Madam Speaker, I rise to move, that this Honourahle House adopts the Report of the Committee on Mines and Energy on the Petroleum Agreement among the Government of the Republic of Ghana and Ghana National Petroleum Corporation on one hand and Afren Energy Ghana on the other land.
1.0 Introduction
The Petroleum Agreement among the Government of the Republic of Ghana, Ghana National Petroleum Corporation and Afren Energy Ghana Limited, Gulf Atlantic Energy Limited and Mitsui E&P Ghana Keta Limited for further exploration work in the Offshore Keta Contract Area, was laid before the House on Tuesday, 26 th January, 2010 and referred to the Committee on Mines and Energy for consideration and report, pursuant to article 103 (3) of the 1992 Constitution and Order 188 (2) of the Standing Orders of the House.
Following the referral, the Committee met on Tuesday, 2nd February 2010 with officials from the Ministry of Energy and the Ghana National Petroleum Corporation (GNPC) and considered the Agreement.
2.0 Reference Documents
The Committee made reference to
the following documents during the deliberations:
i. The 1992 Constitution of the Republic of Ghana;
ii. The Standing Orders of the House;
iii. Petroleum (Exploration and Production) Law 1984 PNDCL
84.
3.0 Acknowledgement
The Committee is grateful to the Hon Minister for Energy, Dr. Joseph Oteng Adjei, the Hon Deputy Minister for Energy, Mr. Emmanuel Armah-Kofi Buah and officials from the Ministry of Energy and GNPC for attending upon the Committee to assist in the deliberations.
4.0 Background
Devon Energy Ghana Limited and EnCana International (Ghana) Limited entered into an agreement with the Government of Ghana and GNPC for the conduct of exploration and production operations in the Offshore Keta Contract Area, effective 1st August, 2002.
EnCana subsequently pulled out of the Agreement after two years of unsuccessful exploration and assigned its 40 per cent interest to Devon in July, 2004.
The Ministry and GNPC later extended the initial exploration period from 31st July, 2004 to 12th September, 2005 to enable Devon seek for a new partner for the operations in the contract area. The company was however, not able to find a suitable partner as at the end of the extension period. To encourage Devon to keep the Contract Area and to drill a second well, the fiscal terms of the Agreement were made favourable to the Company and the work programme for the remainder of exploration period modified to improve upon the risk return of the venture. This modification was ratified by Parliament on 28th July, 2006.
In November 2007, Devon sold its
The interest structure of the partners is as follows:
Afren -- 68 per cent
Mitsui E & P Keta Ltd. -- 20 per cent
GNPC -- 10 per cent
Gulf -- 2 per cent.
6.0 Contract Area
The Offshore Keta Contract Area covers approximately 4,400 km2 and is located in the Eastern Basin.
7.0 Terms of Agreement
The Agreement provides for an exploration period of six (6) years divided as follows:
i. initial exploration period of two (2) years;
ii. first extension period of two (2) years; and
iii. second and final extension period of two (2) years.
The contractor is required to conduct technical studies and drill at least, one well and invest a minimum of US$45,000,000 during the initial exploration period of two (2) years. During the first extension period, the contractor is required to acquire, process and interpret 1,000 km2 of 3-D seismic data, conduct technical studies, drill at least, one well and make a minimum investment of US$45,000,000. The conditions applicable during the initial exploration period also apply to the second and final extension.
Fiscal Package The following benefits will accrue to the State, in the event of Commercial Discovery.
7.2 Training and Technology Support
T h e A g r e e m e n t r e q u i r e s t h e applicants to pay to GNPC an amount
entire interest in the Offshore Keta Contract Area to Afren Plc and Gulf Atlantic Energy Limited because the company's parent and financier, Devon Energy Corporation, closed down its operations in Africa.
The favourable fiscal terms contained
in the first amendment were however, not transferred to Afren and Gulf by the Government. The fiscal terms contained in the original 2002 Agreement were re-instated and this was dully ratified by Parliament in a second Amendment referred to as Amendment No. 2. In October, 2008, Afren assigned 20 per cent of its interest in the contract area to Mitsui E & P Ghana Keta Limited, and retained 68 per cent.
The Amended Agreement (No. 2) was due to expire in December 2008 after the drilling of a second well. Article 2.13 of the Amended Agreement however, gave Afren and Gulf the option to apply for a new agreement if they find the contract area attractive. The Agreement under consideration is, therefore, in pursuit of the said article 2.13.
5.0. The Applicants
Afren Energy Ghana Limited is a wholly owned subsidiary of Alfren Plc, an independent oil and gas exploration and production company founded in 2004. Afren Plc has a portfolio across six countries, namely, Nigeria, Sao Tome and Principe, Gabon, Congo, la Cote d'Ivoire and Ghana. The group is currently producing 27,000 barrels of oil per day from its portfolio.
Gulf is 100 per cent Ghanaian-owned
company incorporated in 2008 with focus on international oil and gas sector.
Mitsui E & P Ghana Keta Ltd is a wholly owned subsidiary of Mitsui & Co. Limited, a private company incorporated in England and Wales. Mitsui has been active in exploration, development and production of natural resources and energy and has operated in Russia and Western Australia.
