The co-chair of the Ghana Extractives Industry Transparency Initiative GHEITI, Dr. Emmanuel Steve Asare Manteaw, is asking a question many Ghanaians may ignore or downplay its relevance.
Who is buying Ghana’s oil from the flagship Jubilee Field and recently, the TEN fields? Which companies are selling or buying them?
You may perhaps be asking, why does this matter? Oh yeah! It matters extremely because it’s an avenue for oil companies to escape taxes and to perpetrate fraud! Please spare some few minutes as we make sense of some leads in Ghana’s oil space.
Dr. Manteaw posed the question at a National Stakeholders forum on petroleum sector governance, organized by Friends of the Nation in Takoradi.
At that forum, he discussed with two other panellists – Benjamin Boakye of the African Centre for Energy Policy; ACEP, and Michael Asare-Akonnor of the Ministry of Finance on the theme; “Towards a decade of commercial oil discovery; progress made in addressing citizens’ concern”.
The moderator for the discussion; Solomon Kusi Ampofo, Communication, Advocacy and Campaigns Coordinator at Friends of the Nation posed this question.
“Dr. Manteaw, can you brief us on GHEITI’s report and what these reports reflect”?
Dr. Manteaw responds and I quote; “GHEITI… also requires transparency in commodity trading. I will cite example from the 2015 PIAC report. Over here, we found out that the Jubilee crude which the entire Jubilee partners are trading, sold at different prices over the same time frame. The highest achieved price was that of Tullow Oil which was somewhere in the region of $62-$64 per barrel. GNPC managed something around $52 per barrel and Kosmos also did $52 per barrel. This tells you that the two [GNPC and Kosmos] are selling at a fair market price.”
“When you delve into this statistics, it tells you that Tullow was able to get a higher achieved price [$62] because of its hedging policy. So Tullow hedged and won. But what is more intriguing is what Anadarko got for its oil, which is Jubilee crude. Anadarko sold for $44 per barrel. Jubilee crude? Selling at $44 per barrel? When others were selling 50 and 60?
[“…there is insider trading; trading within an affiliated entity. So they fix the price so low and sell it among themselves; and therefore, the lower the profit, the lower the tax on this profit they have to pay to the state. It’s possible”!-Dr. Manteaw, 2016]
Well, there could be explanations. It could be that, Anadarko hedged and lost; when Tullow hedged and won.
It could also be that Anadarko is not quoting the fair price. Maybe there is insider trading; trading within an affiliated entity. So they fix the price so low and sell it among themselves; such that, the lower the profit, the lower the tax on this profit they have to pay to the state. It’s possible! [Read about Mopani Glencore Scandal in Zambia and you will understand].
[Getting information in terms of what the companies are paying, and what is coming to the state are not enough. We need to be interested in who is buying our crude and at what price-Dr. Manteaw, 2016].
But, how do you establish that fact? We need to investigate it. But the question is; have we as a nation investigated it? The answer is No!
You see, getting information in terms of what the companies are paying, and what is coming to the state are not enough. We need to be interested in who is buying our crude and at what price.
[Either the suspicion that Saltpond Oil is mixed with stolen oil from Nigeria and other places is true, or it could be that indeed Saltpond Oil sold at a fair and right price but it is Anardako that is fixing price-Dr. Manteaw 2016].
And it becomes more interesting when you consider the fact that Saltpond Oil, which is a heavy crude, inferior crude, sold for $50 [in 2015], and Jubilee crude sold for $52. Really?
But that could also mean something. Either the suspicion that Saltpond Oil is mixed with stolen oil from Nigeria and other places is true, or it could be that indeed Salpond Oil sold at a fair and right price but it is Anardako that is fixing price.
So getting data on the price at which your oil is selling is as important as getting data on how much revenue you are getting as a state.
[During the first two years of oil production, we had a marketing arrangement with Cirus Oil and Vitol. Tried as I did to get a copy of the marketing arrangement, I failed-Dr. Manteaw, 2016].
In this direction, the GHEITI is interested in GNPC and how much they are selling our share of the Jubilee crude for and who is buying.
During the first two years of oil production, we had a marketing arrangement with Cirus Oil and Vitol. Tried as I did to get a copy of the marketing arrangement, I failed. Dr. Joe Abbey of CEPA also tried but failed to get a copy of the marketing contract.
I went all the way to write to the then minister of Energy and Petroleum Dr. Oteng Adjei to ask if we could get a copy of the contract. He told me those guys at GNPC are my friends so I know how to get it. I went to GNPC I did not get it.
[In whose interest is the reason the contract is been hidden, why?]
Now we have a contract with UNIPEK; a Chinese company which is now buying our oil. We have signed with an off taker agreement.
Thankfully through GHEITI, the contract is published now at GHEITI website. But it took some effort. I personally had to intervene to impress on the GNPC to make that document publicly available.
“So this is what the GHEITI is doing to push the frontiers of transparency in the management of the natural resource revenues in Ghana”.
Dr. Manteaw has been articulating similar sentiments on different natural resource platforms.
Stay connected for another edition of the Obrempong’s Oil Diary.
By: Obrempong’s Yaw Ampofo/citifmonline.com/Ghana