Business

Civic Advocates save Ghana Millions of Dollars as Aker’s AGM relinquishes its 80% interest in the South Deepwater Tano Block (SDWT)

In a stunning move, Aker’s AGM has relinquished its 80% interest in the South Deepwater Tano Block. This comes after a long and hard-fought battle by Ghanaian civil society organizations (CSOs) to protect the country’s interests in the oil industry.

The battle began in August 2021, when CSOs rallied on fascinating advocacy projects to prevent a composite transaction that would transfer Aker’s interest in the Pecan field and the SDWT block to the Ghana National Petroleum Corporation (GNPC). The SDWT Block was valued at an outrageous $700 million at 65% commercial risking ($804m unrisked), based on untested and unappraised Nyankom discovery and bizarre assumptions about contingent resources of about 421 MMbls.

When CSOs’ analytical evidence showed that Ghanaian politicians and GNPC were simply seeking to pervert standard practices in the oil industry on valuation and asset acquisition, we were faced with a super coordinated assault on our character by leading members of government, GNPC, sections of the media and members of parliament. Also, some academics and dark forces on the corridors of power, who had never commented on the oil industry but suddenly became industry experts, endorsed the transaction and vilified activists.

On the side of the government, we were always prepared for their defence, even though their defence lost decorum and respect for the work of the civil society group. In some instances, we were described as having eaten fufu (a local Ghanaian dish) and lost reasoning. They sponsored high-profile prime-time interviews to tell the nations that CSOs only sought to derail the best decision ever taken in the oil industry.

I could appreciate the government’s defence. They had a deal to defend even if it appeared shady from their body language and deliberate deviation from facts of our arguments to emotional appeal to the nation.

We had our share of the attack in parliament. One MP, Honourable K.T. Hammond, now Minister for Trade in the Republic, described CSOs as ignorant people struggling to appreciate that the oil industry is technical. However, he made no technical presentation on the floor of parliament to defend his support for the transaction and at least attempt to debunk the specific issues raised by CSOs.

I must acknowledge that parliament made a significant intervention. Despite approving a $1.1 billion cap for GNPC to renegotiate the transaction, which CSOs argued could not be worth more than $300 million, I commend some members, particularly the majority leader Honourable Osei Kyei-Mensah-Bonsu and the then minority leader, Haruna Iddrisu, for making crucial interventions to reject the Minister of Energy’s request for a blank cheque to borrow about $1.65 billion for GNPC in his memo (Fig. 1). Instead, they insisted that the records of proceedings should reflect that the Minister would return to parliament with a negotiated price informed by a genuinely independent valuation. In addition, parliament demanded that the ensuing loan agreement be resubmitted for approval.

Fig 1: Excerpts of Energy Minster’s Memo to Cabinet and Parliament

The demands of parliament extended the advocacy window for CSOs to defend the interest of the state, mindful of the fact that the “borrowing hands” were ready for the parliamentary approval.

The most surprising part of the entire advocacy was the role some media houses and personalities played in pushing the transaction. They described CSOs as “anti-Ghana CSOs”. They infiltrated meetings of CSOs and cunningly spliced the voices of CSOs leaders to blackmail the advocacy.

Thankfully, the resilience of the CSO group and activists attracted the knowledge of Lukoil, a 38% interest holder in the pecan field, who were not informed of the transaction. Lukoil threw in the wrench seeking to be engaged in accordance with good practice and the Joint Operating Agreement (JOA) covering the Pecan Field partnership. This singular act would occasion significant disagreements and back and forth, bolstering the advocacy for transparency on the transaction until it became untenable for government to proceed.

Interestingly, after 18 months, Aker Energy has written to relinquish its interest in the AGM block to Ghana for free. This reinforces CSOs position that the Nyankom discovery announced without effort to test the well was speculative and potentially non-commercial in ultra-deep waters. GNPC could not have been betting on the interest of Ghana.

After several delays and an inability to develop the pecan field, which coincided with regulatory constipation, the ministry of Energy is now demanding that Aker presents its Plan of development (PoD) for the Pecan field by April 15. This is after ten extensions have been granted to the company for various excuses.

It is now clear that CSOs were not anti-Ghana. On the contrary, we looked out for the right thing to be done in the interest of the country. If Ghana had borrowed $1.3 billion, 43% of what the country needs from the IMF for GNPC, the fiscal situation would have been far worse than it is today.

Sadly, the situation appears to provide no lessons for the political class as a new scramble to own the relinquished interest unfolds. As a result, the CSOs have a new task of ensuring that a transparent process results in the reassignment of the interest.

Long live advocates and activists who, against the odds, fight for the national interest.

Benjamin Boakye
Executive Director
Africa Centre for Energy Policy

Comments are closed.