The Public Interest and Accountability Committee (PIAC) is advocating a review of all new oil and gas agreements, amid growing public sentiments that the country’s five-year old upstream petroleum sector has had minimal impact on national development.

PIAC, a statutory body set up to assess, monitor and evaluate compliance with the law in the management of petroleum revenues, says that the existing production-sharing agreements that government has with oil companies do not allow the country to get the most out of oil revenue.

Professor K. Buah Bassuah, the Chairman of PIAC -- which is also mandated to provide a platform for public debate on spending prospects of petroleum revenues in line with development priorities -- explained to the B&FT on the sidelines of GOGIG & Citi FM roundtable discussion on ‘Ghana’s oil and gas scorecard after five years’ that the state will benefit more from oil exploration if oil contracts are renegotiated.

Explaining the state’s interest in the current production-sharing agreements, Prof. Bassuah said: “If you look at the royalties and how it is shared, we get only 5 percent and up to 13.5 percent in carried interest, bringing the total to 18.5 percent. Then, after the oil company has recouped its cost and everything and declared profit, then we (the country) charges a tax of 35 percent.

“So I think from the word go, the negotiation is quite low; and now that we are getting a lot of oil fields coming into play, I think we will have to renegotiate so that the revenue captured will be meaningful.”

The call in Ghana for a second look at oil contracts comes just two months after the new head of the Nigerian National Petroleum Corporation expressed the intention of beginning the process of renegotiating production-sharing contracts to see what value chain improvements West Africa’s biggest economy can gain from them.

Ghana joined the league of oil-producing countries in December 2010, when the country began production of crude oil in commercial quantities.

Since the first lifting of oil from the Jubilee Field offshore Cape Three Points, the total lifting proceeds and other income allocated from inception to the end of June 2015 amounted to US$3.02billion. Annual Budget Funding Amount (ABFA) received a total of US$1.283billion representing 42% of the total revenue, while Ghana National Petroleum Corporation received a total amount of US$908.28million -- equivalent to 30% of total revenue. The Ghana Stabilisation Fund and Ghana Heritage Fund received an amount of US$589.19million (20%) and US$243.42million (8%) respectively.

Yet PIAC is of the opinion that the country has not maximised its revenue potential from the oil find as fears of the dreaded Dutch Disease or resource curse heightens.

Professor Bassuah added: “If within four years you have been able to get about 123 million barrels and we have only 24 thousand barrels, it goes to tell us that 24 percent is not adequate to enable us to do any meaningful project; that is why I am calling for renegotiation to other areas”.

He said the limited revenue from the crude oil has also been spread thinly; so much so that the impact is hardly felt among the populace, as the current agreements have been overtaken by new realities in the economy.

“The government is in a critical position to satisfy all these demands. It will be very appropriate if national projects are looked at that will run through regions. In that case, sustainability is assured and a lot of benefits will come to the citizens; rather than now when every region and every district wants improvement with the oil money, and it will not reduce poverty. Rather, it will increase a lot of problems that we have now,” he added.

The Exploration & Production bill meant to govern the sector and address some concerns of stakeholders has been stuck in parliament for the past couple of years.

However, some industry experts believe that though the country needs to take a second look at its current petroleum agreements with oil companies, clauses that will ensure that the country maximises revenue from oil production will be feasible in future agreements as it is not realistic to attempt renegotiating terms now.

Mr. Dennis Baidoo of the Ghana National Petroleum Corporation said despite the fact that he agrees the country may have to look at new agreements, the Jubilee oil contracts have been closed -- for which reason the country cannot reopen them, a position Prof. Bassuah shares as reopening ones that have already been sealed will affect the investment climate.

"If you reopen them it will affect our prospects in future, and oil companies may say we are not investor-friendly; so this is what we have to avoid. But now that there are a lot of blocks which we think are very rewarding for the near-future. I think we have to go to the table and see how best we can get out of it,” Professor Bassuah said.