Business News of Tuesday, 19 December 2017
The idle Saltpond Oil Field is said to be heavily draining the country’s oil revenues. For instance, in the first six months of the year alone, about US$74,192.57 is reported to have been spent on the payment of the emoluments of skeletal staff and the maintenance of the non-functional oil production facility.
Subsequently, the Public Interest and Accountability Committee (PIAC) has waded in with a call on the government to urgently decommission the fields for lack of activity in the area and to protect the country’s oil revenues from slipping into unproductive activities.
According to the committee, the continuous use of oil revenues in the payment of emoluments of redundant staff, coupled with maintenance-related costs of the facilities offshore, is a drain which must not be allowed to continue.
The 2017 half-year report of the committee – which has oversight responsibility on the prudent use of oil revenues – estimated that the Ghana National Petroleum Corporation (GNPC) spent about US$74,192.57 for these activities between January and June 2017.
Although the field has been shut down because it is financially unviable, the GNPC continues to use oil revenues to cater for the cost of maintaining the offshore production platform ahead of plans to decommission it.
The PIAC, however, believes that the continued use of oil revenues to cater for an idle field did not reflect judicious use of the resources and has, therefore, recommended to the GNPC to speed up efforts to completely decommission the plant.
“The Saltpond Field remains shut down, still awaiting decommissioning. In maintaining GNPC’s skeletal staff on the production platform, the corporation spent US$74,192.57 on staff emoluments and maintenance-related costs.
“The GNPC should, as a matter of urgency, complete the decommissioning of the Saltpond field as the cost of funding skeletal staff in the Saltpond Offshore Producing Company Limited (SOPCL) is not a judicious use of resources,” the committee, in its report released on December 11, said.
Decommissioning in phases
The Saltpond Oil Field, which was the first oil-producing field in the country, has been shut down due to its declining viability. It has, therefore, become necessary to decommission the offshore platform. The field is about 65 miles west of Accra and operated by the SOPCL.
The GNPC has divided the decommissioning into three phases, that is pre-decommissioning, decommissioning and post-decommissioning. The first phase which was earmarked for 2017 was to get a consultant to kick-start the project, while maintaining the plant. It anticipated to use about US$4.20 million to fund the first phase this year.
A Ranking Member of the Parliamentary Select Committee on Mines and Energy, Mr Adam Mutawakilu, in an interview on December 13, said the GNPC had started the process of procuring a consultant to decommission the plant.
This, however, does not mean that the plant should be left idle without any maintenance works as the repercussions, he explained, would be negative.
“Even if you have not decommissioned, you cannot leave it to rust. The more it rusts, the more it affects the environment, and especially the fish that we have,” he stated.
He said there was, therefore, the need to maintain a skeletal staff to man the offshore platform in its idle state and to maintain the field till plans were concluded to decommission the plant.
“There is the need to still maintain it while you look for a consultant to kick-start the decommissioning. If you leave it there and there is no one to take care of it, people can even cannibalise it.
“So we still believe there should be some skeletal staff there just to be maintaining it, while they look for the consultant and then proper decommissioning is done,” he added.
The current Petroleum Exploration and Production Law (2016), Act 919 has provided for the setting up of a decommissioning fund.
This means that any company operating in the upstream sector is supposed to devote a percentage of its oil revenues into the fund to ensure that resources are available should there be a need to decommission their production platforms.
Mr Mutawakilu, however, explained that in the case of the Saltpond Field, there was no money readily available for that due to the absence of a fund.
“In the case of the Saltpond Field, there is no money anywhere to be used to do the decommissioning,” he noted.