Ever since Ghana discovered and started producing oil in commercial quantities, Ghanaians have become very interested in the oil and gas industry. The interest in this sector is driven by the prospects and enormous benefits that oil and gas is expected to generate on the economy of Ghana. Expected Oil revenues have been included in budgets and actual oil revenues have also been included in Gross Domestic Product (GDP) reports, a justifiable evidence to the fact that oil and gas is a major driver of the Ghanaian economy now and will be for the years ahead.
Nevertheless, despite the contribution from the oil and gas sector, the average Ghanaian still feels the country is not getting her fair and reasonable share because the very information in the public domain shows that Ghana is not getting enough from her hydrocarbon resources. However there are countless defense to this claim and assertion anytime it does come up. Irrespective of political affiliations, successive government have been criticized about Ghana’s position with respect to her own hydrocarbon resources. The citizenry are beginning to appreciate and embrace the reality that government is duly responsible for this plight on the nation and hence demand government to rise up to do the needful. Does it mean Ghana as a nation, a people and a government are failing to take what rightfully belongs to us? The answer still hangs in the balance because it calls for critical analysis and reviews.
Getting the Fundamentals Right
If Ghana as a nation is to get the fundamentals right, then it can result in getting all other things right as well. The question here is that what is the fundamental element that Ghana needs to get right? Ghana needs to get her Petroleum Contract Agreements (PCAs). Getting this in the right balance will help her appreciate whatever gains she is making from her oil and gas sector at every point in time. Not to switch into the legalities and the technicalities, it will do the nation much good to understand the various era and dispensation she finds ourselves in always.
Before Ghana went into commercial production, Ghana was not listed as an oil producing country and this was an era on it. This dispensation made the risk profile of the sector very high for investors and operators who were willing to put their investment and expertise on the line. A lot of investors can attest to their loss of investment, time and energy trying to discover commercial quantities of oil and gas. Till Ghana became an oil producing country the risk was totally and substantially on the investor and therefore the need to have agreements that put the interest of the investor ahead of the state. With government not being in the position to finance her own exploration and production activities, an external or independent entity assumes this position without certainty. The sector was not attractive and the few investors who decided to bet on or probable gamble on it did that putting their interest first. Hence the structure and content of the petroleum contracts agreement must of course entice these investors to pursue what seemed absolutely impossible then. If the government of Ghana will not risk her scarce limited resources, which cannot meet her pressing needs to pursue oil and gas activities then we have to genuinely admit the risk associated with the oil and gas sector. Investors must be duly rewarded for deciding to take the risk. The reward in the eyes of the state and citizens to be precise might portray a mismatch but it is worth it in the long run. It is in the light of some of these reported mismatched agreement that Ghana is now and oil producing country. The previous signed agreement might not look worth it, but appreciating the era those agreement were signed will help Ghana make informed decision and be better placed for improved negotiations and contracts.
The Future, Ghana’s Compensation
After 10 years of commercial production, Ghana’s oil and gas industry is in a different era. Even though it is too early for Ghana to compare herself to the likes of Saudi and Nigeria, It is too late for Ghana to compare herself to countries that are not producing oil. Admittedly Ghana is an oil producing country.
This calls for review of most of agreement and policies in order to meet the current identity of Ghana. Ghana cannot be signing agreements without acknowledging that now she is producing oil and gas in commercial quantities and hence there more proven reserves and discoveries still being made.
In as much as only few investors were interested in our high risk profile fields putting the state at the “disadvantaged” end, now the Ghanaian fields are ripe with proven reserve making it more than attractive for investors to place their last dollar on it. There is a very low degree of doubt about the Ghanaian Oilfield unless the State is in doubt about this, but if Ghana embraces the realities of our prospect and potentials then there is the need to take a key position on negotiation desk and this must show in the agreements we sign.
The new identity of Ghana as an oil producing country, and the evidence of continuous discovery of oil and gas should influence the nation’s position when it comes to entering into petroleum contracts and signing agreement. The gate way to Africa as Ghana claims to be always, must certainly be the safe way to Africa. The safety of investment is one of the factors that investors consider before engaging parties in business. The Economic and political climate in Ghana is conducive and most importantly safe for any form of legal business. Unlike other oil producing countries that are plagued with political unrest and instability, Ghana is quite different relatively.
In going forward with respect to signing petroleum agreement, there will therefore be the need to engage a lot of prospective investors and in the light of the above discussed few factors band other sensitive factors choose investors who appreciate the era Ghana happen to be in and hence ready to give Ghana her reasonable maximum value.
Competitive bidding will give Ghana her fair and reasonable share of her hydrocarbon resources, creating wealth and promoting national development. Ghana should negotiate from the right perspective and then she can get her fundamentals right.
