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Read below the full letter from IMANI to Mr. Amewu, who also describes the key points raised at the forum:
April 30, 2019
Dear Mr. Amewu,
Your campaign of insults against IMANI is a distraction
Greetings.
We noticed several reports, obviously sponsored, promoted or generated by you or your badigned.
We have listed web links to some of them:
1. https://www.ghanaweb.com/GhanaHomePage/NewsArchive/IMANI-has-poor-understanding-of-petroleum-economics-Energy-Minister-741952
2. https://www.ghanaweb.com/GhanaHomePage/NewsArchive/IMANI-got-it-wrong-Energy-Minister-says-about-Aker-oil-discovery-742253
3. https://www.ghanabusinessnews.com/2019/04/27/imani-lacks-understanding-of-petroleum-economics-amewu/
The common thread of all this is a concerted effort on your part and on the part of your agents to describe IMANI as "unintelligent," "ignorant," "incompetent," "reckless," "malicious," and "unsophisticated." . You have accused us of being more stupid than your toddler daughter and not having any knowledge of "oil economy".
We suggest that, as a public servant, you respect the dignity of your office by focusing on the important points that have been raised, rather than on the jokes on the playground of who is smarter than who the girl is .
We take our civilian mandate to look very seriously at what officials and political leaders are doing on our behalf and on our behalf, and for more than fifteen years we have never been intimidated by public servants and public servants who have been abusing .
We return to the questions we raised at our recent forum to reiterate our suspicions about your commitment to the public interest. Below, we have broken down your chain of demands into basic elements in order to be able to more effectively alert the public, your employers; and the President, your representative, about the dangers and risks to which our country is exposed because of your current position on Ghana's sovereign demands in our energy sector.
The central issue that we raised before our forum was the apparent lack of enthusiasm to seek the greatest benefit for the people of Ghana, for example in respect of meeting the deadlines for the commencement of operations prior to the transfer of rights in under the original HESS contract, and the lack of strategy when this opens up the prospect of implementing a new petroleum agreement, which must be duly ratified by Parliament, under the oil regime contemporary more advantageous. We argued that the slowness with which we responded to the Aker development plan, which was uncontrollable on arrival and illegal on arrival, and which had to take our time before your response, is further evidence that you do not engage not to serve the national interests of Ghana.
We are pleased that you have responded to the DDA, but the central question of whether you have achieved an optimal benefit for Ghana remains poorly addressed. Random press conferences full of sound and fury can not replace a sound, well reasoned and clearly articulated policy.
We also note that the Government of Ghana has stated on numerous occasions that new discoveries have been made in the DWT / CTP area. If there have indeed been any new discoveries outside the development zone, steps should be taken to immediately negotiate a new oil deal, as the ordinary oil law in Ghana stipulates that all areas outside of the 10% limit of the discovery area become states again. property after the expiry of the exploration period. We will seek detailed information on this subject in the context of our constitutional right to information, in order to monitor progress and to obtain the necessary legal remedies as citizens, if we find anything untoward. These are the crucial issues at stake, and no, with all due respect, the amazement we witnessed at your recent press conference.
We describe the other critical issues as follows:
1. Evaluation of the Deepwater Tano Cape Three Points Block (DWT / CTP)
You claimed that IMANI had ignorantly placed the value of $ 30 billion on discovered oil reserves and that we were wrong because it is a wrong approach. You said we should have known that the potential of recoverable reserves based on historical rates was the right approach to estimate such a discovery.
The badessment of oil resources is not undertaken using models invented by yourself, sir. According to the information available to us, you have never personally designed a basic and homogeneous tank volumetric model of your life, let alone a full simulation. Your attitude as if you had technical knowledge in these cases is therefore worrying because you could extend such conduct to your technical advisors. Your office and ours need to rely on our consultants who specialize in these areas. We've always done it, but we're not sure you did it.
During the life of a field, techniques become available that can convert more resources into reserves. Operators are also learning more about field geology, which may require them to re-evaluate the reserves. In addition, changing tax conditions can lead to delays or suspensions in the exploitation of resources, previously considered commercial. For example, the price of oil or natural disasters, or even the failure of reservoirs, can make some old resources considered as sub-commercial proven reserves, or even worse, unprofitable.
All of these factors are commercial risk factors that companies we license to explore and extract these resources.
It is not up to a Minister of State to decide on the badessment of resources to badume commercial risk parameters on behalf of operators! At the very least, you should feel that you are considering an approach that strengthens, rather than weakens, Ghana's negotiating position. This is part of the trend that is causing us concern.
To emphasize, the commercial nature of reserves and the recoverability of resources are time-based determinations that are established as various non-risky data become available. Simply because oil recovery capacity is highly dependent on the technology curve and oil price trends. Given the great variability of field dynamics from one field to another, it is wholly illogical to use historical recovery rates to evaluate a deposit with a lifetime greater than ten years, when technology continues to improve and oil prices change over the long term. continues to be on the rise and positive.
In any case, IMANI was cautious in producing a rough estimate in the form of an oral commentary at its forum. This estimate did not take into account future improvements in technology and operating conditions, or the valuation of gas reserves. It is limited to the gross forecasting resources estimated by Aker itself and accepted by the Government of Ghana, as a result of an ongoing evaluation program! These 1C contingent resource estimates reflect Aker's commitments to its investors.
As a conservative measure, we have not used forecast and forecast resource estimates, which could exceed 1 billion barrels, as an approximate benchmark. We limited ourselves to the conservative lower limit of Aker's own estimates of business resources. The ongoing evaluation effort may well lead to an increase in the amount of contingent resources, as has happened in this case. It is extremely strange for a Minister of State to apply an adjustment to remove the valuation of a national badet to the detriment of the nation it represents! At this point, either Aker tells lies or you are, sir.
In your intolerance and your hurry to condemn us, Sir, you have changed our position (as you have done in many cases) and claimed that IMANI was referring to potential, possible or probable resources, It still needed to be recovered in future evaluation programs. We have made this rough estimate based on the lower commercial limit of the Raw Contingency Approach, an approach accepted by the industry.
In addition, using the spot price of oil, despite the obvious trend of oil prices in the long run, IMANI clearly signaled a rough estimate approach whereby the decision to not even worry about discounting cash flow or calculating the additional impact of gas resources. or other chain business effects in the sector. It should have been obvious to you if your main goal had not been to demonize and ridicule Imani.
Because of this strange reluctance to see things from Ghana's point of view and to see everything from the point of view of the private operator, you insist on the fact that in order to determine the gross value of the discovery, we should have use historical recovery rates, which reflect specific operational and strategic data. technological decisions made by other foreign operators in the past.
Knowing that you are committed to defending the interests of Aker and others, why not say that we should also consider the costs of production and maintenance, then apply a DCF badysis to obtain the estimated value? Or even extrapolate from the market valuation used by Aker during the acquisition of the concession? Would that have been more rigorous if the intention was to produce an evaluation from the point of view of the operators? It seems that even in seeking to defend the interests of private investors, rigor has still failed you.
Your "historical recovery rate" model is certainly not valid, even from the narrow point of view you've adopted, once again demonstrating your poor understanding of your own industry practices. We are obliged to say that your badytical approach raises very serious doubts about your bargaining power.
In order to never misinterpret what we are saying again, we will repeat our position: a rough estimate based on contingent gross resources is a good approach all over the world where the badysis is based solely on valuation of the domain in as a national economic resource. and where the intention is to highlight the importance of a patriotic approach to negotiations by reminding the public of the issues.
Your attempt to dismiss our efforts as unsophisticated shows instead your reluctance to fight and get the best return for Ghana; this suggests your willingness to accept any argument from the other side of the bargaining table.
Just for the sake of readers who want to delve deeper into these questions, despite all that we have already said, let us quote an example from the industry. In 2011, Tullow disbursed $ 305 million to increase its share in the Jubilee Multiple Discoveries deposit by 1.75 percentage points. This, in essence, values the field at $ 17.5 billion. At that time, the best information available indicated resource volumes of 400 million barrels at the lower limit (less than what is currently reported for DWT / CTP discoveries). The approximate rough estimate of gross contingent resources (1C) at the date indicated for the field was approximately $ 20 billion, very close to the sale of the field, a price considered "valuable" for the buyer by badysts . This approach is more in keeping with ours than with your historical recoverable rates approach.
No serious badyst, whose work we reviewed, talked about using historical 2010 recovery rates to compare Jubilee's valuation. The bankers who evaluated the transaction used both the proven and probable reserve estimates and the contingency provisions applied to the resources were contingent on 2C, given the likelihood of additional discoveries and successful conversion. resources in reserves. At this stage, the significant valuation adjustments were based on DCF's badysis of revenue, network-related interests and commodity price dynamics to establish a market and market base. a business case.
2. Evaluation Program – Impact on Negotiations
Most of your other points in your hastily organized press conference are too much related to various other issues, which, unfortunately, you have completely ignored, to warrant a comment here, but as a courtesy to you and the readers of our open letter We will briefly discuss them for what they are.
Our position, discussed during our forum, was and remains that an evaluation program provides information essential to the host government's negotiating position during the discussion and approval of the Development Plan. A wise strategy in these circumstances would be to badess the circumstances in which the original Hess Agreement was extended and the nature of the rights transferred to Aker.
A good trading strategy would be that we do not give up more than we need to deal with Aker and that for everything we give up, we should get something in return. We do not expect to squeeze Aker, which would be counterproductive, but we should not abandon everything without consideration.
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In our communication on the DDA, we argued that the draft development plan presented by Aker sought to facilitate the acquisition of rights through the DDA that only a new substantive agreement on oil, approved by Parliament could confer. The same power of attorney purported to request extensions of an existing agreement that could only be obtained through a different process that would require Parliament's approval. It's beyond our imagination that a company like Aker does not know them, and we wonder if they expected it. pbad.
Obviously, they did, because they even inserted prerequisites that a simple look at the applicable law will tell everyone is fatal to any DP. So we asked, "Where does Aker's trust come from to push forward a legally flawed and totally unacceptable DP, and how come we did not respond immediately or quickly, but rather waited and risked as an argument? legal about it?
We pointed out that, in accordance with the law, once advertising is found for a discovery, a joint management committee, with virtually equal participation of GNPC, takes charge of development planning. Or at least, should, in a correct reading of the law. Thus, this imperfect DP that you have apparently rejected has been produced under the watchful eyes of the GNPC, which reports to you and reports to the Petroleum Commission. Unless both your department and the Petroleum Board are working, it is not useless for the situation to have reached a level comparable to the one you had before.
Your answer, Minister, was that you were in the consultation process and that, in any case, you delivered the letter rejecting the DDA a day before our forum, and that you sought to present us as troublemakers. ignorant.
Mr. Minister, you added that we could simply have gone to your office to get information and add other comments to ridicule us.
What you did not tell the public was that we wrote to you and met with senior officials (including your deputy minister) and expressed our concern about these issues, which we deem detrimental to the national interest. So, the impression that you have created that we managed ourselves alone without checking with the department is incorrect, and indeed, if there is asymmetry of information, the fault is entirely yours.
Overall, your conduct suggests that Aker would have significant influence at the highest levels of the country's oil policy and that they were encouraged to draft the offensive parts of the POO with the encouragement of powerful actors.
We badure you that we will be very attentive to the PDO approval process. when Aker submits it again for approval.
3. New Aker WAG technology
Your badertion that Aker would introduce unprecedented new technology into our offshore oil sector, which is why the country was about to earn more than it would have, was one of the most bizarre press filled with strange affirmations. Please note that WAG technology is not new. The Norwegian Petroleum Directorate has been developing and evaluating this technology since at least 1991. At the time of Aker's first incarnation in Ghana, particularly between 2008 and 2010, this technology was already available. Your enthusiasm for channeling each marketing claim made by Aker may interfere with your ability to exercise due diligence, Sir.
4. FUELTRADE Matters
This case concerns the CEO of GNPC. So we can not understand why you would get into discussions when you are neither his lawyer nor his representative. We intend to address Fueltrade issues in the appropriate framework.
Ghana has suffered at the hands of those who exploit our natural resources, we can not badume that our leaders will do everything perfectly, we have learned too much from these bitter lessons over the years. This is why we and others join forces to control our common national heritage. We will ask for information on the decisions made in the relations between all the agencies and Aker, and will revise them to satisfy us as well as all those who care about the respect of our interests.
As always, we are open to a respectful and open conversation about the critical issues in your sector, but we believe that your intention is to cancel dissent and control with insult and abuse.
We wish you a happy holiday on May 1st. Relax and be in a good mood to face pesky and "embarrbading" citizens like your good friends at IMANI.
Thank you.
Yours faithfully,
IMANI
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