ENI/GNPC SANKOFA CONTRACT

 
 
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“REVIEW ENI/GNPC SANKOFA CONTRACT” – MINORITY LEADER TO ITALIAN PM

The Minority Leader in Parliament, Hon. Osei Kyei-Mensa-Bonsu, MP for Suame, on Tuesday, February 2, 2016, urged visiting Italian Prime Minister, His Excellency Mr. Matteo Renzi, to prevail on ENI, a state-owned Italian oil conglomerate, its partners and the Government of Ghana, to review some aspects of the contract involving the exploitation of the Offshore Cape Three Points Block (OCTP).

According to Hon. Osei Kyei-Mensa-Bonsu, a careful interrogation by the Minority of documents on the $7 billion deal has led to the discovery of some “sore points and knotty issues”, which will, in the long run, shortchange Ghana.

The Minority Leader made this known to the Italian Prime Minister in the holding room of the Speaker of Parliament after H.E. Matteo Renzi had delivered a speech to the House.

In the presence of Ghana’s Minister for Foreign Affairs, Hon. Hannah Tetteh, and high-ranking government officials from the two countries and a section of the media, Hon. Osei Kyei-Mensa-Bonsu expressed grave worry about the contractual arrangements in the ENI deal, and requested that the parties involved take a second look at the agreement.

Whilst thanking the Italian Prime Minister for his visit and address to the House, Hon. Osei Kyei-Mensa-Bonsu noted that Ghana is appreciative of the years of collaboration and partnership that have existed between the two countries in various fields.

The ENI-Sankofa gas project, the Minority Leader added, is the single largest investment in Ghana. This agreement, like all others, he, however, noted must inure to the benefit of the two countries and must in no way be lopsided, which is the case in the present deal.

The Prime Minister indicated that he would look into the matter.


Concerns by NPP
The Director of Communications of the New Patriotic Party, Nana Akomea, in an earlier statement, explained that his party’s worries about the ENI deal stem from the fact that the government of Ghana has provided financial terms to ENI and its partners of 20% return on investment, instead of the normal 12.5%. This, in the view of the NPP, is an unusually high rate for commercial transactions of this nature, especially as GNPC assumes all the risk in the project.

Additionally, the negotiated gas price of $9.8/MMBtu for gas from the Sankofa fields, according to the party, is too high by world standards, which stand at between $5-7/MMBtu.

“It is even higher than the price of gas sold to Ghana from Nigeria, which stands at $8.3/MMBtu, delivered at Takoradi. It is even more expensive than our own Atuabo Gas price of $8.8/MMBtu delivered at Takoradi. At the negotiated gas price of $9.8/MMBtu, it puts to great risk Ghana’s potential of becoming the Petrochemical hub of the region to Nigeria, due to that country’s lower gas prices,” the statement added.

The agreement, according to Nana Akomea, also compels the Ghana National Petroleum Company to buy up to 90% of ENI produced gas at a higher negotiated price of $9.8/MMBtu for 20 solid years. Furthermore, GNPC, after buying the gas from ENI at a guaranteed price stands the risk of losing its market (VRA, IPPs, petrochemical industries) to other cheap gas suppliers.

Whereas the cost of development of ENI’s Sankofa fields, with less reserves of oil equivalence, stands at $7 billion, the cost of the development of the Jubilee Fields, which has even more reserves of oil, came to $4 billion. The cost of development of the TEN oil fields, also with more oil reserves of oil equivalence, Nana Akomea noted, came to $4.9 billion.

“We wonder the quality of due diligence done, if any,” he queried.


 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   
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