Akufo-Addo launches maiden Oil and Gas Licensing Round today

By PrimeBusiness
Oil_and_Gas_Licensing

President Akufo-Addo will today October 15, 2018 launch Ghana’s maiden Oil and Gas Licensing Round offering about six offshore blocks.

The purpose of the licensing clearly invites, negotiate and enter into petroleum agreements with competent and capable companies, who will explore for, develop and produce petroleum in an efficient, safe, cost-effective, sustainable and mutually beneficial manner.

The West African nation, which became a significant oil producer in 2010 when it began pumping from the offshore Jubilee field, is keen to unlock its vast oil and gas resources. Adam said global oil majors like BP, Shell and some independent producers have shown interest in acquiring a stake in oil assets in Ghana.

“We have asked them to wait for our first bidding round which is scheduled for the last quarter of this year,” Adam told Reuters in New Delhi. He said Ghana would put up another six offshore blocks for auction next year.

Drawn to Ghana’s hydrocarbon potential, ExxonMobil Corp recently signed a deal with Ghana to explore for oil in the Deepwater Cape Three Point offshore (DWCTP) oilfield. Exxon is doing due diligence to find a local partner to explore the block, a condition required to operate a field in Ghana, he said. “Once they select the local partner, we are ready to go to parliament for ratification,” he said. He refused to elaborate on the timeline for completing the deal.

Aker Energy AS, controlled by Norwegian billionaire Kjell Inge Roekke, agreed in February to buy Hess Corporation’s Ghana unit in a $100 million deal, gaining access to a 50 per cent stake in the Deepwater Tano Cape Three Points block.

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The block holds an estimated 550 million barrels of oil equivalent in contingent resources and potential for a further 400 million barrels. Adam said Aker may not have to pay capital gains tax on its transaction with Hess as the block is covered by a stability clause. Stability clauses guarantee that the terms of an oil contract stay the same throughout its life.

“Some of our contracts are covered by stability clauses ... the contract with Hess was covered under a stability agreement so any transfer of ownership may not require capital gains tax,” he added. However, he cautioned, the question is subject to interpretation by Ghana revenue authorities.

Meanwhile, a statement issued by the Ministry of Energy explained that the process will be conducted in accordance with the provisions of the Petroleum (Exploration and Production) Act 2016, Act 919, the ancillary Petroleum (Exploration and Production) General Regulations 2018, LI 2359 and all other applicable laws in Ghana as well as the policy objective of the licensing round.

Expression of Interest from the International Oil Companies (IOC) is expected to be submitted by end of November this year, while pre-qualification of local partnering companies and IOC’s will be done in December.

Between January and February 2019, there will be an evaluation and announcements of pre-qualification of applicants in line with applicable regulations and invitation to tender of pre-qualified applicants.

The qualified companies will have four months within which to submit their tender while the Licensing Bid Rounds and Negotiation (LBRN) Committee between June and August 2019 will evaluate the tender.

The announcement of a successful tender is expected in mid-August 2019 which will pave way for negotiations to begin with the committee.

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