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MARCH 8, 2017

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Contrary to the perception that local companies did not have the capacity to insure any of the three Floating Production, Storage and Offloading (FPSOs) used in oil production, the Ghana Oil and Gas Insurance Pool (GOGIP) says it is up to the task

The Pool, comprising of indigenous general insurers, explains that it currently provides complete insurance for  all the three FPSOs- Kwame Nkrumah, John Evans Atta Mills and John Agyekum Kufuor, but reinsures the excess risk above its limit of retention.

The Technical Manager of the Ghana Oil and Gas Insurance Pool (GOGIP), Mr Faris Attrickie in an interview on March 2, said the GOGIP currently provided 100 per cent insurance for the FPSOs, per its mandate of being the only vehicle through which the upstream oil and gas insurance are to be insured.

“The pool is a conglomeration of general insurers in Ghana. All the general insurers subscribe to it, and we pool our capacities together. We are insuring 100 per cent because we are the exclusive vehicle through which the insurance must be done, it cannot be done through anybody,” he said.

Although the insurance of the FPSO, required huge capital, Mr Attrickie said the pool had a proper re-insurance system that helped  to reinsure the excess risk above their limit of retention.

“It is not like we are not up to the task, once you have the reinsurance in place, you earn the capacity together with your reinsurers, to absorb the whole risk. We have world class reinsurers and they provide us the support. We take it on and the excess that is above our limit of retention, are properly reinsured,” he said.

Aggregation of risk

He explained that the reinsurance was done by foreign reinsurance companies because it was not prudent to retain all the risk locally.

“The pool has the money to pay all these but if the pool goes down then it means the subscribers go down. Therefore, if these things are insured, then it is not proper that we reinsure ourselves,” he said.

He added, “the liability that the pool takes on itself is for members who have subscribed, assuming there is a loss, it is borne by all the subscribers.”

Insurance for FPSO Kwame Nkrumah

In 2016, oil production from the Jubilee field slumped by over 50 per cent following a fault with the turret bearing on the Floating Production,  Storage and Offloading (FPSO) Kwame Nkrumah.

He explained that the reinsurers had to pay for the insurance with the exception of the Business Interruption insurance, which covered the consequent loss of production and revenue for Tullow, the lead operator of the field.

Tullow Oil received a total of US$80million to cater for the losses the company suffered as a result of the fault.

GOGIP

The Ghana Oil and Gas Insurance Pool (GOGIP) comprising mostly general insurers are expected to pull together local resources to underwrite oil and gas risks in Ghana.

The formation of the pool was in accordance with the Petroleum (Local Content and Local Participation) Regulations 2013, (L.I. 2204) and the Insurance Act 2006, (Act 724) and seeks to give opportunity to local underwriting companies to take part in activities in the sector.

Source: http://www.graphic.com.gh/business/business-news/oil-and-gas-insurance-local-insurers-up-to-the-task.html

Ken Ofori Atta 2

The Minister of Finance, Mr. Ken Ofori-Atta, has revealed that GHC400 million will be allocated from the Annual Budget Funding Amount (ABFA) to finance the NPP’s Free SHS policy with additional revenue from other domestic sources to support its implementation. He confirmed that the Free SHS policy will begin in September this year, starting with fresh students across all public schools in Ghana. He made this known at his maiden annual budget presentation to Parliament on 2nd March. The amount will constitute about 49% of the total US$ 169,458,674.13 revised benchmark revenue to be allocated to the ABFA.

Speaking on the petroleum sector, he stated that, the total petroleum receipts for 2016 recorded US$247,175 million as compared to the 2016 Budget estimate of US$348.42 million, leaving a variance of US$101,241 million Dollars. The total ABFA receipts in 2016 amounted to GHȻ388.85 million, with actual utilisation amounting to GHȻ311.12 million, leaving an unutilised balance of GH¢77.73 million in the Petroleum Holding Fund.

2016 ABFA Utilisation by Priority Area

 

PRIORITY AREA

 

UTILISATION (GHȻ)

 

Expenditure and Amortisation of Loans for Oil and Gas Infrastructure

        –
 

Road and Other Infrastructure

 

199,447,492.13

 

Agriculture Modernization

 

27,671,280.88

 

Capacity Building (including Oil and Gas)

 

83,037,283.91

 

Total Spending in Priority Areas

 

310,156,056.92

 

Transfers to the Public Interest and Accountability Committee

 

967,000.00

 

Total ABFA Spending

 

311,123,056.92

Source: Bank of Ghana, Ministry of Finance

About 64 percent of the total ABFA in 2016 was spent on roads and infrastructure, 27 percent on road and infrastructure, 9 percent was invested in the agricultural sector and a little under 1 percent was given to the Public Interest and Accountability Commission for its activities.  Ghana National Petroleum Corporation was allocated USS88, 4970.92 million for its operations out of the total USS247, 175394.26 petroleum revenue collected in 2016.

Evelyns pie chart

The implementation of the Petroleum Local Content and Local Participation Regulations which began in 2016 led to the industry registering an increase in capital investments, local sourcing and subcontracting. For petroleum downstream service contracts, indigenous Ghanaian service providers were awarded about USD 221 million representing 73 percent increase to USD 128 million for 2015.

The Mr. Ofori-Atta also revealed that, the NPP government will review the priority areas of spending for the ABFA according to the PRMA and propose to have Agriculture; Physical Infrastructure and Service Delivery in Education; Physical Infrastructure and Service Delivery in Health; and Road, Rail and other critical Infrastructure Development as the government’s new priority areas for investing the ABFA. According to him the revision of the priority areas is to give focus to infrastructure development in critical areas of the economy.

The 2017 Benchmark Revenue for 2017 petroleum revenue was revised and projected at US$515.64 million, down from the original US$741.77 million due to volatility of the oil price on the international market, early performance issues from the TEN Field and the Jubilee FPSO turret bearing remediation project.

Breakdown of the Total Revised Petroleum Receipt and Distribution/Allocation in 2017

Transfer to National Oil Company (NOC) US$ 273,590,424.25
Annual Budget Funding Amount US$ 169,458,674.13
Transfer to the Ghana Petroleum Funds US$   72,625,146.06
Ghana Stabilization Fund US$  50,837,602.24
Ghana Heritage Fund US$  21,787,543.82
TOTAL US$588,299,390.50

Evelyns pie chart 2

He pledged that, the Ministry will work with the Jubilee Partners to address the shortfall in oil and gas production resulting from the 2016 damage on the turret bearing on FPSO Kwame Nkrumah and will adopt a three phase approach to convert the FPSO Kwame Nkrumah to a permanent spread-moored.

 

 

 

 

 

Story by Evely Addor

FEBRUARY 16, 2017

osafo-marfo-yaw

GOVERNMENT will soon review the Petroleum Act to make it possible for it to use the Heritage Fund for key developmental projects, Senior Minister, Yaw OsafoMaafo has announced.

According to the Senior Minister, the move is better than having the Fund sit ideal while critical areas of the economy lacks the needed support to make them more viable.

“We are going to look at the Heritage Fund. We want to introduce,as the President mentioned last week, fee-free education at the secondary level. And it is likely to be funded through the Petroleum Act,” Mr OsafoMaafo said.

“If that be the case, we have to make amendment and say that X per cent of the Heritage Fund or the Petroleum Fund would be used to support second cycle education;if we think that industry requires a stimulus that will enable it create more jobs that will in tend build the country for the future, we can look at it and put a certain amount for that too,” he added.

Mr OsafoMaafosaid government is also looking at developing,through the Fund, the agricultural and other key sectorsof the economy to support the future development of Ghana.

The Heritage Fund and the Ghana Stabilisation Fund are collectively known asthe Ghana Petroleum Funds.

Government, after the discovery of oil in 2007, set up the Funds because it was feared that allowing all the oil revenue to flow into the hands of politicians in the name of infrastructure development could be too costly for the nation because of the perceived corruption in government.

Recently however, some economic analysts and elements in government have been of the view that if the country has been able to develop strong transparency mechanisms to govern the Funds, then it should be able to do same with respect to the use of the funds for infrastructure development.

They are of the view that this would lay a strong foundation for present and future development while minimising the amount and cost of borrowing.

“What makes the use of the Ghana Petroleum Funds as a means of managing the oil revenue more worrisome in the face of the huge infrastructure deficit is that the country continues to borrow at very high rates of interest for infrastructure development, while part of the oil revenue continues to be kept in savings attracting insignificant rates of return,” a paper by the Institute of Fiscal Studies titled Revenue Earmarking in Ghana: Management and Performance Issues, states.

For instance, in 2015, government borrowed $1 billion for infrastructure development at an interest rate of 10.75 per cent, while the country had a little over $500 million in the Petroleum Funds attracting a mere 0.74 per cent rate of return.

The Senior Minister said it does not make economic sense to have that huge amount sitting in an account overseas and attracting little interests while Ghana borrows at high rates for infrastructural development.

“If the Heritage Fund is set aside for the future, the provision of infrastructure now and the development of industry to create more jobs is also for the youth who are the future,” Mr OsafoMaafo noted.

Source: http://www.thefinderonline.com/News/Govt-to-review-Petroleum-Act.html

FEBRUARY 16, 2017

fuel-new

The energy think tank, Institute for Energy Security has said that Ghana’s fuel supplies were expected to face serious disruptions due to the unanticipated shut-down of the Tema Oil Refinery (TOR), and port congestion facing the oil companies.

But the National Petroleum Authority (NPA) has responded and explained that the claims should be disregarded since there were enough stocks.

According to the Principal Research Analyst of the Petroleum Unit of the Institute, Richmond Rockson, the current situation was compelling oil companies to postpone their import and export programmes; amid acute discharge and loading constraint.

“As a result, stocks of the two main petroleum products consumed in the country have fallen short of the mandatory strategic level of 6-weeks, at a time when economic activities have picked up across the country after the General Election and Christmas festivities.

According to him, at the close of business Tuesday, the country’s stock of Gasoline and Gasoil at both the TOR and the Bulk Oil Storage and Transportation Company (BOST) installations across the country was 86,000 metric tonnes.

“Also, the stocks held in-tank at Bulk Oil Distribution Companies (BDC’s) facilities in Tema stood at 24,750 metric tonnes. A year ago, the combined stock of these fuel stood at 451,200 metric tonnes; a little above the mandatory 6- weeks requirement.

“Today [Tuesday], the stock of gasoline and gasoil combined can meet just 13-days of fuel supply. The last time the country came close to this situation was June 2014 and this actually resulted in fuel shortages in the Country.”

He said in the statement that the current situation was anticipated when the explosion of the Furnace occurred at TOR few weeks ago adding “That was the moment when the government and relevant agencies should have taken the necessary steps to forestall any such incident, especially when it was followed up with a disruption of the Conventional Buoy Mooring (CBM) facility in Tema.”

The institute therefore called on the quarters concerned in ensuring fuel security to as a matter of urgency increase fuel supplies for strategic reserves in order to avoid the imminent threat facing the country.

However responding, the NPA said there was sufficient supply of fuel in the country to meet domestic demand contrary to some speculations in sections of the media.

Below is a copy of the statement from the NPA

NO FUEL SHORTAGE

The National Petroleum Authority (NPA) wishes to assure the general public that there is sufficient supply of fuel in the country to meet domestic demand contrary to some speculations in sections of the media.

The current stock position in the country indicates there is over 200 million litres of gasoil and more than 100 million litres of petrol at various depots throughout the country.

These stocks are expected to last up to 6weeks. Additionally, over 73 million litres of gasoil and 46 million litres of petrol are expected to be delivered into the country from the 13th to 18th February 2017.

The NPA continuously monitors the weekly schedule of fuel imports to ensure that there is constant supply of fuel for the country.

The Authority wishes to assure the general public that there are no challenges at the discharging terminals at the country’s ports and ensures that there is fairness in the process leading up to the discharge of cargoes of all importers.

We therefore encourage the media and the general public to disregard any projections being put out in the public domain as merely speculative without any empirical basis. We further encourage all such interested organizations to crosscheck their information with the NPA before making public statements about this matter.

The NPA wishes to assure all motorists and consumers that there is no imminent shortage of fuel in the country.

SIGNED
Yaro Kasambata
Manager, Public Relations & Consumer Service
National Petroleum Authority

Source: http://www.graphic.com.gh/news/general-news/disregard-claims-of-fuel-shortage-we-have-more-supply-npa.html

FEBRUARY 17, 2017
 

court_14

Ghana has about eight giant agencies contributing to the economic growth of the country’s hydrocarbons. These agencies are the Ghana National Petroleum Corporation, the Petroleum Commission, the National Petroleum Authority, the Ghana National Gas Company, the Tema Oil Refinery, the Bulk Oil Storage and Transportation Company, the Ghana Oil Company and the Ghana Cylinder Manufacturing Company.

These agencies have peculiar roles they play in the hydrocarbon industry. However, the appointment of heads of these agencies have often appeared complicated to some citizens. The hydrocarbon sector of Ghana is also guided by the Constitution of the land.

Article 195 of the Constitution of Ghana, gives the power of appointments of persons to hold or to act in an office in the public services to the President. This, the president is expected to carry out in accordance with the advice of the governing council of the service concerned given in consultation with the Public Services Commission.

However, there is no requirement under the law for the Chief Executive to either have experience or knowledge of the industry. The National Petroleum Authority Act, 2005 (Act 691), Section 48, outlines the appointment process and roles of Chief Executive Officers appointed by the President. In this section, the chief executive officer must be a member of the board of the National Petroleum Authority (NPA).

Also he or she shall be responsible for the day to day administration of the affairs of the Authority and shall ensure the implementation of the decisions of the board. He or she is mandated by law to delegate a function to an officer of the Authority but shall not be relieved from the ultimate responsibility for the performance of the delegated function.

At the Petroleum Commission, the Chief Executive shall hold office on the terms and conditions specified in the letter of appointment in accordance to the Petroleum Commission Acts of 2011, Act 821. The law also specifies that he or she should be a person of high moral character and integrity with the relevant qualifications and experience related to the functions of the commission.

The Ghana National Petroleum Corporation is the mother oil state agency. Appointments of its managing directors and chief executive officers are strictly done by the President on the advice of the minister given in consultation with the Public Services Commission. Criteria for appointment under Section 6 of the Ghana National Petroleum Corporation 1983, PNDCL 83 states that the appointee must be a citizen of the country. It further states that the person must be someone who has not been sentenced to death or to a term of imprisonment exceeding 12 months.

Also, he or she has not been convicted of an offence involving dishonesty; he or she has not been declared an insolvent or a bankrupt under any law in force in Ghana and is of sound mind. All persons appointed as Chief Executive Officers hold office for a period of 5years upon the terms and conditions specified by the President in its instrument of appointment and may be re-appointed for a further 5years.

However, the appointment of the managing director may be terminated by the President giving 6-months’ notice or the payment of 6-months emoluments in lieu of that notice and in addition the managing director is entitled to receive the benefits that had accrued at the time of the termination.

Again in Section 10 of the PNDCL 83, the managing director may by writing addressed to the President resign the appointment by giving 6 months’ notice.

Furthermore, a senior officer of the corporation shall be designated by the board to perform the functions of the managing director in the event of where the office of the managing director has become vacant or the managing director is temporarily absent or is otherwise incapable of performing the functions of the office.

New CEO’s under the Akuffo-Addo Administration
After the sworn-in of the President, the country witnessed the dismissal of the Tema Oil Refinery Boss, the National Petroleum Authority and the Petroleum Commission. Others with the likes of Mr Sipa Yankey, the Chief executive office of the Ghana Gas Company resigned as bosses.
Currently, the National Petroleum Authority is headed by Mr Hassan Tampuli. Furthermore, Mr Kwame Awuah Darko, Managing Director (MD) of the Tema Oil Refinery (TOR) who assumed his position in June 2015 is currently being replaced by a new Mr Isaac Osei.
Dr Ben K. D Asante has been appointed the Chief Executive Officer(CEO)of the Ghana National Gas Company following the resignation of the then CEO, Dr. George Sipa-Adjah Yankey. The lucky CEO of the Petroleum Commission is still in charge of regulatory affairs at the Commission.

www.reportingoilandgas.org- Jacqueline P. Parditey

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