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Parliament approved the oil agreement between Ghana and Exxon Mobil for exploration and production activities in Ghana's deep waters.
Deputy Minister of Energy, Mohammed Amin Adams, who introduced a motion on behalf of the sector's minister, welcomed the terms of the agreement, describing them as the best in the history of the countries, but members of the minority disagree. treat "as a financial loss" for the state.
Ghana is expected to obtain about 65% to 84% of local net oil, depending on the profitability of the project following the ratification of the ExxonMobil oil agreement by Parliament.
This was contained in a report of the Select Committee on Mining and Energy on the Petroleum Agreement between the Government of Ghana, Ghana National Petroleum Corporation (GNPC), ExxonMobil Exploration and Production Ghana (Deepwater) Limited and Goil Offshore Ghana Limited, with respect to the Deepwater Cape Three Points Block (DWCTP) off the Republic of Ghana.
The report was presented by George Mireku Duker, Vice-Chair of the Committee, on behalf of the committee.
According to the Deputy Minister, Ghana will benefit by 84% of the total net oil that will be drawn from the transaction.
"With the current ExxonMobil, despite the waivers or exemptions we grant them, the net oil that Ghana will get will reach 84%, the highest level ever in the history of our country.
"Our last participation was 74% under the NDC and with that we will reach 84% .If you look at the contract that they have signed in the past and that they have better conditions, between 2013 and 2016, they signed 13 contracts with so-called best tax conditions.
"Today, these companies are not performing well, they have spent 890 million US dollars to drill 14 exploration wells." Today, not a single well has been drilled and drilled. they spent only 95 million US dollars out of the $ 890 million that they supposedly spent.We are looking for competent companies and ExxonMobil is a company that can make a discovery, "he said. he said in an interview with reporters after the ratification of the agreement.
Among the strong points contained in the terms that elicited mixed reactions during the debate are the loss carry-forwards / capital provisions.
The Committee noted that the Income Tax Act, 2015 (Law 896) only provided for the five-year carry forward of losses for all upstream petroleum activities.
However, given the significant initial outlay and the risk badociated with exploration activities in the contract area, it is conceivable that some costs remain unrecovered beyond the fifth year.
Therefore, the contractor requests an extension of the loss carry-over beyond the fifth year and at least up to the tenth year.
Casiel Ato Forson, a senior finance committee official, said the government had failed with respect to the overall negotiations.
"We saw that we failed in negotiations. I am particularly concerned about our negotiations for additional petroleum rights (the economic rent tax). Unfortunately, this government has negotiated it so that it is inferior to all the agreements we have signed so far, which is not acceptable.
We have also requested that the withholding tax on dividends be reduced to zero per cent instead of the usual eight percent provided for by our laws (Income Tax Act, Law No. 896), a- he declared.
He also baderted that the financial costs that should be carried over five years, which have now increased to ten years, have huge consequences on revenues and that those who executed the agreement have "caused financial losses" to the nation.
Net oil in this context is defined as total oil produced minus the costs of exploration, development and production. A commercial discovery will also stimulate more exploration and production activities in other sedimentary basins off Ghana, increasing Ghana's fortunes in search of more oil and gas deposits.
The Committee noted that the agreement provided for adequate participation in oil operations with local content. For example, GOIL Offshore Ghana Limited, an indigenous Ghanaian company, holds a 5% interest in all oil activities and related rights.
In addition, the report also reveals that provisions have been made in the agreement to ensure the transfer of knowledge and job creation to Ghanaians. For example, the contractor is required to make deliberate efforts to badist GNPC personnel in acquiring knowledge and skills in petroleum science, technology and engineering, as well as accepting individuals for ongoing training. job.
Other information in the report includes a tax exemption which, according to the contract, exempts the contractor from any such restrictions. The Contractor shall have the right to receive, remit, retain and freely use abroad all foreign currencies intended for its activity, without any restriction.
According to the report, Finance Minister Ken Ofori-Atta explained that the Bank of Ghana had agreed to lift the restrictions given the impact of the restrictions on the entrepreneur's activities and the potential benefits resulting from it for Ghana.
An amount of US $ 2 million per contractual year and a one-time payment of US $ 7 million has been paid in the form of training and technology support, all of which is intended to equip Ghanaians with skills and expertise. enabling them to participate actively in all aspects of oil operations. .
The agreement is valid for a total period of 25 years if a commercial discovery is made. According to Article 14 of Law 919, the Minister may approve an extension of five additional years, subject to ratification by Parliament.
The agreement expires however after a period of exploration of 7 years without commercial discovery in this period.
In addition, the 2015 Income Tax Act (Law 896) provides for an 8% withholding tax on dividends for the oil sector. As a result, the actual tax of the contractor is increased from 35 to 43%.
The contract area is part of the three-point block of the abandoned Deepwater Cape previously operated by Lukoil. It is approximately 1,474 km 2 and is between 200 and 3,000 m deep.
The contracted area is in the Tano-Cape Three Points Basin, where exploration activities have been consistent over the past decade, with significant contributions from GNPC, Vanco and Lukoil.
The Tano Basin has a deep deep geological structure that is home to numerous oil, gas and condensate discoveries. The Jubilee oil deposit is located north of the block, while the Paradise / Pecan / Almond oil / condensate finds are located to the west and the Dzata oil / condensate is located east of the contract.
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