GNPC-Aker deal apt, support it – Manteaw

Dr Steve Manteaw
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Chairman of the Civil Society Platform on Oil and Gas, Dr Steve Manteaw has said that 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.

He said Ghana has about 700 million barrels of oil in the ground yet to be produced however, almost all the multinational oil companies are leaving Ghana because their countries are moving from fossil fuel to renewable energy.

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

He is also of the view that before Ghana will transition into renewable energy, the West Africa country will first of all have to maximize its profits from the remaining oil in the grounds.

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 Mathew 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 on Wednesday August 18 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 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 decide 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  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 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 hydro carbons  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.”

By Laud Nartey|3news.com|Ghana