24th May 2024

The Energy Ministry has chastised Alex Mould, former chief executive officer of Ghana National Petroleum Commission (GNPC), over his “dishonest” comments regarding government’s incentives to Aker Energy and AGM Petroleum agreements.

The ministry, in a statement signed by its head of communications and public affairs, Nana Damoah, questioned Mr Mould’s position on the import of Aker Energy and AGM Petroleum agreements, particularly when GNPC under his watch had equally granted incentives to ENI Sankofa project.

The statement said the amendments to the petroleum agreements of Aker Energy and AGM were to provide “regulator certainty and incentives” to support the realisation of Aker Energy’s Pecan project and increase investment in the AGM block respectively.

The ministry stated that these investments have already yielded positive results for the country, as AGM recently announced crude oil discoveries following an accelerated drilling campaign.

It explained that the incentives will also increase oil production, provide job opportunities and add value to the economy.

Unfounded claims

Mr Mould, in a statement, claimed that the Energy Ministry has caused massive historical damage to the country’s oil and gas sector, saying the amendments of the agreements of Aker Energy and AGM have consequences on the country’s oil and gas industry.

Some of the consequences, he claimed, include strangling state policymaking, state regulation, and state commercial participation in the upstream oil and gas sector; collapsing local content development; imposing certain critical obligations on the Minister, which are regulatory in nature and compelling him to accept use of FPSO technology as the only option for producing the resources of the AGM block.

Others, according to him, include compelling the Minister to accept the contractor’s delineation of the area to be included within a “Development and Production Area” in the Aker block; allowing Aker within a year of its “Final Investment Decision” to unilaterally vary the approved development plan without reference to the Minister; giving contractors unfettered discretion over oilfield procurement without recourse to the Petroleum Commission or any other governmental authority, among others

Factual inaccuracies

However, according to the Energy Ministry, Mr Mould published factual errors to mislead the public.

The ministry’s statement said his claims that the amendments compel government to accept FPSO as the development technology is factually wrong.

It explained that the amendments only stabilise the framework for evaluating the FPSO, assuring the contractor that any FPSOs being evaluated will be subject to the current evaluation criteria.

The statement therefore urged Mr Mould to know that the FPSO is the most realistic development option at these water depths.

It added that Mr Mould demonstrated a lack of appreciation of the fiscal stabilisation provisions specified in the original agreement, saying it specifies the type and number of taxes the contractor shall be required to pay.

The statement further noted that in “Article 12.1, the Petroleum Act provides: No tax, duty, fee or other impost shall be imposed by the state or any political sub-division of the state on contractor, its sub-contractors or its affiliates in respect of activities related to petroleum operations and to the sale and export of petroleum other than those provided in this article.”

It stressed that the “withholding tax of rate of AGM, which Mr Mould described as zero, is factually inaccurate and, thus, it is five per cent as stated in the PA amendment.”

The statement noted that it is curious where Mr Mould got his idea about “unfettered discretion” since Regulations 40A (2) mandates the contractor to submit the approved annual work programme and budget to the Petroleum Commission for a final approval.

“It is important to state that in the amendments of the AGM Petroleum Agreement, we negotiated a higher net gain for Ghana. We reduced our commercial paid interest and subsequent exposure of GNPC but raised the free carried interest of the state,” it said.

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