the Government of Ghana has signed a Memorandum of Understanding (MoU) to extend the petroleum licenses of Tullow Oil and its partners until 2040. The IEA considers this decision to lack good faith, transparency, probity, and accountability, and to be starkly at odds with the government’s own commitment to reset and strengthen governance in the extractive sector."

The IEA added that it opposes the extension due to ongoing tax and arbitration disputes between Ghana and Tullow.

It cited a $320 million Branch Profit Remittance Tax assessed by the Ghana Revenue Authority (GRA) for the period 2012–2016, following a comprehensive audit, which Tullow successfully challenged at the International Chamber of Commerce (ICC) in London.

“It is a matter of public record that Tullow’s operational relationship with Ghana has been riddled with challenges, including a series of high-profile international arbitration disputes that cast a shadow of doubt over the existing Petroleum Agreement.

"In the ensuing proceedings under the terms of the Petroleum Agreement, the International Chamber of Commerce (ICC) in London ruled in favour of Tullow. The ICC held that Tullow was not liable to pay the USD 320 million tax liability and further directed Ghana to pay substantial legal and arbitration-related costs, including GBP 1,946,589.44, USD 294,228.72, and USD 574,000.00 in tribunal and ICC fees, with interest accruing at 5% per annum until payment is made in full,” the statement detailed.

The IEA also highlighted an unresolved $387 million tax claim by the GRA, linked to disallowed interest deductions, which Tullow has once again referred to international arbitration.

It therefore called on the government to halt the license extension process immediately.

“The government must immediately halt efforts to extend the licenses of Tullow and its partners in the West Cape Three Points and Deepwater Tano blocks. Instead, the existing colonial-era contract should be thoroughly reviewed and restructured into a service contract, similar to those in Norway, Saudi Arabia, Dubai, Qatar, Oman, and Abu Dhabi, contracts which vest control in the state while leveraging private sector expertise. The current colonial contract will never inure to the benefit of Ghana and its citizens," the institute said.

SSD/MA