c) Surface Area Rental In addition, the following surface rental charges will accrue to the State during the
exploration and development phase of the contract:
Table 3 10.0 Training and Technology Support
TABLE HERE 12.40 P.M.
11.0 Decommissioning Fund
A provision has been made for the establishment of a Decommissioning and Environmental Management Fund which will be managed by the contractor and GNPC upon the coming into force of the Agreement. A portion of the revenues from production will be set aside to build up the Fund which will be used to finance the decommissioning plan and any environmental accident that may occur.
12.0 Relinquishment Conditions
The Agreement requires that on or the expiration of the initial exploration period, the Applicant is required to relinquish 20 per cent of the Contract area if the contractor elects to acquire 600 sq kilometres of new 3D seismic data or 40 per cent if the contractor elects to drill on the basis of the 2D data. At the end of the first extension period, the contractor shall relinquish a further 25 per cent of the contract area. On the expiration of the second extension period, the Applicant shall relinquish the remainder of the
Contract Area excluding development and production areas.
1 3 . 0 O b s e r v a t i o n s a n d Recommendations
13.1 Development of the Voltaian Basin
The Committee was informed that the objective of the Government and GNPC is to spread and diversify oil exploration and production across the length and breadth of the country. This is based on the belief that there are hydrocarbon deposits in different parts of the country. On the basis of the above, the Ministry and GNPC are encouraging exploration within the Accra- Keta and Voltarian Basins. The Committee observed that this Agreement is, therefore, in line with this objective of Government and GNPC. Ratification of this Agreement will bring to two, the number of valid licences for exploration and production currently operating within the Accra-Keta Basin.
13.2 Due Diligence
The Committee was informed that GNPC had conducted appropriate due diligence on the three companies applying for the block. As much as the Committee does not doubt the competency of GNPC to conduct such due diligence, it is the considered view of the Committee that in the interest of objectivity and fairness, GNPC should engage the services of an independent organization to do due diligence on all prospective companies in the future.
13.3 Training and Technology Support
The Committee further observed that the contractor under this Agreement is required to pay about US$2,300,000.00 to GNPC in respect of training and technology support within the exploration period. The Committee observed that similar clauses exist in other agreements that have already been ratified by Parliament. It is the view of the Committee that in addition to GNPC, there are other agencies of State that urgently need to build their capacities to enable them perform their roles effectively within the industry.
Some of these agencies include the country's tertiary educational institutions, the revenue agencies, the Judiciary, the Attorney-General's office, the Legislature, among others. The Committee, therefore, urges GNPC to endeavour to use part of the resources earmarked for training and technology transfer to support these institutions to build their capacities. It is further recommended that GNPC should report to the Committee on the utilization of these funds in addition to other funds from earlier Agreements ratified by Parliament. GNPC should also periodically report to the Committee on Mines and Energy on the utilization of such funds in future.
13 .4 Standardizat ion of Block Size Allocation
The Committee requested information on block size allocation and wished to know if there were standard sizes given to exploration companies. GNPC informed the Committee that the range was between square 2,000 kilometres and 3,000 square kilometres and actual allocation depended on several factors.
13.5 Fiscal Benefits
The Committee wishes to advise the Ministry and GNPC to endeavour to improve on the financial benefits to the country in the post-oil discovery regime.
13.6 Local Participation
Information available to the Committee indicates that there was only one Ghanaian board member in one of the companies but no local shareholder or partner in this Agreement. In view of the call for increased local participation in the oil and gas sector, the Committee urges the GNPC to endeavour to encourage foreign exploration companies to partner local companies in their operations.
14.0 Conclusion
The Committee recommends to this Honourable House to adopt its Report and ratify the Agreement in accordance with article 268 of the 1992 Constitution.
Respectfully submitted. Mr Joseph K. Adda (NPP - Navrongo
Central): Mr Speaker, I beg to second the motion on the floor and to urge my Hon Colleagues to vote for its adoption.
Mr Speaker, the Petroleum Agreement whose ratification this Report seeks to do is a fairly straightforward and standard one. The fiscal terms are within the range that we have set as a nation that have been negotiated on over time and they
are acceptable.
Mr Speaker, block size which has now been standardized between 200 square kilometres and 3,000 square kilometres is also within range. The conditions that have been set which include the interpretation of 3D seismic data over a 600 square kilometres area, the drilling of at least, one well are also conditions that are standard and have been applied to other petroleum agreements.
Mr Speaker, on the consortium or the partners who have sought to undertake this exploration, due diligence has been carried out on all three companies and information reaching us through the GNPC is that they all have the financial wherewithal to be able to undertake this venture. They also have the technical expertise and so together they are well equipped to be able to explore and perhaps, help us as a nation to discover more oil in commercial quantities.
Mr Speaker, there were some concerns on due diligence that needed to be carried out. Indeed, over the period, the GNPC seeks to be improving in some of the functions that it has been performing with regard to negotiating petroleum agreements and bringing them to the attention of this House. But the Committee insisted that we should try and get them to engage an independent company that is specialized in undertaking due diligence to ensure that what comes before us is bona fide and is acceptable globally.
Mr Speaker, the Committee was also concerned about the training components on the agreement and that is the aspect on which the GNPC benefits financially from the exploration companies. Indeed, the standard amount that they have been collecting has been in the range of US$200,000 per year over the exploration period.
Whereas these funds have been utilized to train some of the GNPC officials as well as other agencies within the country, the Committee found it necessary to advise them to report to this House on how they have been utilizing these funds and to insist that there is transparency in the utilization of the funds.
Mr Speaker, we are particularly concerned about the ICT aspect of the activities of the national oil company. Mr Speaker, I recall the last time that we ratified an agreement in this House; we tried to bring to the attention of the House that the ICT industry is growing by leaps and bounds, if I may say so. Ghana is lagging behind, and therefore, substantial amount of this fund should go into equipping the Ghanaians to be able to handle their oil operations when we start tapping that oil.
Mr Speaker, the GNPC accepted to do that and said it would also report to this House on the way they have been using these funds.
Mr Speaker, I think what is really exciting about this Agreement is that, we are moving away from the west coast of the country and going to the east side, and indeed, this is part of the objective that the Chairman of the Committee mentioned that it is a broad objective of Government.
Therefore, for us to be able to get companies that are prepared to look at the eastern coast of this country where we have all been informed that there is a potential for us to tap hydrocarbons, I think it is a welcome idea.
There are also plans for us to be able to move up country along the Volta Basin and ensure that we undertake the various
