Fair-Trade Oil Share – Ghana Critique of Petroleum Commission’s (Part 2) “Presentation to the Council of State” “Overview: Ghana’s Oil and Gas Fiscal Regime”, of 27 Feb 18 GHANA GHANA GHANA GHANA OIL OIL OIL OIL FTOS-GH DIASPORA EXECUTIVE COUNCIL (DEC) Analytical Support Group (ASG) GhanaHero.Com & Associates 6 Apr 18 Contact: professor.lungu@yahoo.com 1
Fair-Trade Oil Share – Ghana Outline (Part 2) • Dedication ………………………………………………………………….….. 3 • Organizing Principles of this Review …………………………….... 4 • Markers …………………………………………………………………………. 5 • Introductory Points of Order …………………………………………. 9 • What Oil Companies Are Reporting ……………………………….. 14 • Review of Feb. 2016 “Overview” to Parliament …………….. 16 • Review of Feb. 2018 “ Presentation to Council of State ” … 24 • On Royalties and Ghana’s Petroleum Agreements ………… 33 • On Production Sharing Agreements (PSAs) …………………… 36 • Major Omissions & Admissions by PC …………………………… 40 • Five Questions to Ask of Petroleum Commission ………….. 42 • Summary / Conclusions of the Critical Review ……………… 43 • 9 DEC/ASG Recommendations to Gov. of Ghana …..……… 45 • Credits …………………………………………………………………….…… 46 • Sources & Reckons ..………………………………………………….…. 47 Your’s Your’s 2
Fair-Trade Oil Share – Ghana Petroleum Commission 2018 Presentation ARCHIVE VERSION AT: http://ghanahero.com/FTOS-GH/FTOS-GH-PSA-Library/PRSESENTATION-TO- COUNCIL_OF_STATE-BY-PETROLEUM_COMMISSION-27Feb18.pdf Your’s 24 Your’s
Fair-Trade Oil Share – Ghana Review of Feb. 2018 Presentation to CoS
Fair-Trade Oil Share – Ghana Review of 2018 Presentation to CoS (contd.)
Fair-Trade Oil Share – Ghana Review of 2018 Presentation to CoS (contd.) WE SAY: (1) “Government Take” is not wholly based on “Net”. Royalty is a part - collected on “GROSS” (1) THEREFORE, Government & PC may be abusing their stewardship responsibilities. (2) That’s not “prudent cost management” (1) If collected from gross, royalty can defray some operating expenses (OPEX). (3) Today, there is no limits on OPEX; there are No Open, Competitive Bidding (4) Today, there is no transparent “Pre - Bid Qualification” process.
Fair-Trade Oil Share – Ghana Review of 2018 Presentation to CoS (contd.)
Fair-Trade Oil Share – Ghana Review of 2018 Presentation to CoS (contd.)
Fair-Trade Oil Share – Ghana Review of 2018 Presentation to CoS (contd.) WE SAY…(PC neglected to show source of the data): (1) Where’s the BONUS for Ghana? (Dollars in hand in 2018 is worth a whole lot today than in the out-years (in 2036) (2) Where’s “Government Take” of 35% for “Income Tax”, for Eq. Guinea & Gabon? (3) REPEAT: Suggest Oil Companies are in charge! 30 Your’s Your’s
Fair-Trade Oil Share – Ghana Review of 2018 Presentation to CoS (contd.)
Fair-Trade Oil Share – Ghana Review of 2018 Presentation to CoS (contd.) During 2007 – 2016: ---- Loss of Income to Ghana on “Royalty Line” Alone = $136,300.000 5% Royalty off $16,586,300,000 = $829,315,000 ( ≠ $693,000,000) 32
Fair-Trade Oil Share – Ghana On Royalties & Oil Agreements Deep Water Tano (DWT) PETROLEUM AGREEMENT AMONG GOVERNMENT OF THE REPUBLIC OF THE DEEPWATER TANO CONTRACT AREA | DATED MARCH 10, 2006 ARTICLE 10 | SHARING OF CRUDE OIL • 10.1 Gross Production of Crude Oil from each Development and Production Area shall (subject to a Calendar Year adjustment developed under the provisions of Article 10.7) be distributed amongst the Parties…: a) Five per cent (5%) of the Gross Production of Crude Oil shall be delivered to the State as ROYALTY, pursuant to the provisions of the Petroleum Law. Royalty for any Crude Oil having an API gravity of less than…. West Cape Three Points (WCTP) • PETROLEUM AGREEMENT Among THE REPUBLIC OF GHANA GHANA NATIONAL PETROLEUM CORPORATION KOSMOS ENERGY GHANA HC And THE E. O. GROUP • ARTICLE 10 | SHARING OF PETROLEUM • 10.1 Gross Production of Petroleum from each Development and Production Area shall (subject to a Calendar Year adjustment developed under the provisions of Article 10.7) be distributed amongst the Parties…: • a) Seven and one half percent (7 1/2%)of the Gross Production of Crude Oil shall be delivered to the State as royalty, pursuant to the provisions of the Petroleum Law and the Petroleum Income Tax Law 1987; provided,…. Five per cent (5%) ….. 33 Your’s Your’s
Fair-Trade Oil Share – Ghana On Royalties and Oil Agreements (contd.) TABLE: Uncollected/Underpaid Royalty ($136,300,000) (2007-2016) Royalty Expected/Royalty Paid (2007-2016 Revenue = $16,586,000,000) Royalty Percent (%) Royalty (Expected) Per Petroleum Agreement (FTOS-Gh Finding) $829,300,000 5.00 Royalty Paid (Actual) (By Oil Companies $693,000,000 4.18 Difference $136,300,000 0.82 13 34 Your’s Your’s
Fair-Trade Oil Share – Ghana On Royalties and Oil Agreements (contd.) GRAPH: Uncollected/Underpaid Royalty ($136,300,000) (2007-2016) 900,000,000 829,300,000 800,000,000 693,000,000 700,000,000 600,000,000 500,000,000 400,000,000 300,000,000 200,000,000 136,300,000 100,000,000 0 ROYALTY from Top (from GROSS) ROYALTY Collected (After Some Estimate of Royalty Balance (Unpaid - Expenses) Minimum) Data Source: Petroleum Commission Presentation to Council of State, 27th February, 2018), Table 1, Page 4
Fair-Trade Oil Share – Ghana On Production Sharing Agreements (PSA) NOTE: Contrary to what PC says, PSA revenues and exact split of those revenues, including bonuses, are a result of “…hard bargaining -- there are no scientific determinants of what a reasonable split should be…”. • Royalty is at “Gross”. • “Take” includes royalty. • Cost recovery is capped, ~35%. • “Take” ought to include bonuses, annualized for transparency. • As Ghana has never received a bonus in almost 10 years, who are the persons taking the bonuses? 36 Your’s Your’s
Fair-Trade Oil Share – Ghana On Production Sharing Agreements (PSA) • PNDC Law 84 stipulates PSA for Ghana’s Fiscal Oil Regime. • Royalty is key part of PSAs. • Bonuses are key part of PSA. • A “Model” PSA provides standard framework for competitive bidding over areas to be awarded. • Unlike other fiscal regimes, PSA allow variation of economic terms for an area without amendment of fiscal legislation. • Combination of PSA with tax allows Contractors/Investors to obtain credit at home; this minimizes cost to sovereign revenues. • The People of Ghana have never received a pesewa in BONUS. • REPEAT : “…The Jubilee field, discovered in 2007, was significant not only because of its size but because it opened a new Cretaceous hydrocarbon play along the West African Transform Margin (WATM)...”. – Who got away with the “bonuses”, when, how? NOTE: The FTOS-Gh Campaign found that around 2011, Angola alone received over $4 Billion in Bids and Bonuses from 7 major Oil Companies for 12 Blocks. 37 Your’s Your’s
Fair-Trade Oil Share – Ghana On Production Sharing Agreements (PSA) Your’s 38 Your’s
Fair-Trade Oil Share – Ghana On Production Sharing Agreements (PSA) MESSAGE: (Above) Analysis of 2010-2015 by the Fair-Trade Oil Share Ghana/PSA Campaign showed that if Ghana had opted for PSA, Ghana would have earned approx. 60% of all petroleum revenues. During 2011-2017, out of total revenues of approx. $19 Billion, Ghana would have earned $11 Billion in fair trade, and the foreign oil companies $8 Billion, as contractors. (But, instead Ghana earned a pithy $3.5 Billion. 39 Your’s Your’s
Fair-Trade Oil Share – Ghana Major Errors, Omissions & Admissions by PC False and Unprovable PC Statements (2018): (Page 3 (Error)) (Page 16 (Error)) (Page 16 – Only if reasonable & fair) (Page 17 (Not True)) • PC totally neglected to inform CoS changes made since Act 919. 40 Your’s Your’s
Fair-Trade Oil Share – Ghana Major Errors, Omissions & Admissions (cont.)
Recommend
More recommend
