Petroleum Africa
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Tuesday, March 25, 2014
The Ghanaian parliament has ratified the petroleum agreement for the exploration of oil in the Expanded Shallow Water Tano Block. The companies involved in the agreement are GNPC, CAMAC Energy, Base Energy, and GNPC Exploration and Production Co.
Under the terms of the agreement if a commercial discovery of oil was made on the block, GNPC, CAMAC Energy Ghana Ltd., and Base Energy Ghana Ltd. who would prospect for oil in the block for 25 years. The prospect area, bounded on the north by the Ghana coastline and on the west by the maritime border with Cote d’Ivoire, on the south by the Deep Water Tano Block and on the east by the cape Three Points Block, spans some 1,508 sq km.
Under the agreement terms, if no commercial discovery of oil was made after seven years, the contract expires. The contractors are obligated to spend a minimum of $30 million in the agreement.
Dr. Kwabena Donkor, Chairman of the Parliamentary Select Committee on Mines and Energy and MP for Pru, who moved for the adoption of the report of the committee said the GNPC had commissioned several studies in the area for which there were technical reports. He went on to say that the contractor would be required to reprocess existing 2D and 3D seismic data over the applied contract area and drill one exploration well and that they were required to commence operations latest by 60 days after the ratification of the agreement by Parliament. Under the agreement the contractor would be required to relinquish 25% of the original contract area at the end of the exploration period and 25% of the remaining contract area after the first extension period.
Ghana is entitled to 12.5% of oil and 7.5% of gas as royalties. The GNPC has an initial carried interest of 10%, with an additional interest of 10%, and government also has an entitlement of 35% income tax according the government of Ghana’s official website.
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