Ghana producing more Oil than recorded – PIAC Expresses Fear

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Ghana could be producing more crude oil in its Jubilee Field than the production figures being recorded due to the unavailability of proper checks and control measures on the Floating Production Storage, Offload Vessels (FPSOs), Chairman of the Public Accounts Committee (PIAC), Mr Joseph Winful has stressed.

Speaking in an interview with the New Crusading Guide at the Launch of the 2016 report on oil and Gas production in Ghana by PIAC, Mr Winful said he doubts some of the figures being recorded by the oil companies as production figures for the year. Mr Winful said stationing one officer of the Ghana Revenue Authority on the FPSO Kwame Nkrumah and other oil platforms to check and verify the quantity of oil being produced is a great risk since such an officer could be compromised.

He said this happened and continue to happen in the mining sector where mining companies compromise officers of state and the Ghana revenue authority on daily bases in order to have their way. He has therefore called for proper measures to be set in place to ensure that the right quantities are calculated and recorded. We should have more GRA officials on the FPSO. We can’t rely on only one person for information. We need to do more ensure that or oil resources are properly accounted for” he stated.

In a statement the Head of Governance at the German Technical Corporation, Allan Larsey corroborated his view and said there positioning of a single officer of the Ghana Revenue Authority is breeding disaster in the fight against accountability in the oil and gas sector. He therefore suggested that the number of GRA officials should be increased from one to either two or three on the FPSO to ensure that they undertake proper monitoring checks and balances to help record the right figures for Ghana.

There was a 13.7% year-on-year decline in crude oil production in Ghana with annual production dropping from 37.41 mmbbls (102,498 bbls) in 2015 to 32.30 mmbbls (73,955 bopd), According to the PIAC 2016 report.

The report noted that the decline in production occurred in spite of the fact that Ghana’s 2nd major production field – the TEN Fields – came on stream in August, 2016 and actually contributed 16% (5.32 mmbbls) to annual production. The production shortfall would have been approximately 28% but for the addition of the TEN Fields;

Along with the decline in crude oil production, the production of indigenous natural gas also declined by a similar magnitude of 27% (from 52.455.91 MMScf in 2015 to 38,420 MMScf in 2016) compared only with Jubilee gas production and by 14% when compared to the combined production from Jubilee and TEN Fields of 44,780 MMScf;the report stressed

It further noted that the decline in petroleum production in 2016 was caused by a 34-day shutdown of the Jubilee Field for maintenance from March 31 to May 3, 2016; Approximately seventy-two percent (72%) of the gas produced on the TEN Field was flared compared to approximately 23% and 6% that was reinjected and used as fuel for the FPSO respectively.

The Ghana Group, the report indicated, lifted 4.86 mmbbls from the Jubilee Field in 2016, representing 18.06% which is consistent with the Ghana’s shareholding in the Field. The sole lifting undertaken by the Ghana Group from the TEN Field in 2016 also represented 18.60% of total lifting made by the TEN partners.

Ghana’s crude oil from the Jubilee Field was sold at an average achieved price of US$46.13 per barrel which compares favourably with the average dated Brent price of US$44.01 as well as the average achieved price of all the other Jubilee Partners (Tullow – US$41.7/bbl; Anadarko – US$43.93/bbl; and Kosmos – US$45.94/bbl);

The other Jubilee Partners however were able to sell a portion of their lifting’s at a higher price as a result of their respective hedging policies with Kosmos and Tullow realising unit prices of US$73.76/barrel and US$61.7/barrel respectively .

Actual petroleum receipt in 2016 of US$247.18 million was 29% lower than the budgeted amount (US$348.42 million) and translates to 38% year-on-year decline in annual petroleum revenues when compared to the 2015 receipts of US$396.17 million, the report noted

11. Except for Corporate Income Tax (CIT) which exceeded target, none of the other sources of petroleum revenues achieved set targets. Only five (5) out of the 18 licence holders paid surface rental during the period under review; Ninety-two percent (US$27.31 million) of total CIT received in 2016 was in respect of tax liabilities that Tullow ought to have paid over the period 2011-2014, according to the report .

It further stated that Only US$9.35 million (16.45%) out of total receivables of US$56.79 million from the sale of raw gas was paid by the off-taker –Ghana National Gas Company ( GNGC) – in 2016;15. Payment of the outstanding receivables for 2016 would have reduced the revenue shortfall of US$101.24 million by 46% while the shortfall would not have arisen had the total outstanding indebtedness of GNGC of US$135.49 million been honored during the period under review.

Source: Kwabbena Adu Koranteng

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