The agreement for the development of the Offshore Cape Three Points (OCTP) integrated oil and gas project – being undertaken by Italy's largest oil company, Eni Spa, in collaboration with Vitol Energy – is aimed at boosting Ghana’s gas supplies to secure the country’s energy and power sector.
“This investment is worth $7 billion and is reportedly the single biggest investment signed in recent history,” said the President in his State of the Nation Address to Parliament on Thursday.
Ghanaians should however be worried about this deal, says Dr. Mohammed Amin Adam, Executive Director of the African Centre for Energy Policy (ACEP).
According to him, “the $7 billion deal they signed with Ghana is badly negotiated; it’s everything for ENI, nothing for Ghana. The only thing Ghana can guarantee is that we’ll have gas to buy, other than that what?”
Revenue accruing from the oil and gas industry is dependent on the quality of contracts signed.
“Unless you have good contracts, you will not get much revenue and unless you have contracts that will lead to production, you will not get revenue,” observed Dr. Adam, in reference to recently signed contracts and processes in acquiring oil blocks.
He has acknowledged government’s share of potential proceeds from new oil contracts are progressively increasing. But there are doubts the new contracts will lead to oil discoveries because Ghana is not attractive to big players in the oil business.
“Those who have been given contracts are doing nothing on their blocks because most of them have no experience in upstream work; they don’t have money,” said Dr. Adam.
The Ministry of Energy and Petroleum has stated that the award of new petroleum contracts to eight foreign companies in 2014 was negotiated within the existing legal and regulatory framework of Ghana.
But the ACEP Executive Director says attracting big oil players in Ghana’s upstream sector will demand the disclosure of beneficiary ownership information in signing agreements, whilst providing “transparency and predictability” in the process.
“If you are not connected you cannot get an oil block and this is why we say government must adopt an open and competitive bidding process so that the companies that can give us higher value for our oil wealth, for our deposits, we give the contracts to them,” Dr. Amin Adam said.