New Ghana petroleum bill aims to boost transparency

Out-Law News | 14 May 2014 | 3:45 pm | 2 min. read

Draft legislation aimed at improving transparency and governance in the exploration and production of oil in Ghana has been approved by the country’s cabinet.

The new Petroleum Exploration and Production Bill, which will supersede legislation in place for 30 years, is expected to be presented to parliament later this month, the government has confirmed.

The executive director of the Africa Centre for Energy Policy think tank, Mohammed Amin Adam, said: “This is clearly a progressive bill because it is investment friendly and will attract investors to our largely unknown oil and gas basins.”

Adam said the bill also provides for the disclosure of oil contracts for Ghanaians to know the terms the government negotiates for oil contracts.

However, Adam said he was concerned that some clauses in the bill would allow the energy and petroleum minister to “ignore open and competitive bidding” if, in the minister’s opinion, direct negotiations “offer the most efficient way of exploring resources”.

According to Adam another provision in the bill, which seeks to establish a ‘local content development fund’ to be managed by the minister to provide financial support for small and medium enterprises in the industry, is “problematic” because it could allow the minister to influence who becomes a beneficiary.

Adam called on legislators to amend these and other provisions “to discourage corruption in the industry”. He said: “I think the local content committee of the Petroleum Commission should be solely responsible for the management of the fund, and not the minister.” Adam also urged parliament to include a provision that would compel the fund’s managers to report on accruals, disbursements and beneficiaries.

According to the chief executive officer of the Ghana National Petroleum Corporation (GNPC), Alexander Mould (7-page / 374 KB PDF), opportunities for new exploration acreage exists offshore and onshore Ghana. Mould said the total size of Ghana’s offshore sedimentary basins up to 3,000 metres in depth is about 60,000 square kilometres (sq. km) of which about 30,000 sq. km or 50% is licensed to international oil companies.

Mould said: “We have intensified the review of data within the unlicensed areas in order to make it attractive for oil and gas companies.”

In December 2010, the World Bank approved a credit of $38 million to Ghana’s government to implement an oil and gas capacity building project. The support, a concessional loan with a repayment period of 35 years, including a 10 year grace period, constituted two-thirds of the total project cost. Other co-financiers are the governments of Ghana and Norway. The project is due to come to an end in 2015.

Ghana’s president John Dramani Mahama told the country’s third National Economic Forum meeting (10-page / 2.64 MB PDF), on 13 May: “We need to work with the private sector as partners... What we require is a broadly sound and predictable environment that will allow new businesses to rise and existing ones to thrive. We must enter into partnerships, if need be, to raise the capital and acquire whatever expertise we do not possess in order to grow our businesses. We must be willing to explore options other than those with which we are familiar.”