Prime News Ghana

Aker Energy sells Pecan field in US$1 upfront payment

By Primenewsghana
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Two years after the country’s failed bid to purchase shares in two offshore petroleum blocks owned by Aker Energy for US$1.65billion, the company has entered into a US$1 upfront payment agreement with a subsidiary of its main creditors for one of the blocks – raising questions over Ghana National Petroleum Corporation’s (GNPC) prior purchase intention.

It will be recalled that government and the GNPC mounted a ‘spirited’ bid for the Aker Energy-controlled offshore blocks, South Deepwater Tano and the Deepwater Tano Cape Three Points (DWT/CTP).

The parliament of Ghana was convinced to grant authorisation for the GNPC to spend a maximum of US$1.1billion – which was to be borrowed in the name of Ghana – on the blocks. Including its plan of development, Aker demanded US$1.65billion from GNPC.

The development led to some civil society organisations (CSOs), committed to accountability in the energy sector, forming a coalition to block the transaction. They argued that based on available data, the two oil blocks had been ridiculously overpriced.

Two years later, the SWDT was returned to Ghana for free. However, DWT/CTP – where the Pecan field is located – is said to be now controlled by AFC Equity Investment, a subsidiary of Africa Finance Corporation (AFC). This follows Aker Energy’s default on its commitment with AFC.

“Aker Norway has more or less defaulted on the loan of US$200million they were given to invest in Pecan, and handed over the asset in a face-saving ‘sale’ for US$1,” said the Civil Society Organisations (CSOs) Coalition on Extractive Governance.

“Aker will only recoup some of its earlier investment if AFC succeeds in developing the field to the point where it can produce and sell oil to recoup its investment and make some money,” the coalition explained in a statement.

They said: “The same blocks that barely two years ago were worth more than half the IMF money this country has sweated blood for nearly a year to secure, have either been abandoned or pawned for scraps”.

The 32-member strong coalition of CSOs, during a press conference in Accra, noted that the sale of Aker’s interest to AFC and subsequent submission of the Plan of Development (PoD) to government raises more questions.

They alleged that: “Even though Aker has sold their interest in Ghana, they are scheming to stay on the Pecan development through surrogates and Ghanaian collaborators across segments of our society to amass ridiculous benefits from the Pecan field development”.

Meanwhile, in what is an even more puzzling development, the coalition said Aker Energy in 2021 purchased an FPSO for US$35million: but in its Plan of Development submitted to government, Aker’s previous owners intended to bill Ghana US$1.7billion for the FPSO.

“We admit that the energy ministry has raised a preliminary objection to the FPSO’s cost. But there is no proposal on what the ministry considers fair value for the FPSO,” they said.

Also, they indicated that while some technocrats have expressed concerns about the FPSO’s age and recommended caution, there is political pressure to proceed with the deal. “Typically, FPSOs have an average payback period of 5-7 years, varying based on size and configuration. The lease period for rented options is commonly ten years.”

The CSOs said they are monitoring this keenly and will demand transparency on the ministry’s judgment before the approval is granted: “We demand complete information on the AFC transaction and the actual amount that will constitute petroleum cost… and further demand a full audit of the US$200million expenditure deemed recoverable at the start of production”.

Furthermore, they also charged GNPC to state its position on the Aker and AFC transaction, particularly explaining why it did not pre-empt sale of the asset for an upfront payment of US$1 – since they were willing to pay US$1.3billion upfront, which parliament reduced to US$1.1 in 2021.

They also asked for disclosure of the justification to use a 14 year-old FPSO in a field with a minimum production period of 25 years; and the Aker PoD from the Petroleum Commission and government.

The Norwegian government, they said, should take particular interest in the behaviour of Aker in Ghana to forestall a negative image for the country which hosts a global transparency initiative – the Extractive Industries Transparency Initiative (EITI).


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