The Africa Center for Energy Policy (ACEP) has welcomed government’s decision to renegotiate the Sankofa-Gye Nyame Project agreement.

Deputy Minister for Petroleum Benjamin Dagadu yesterday indicated government will soon kick-start renegotiation of the Sankofa-Gye Nyame Oil and Gas deal signed early this year.

This according to him, has become crucial to ensure the country derives the maximum benefit from the project.

Some industry watchers and Civil Society groups had called for a relook at the 7 billion dollar project contract which would see gas from the field sold to Ghana gas at about $12 per million British Thermal Units (MMBtu) for gas from the Sankofa fields.

Mr Dagadu tells JOY BUSINESS the conditions that informed the earlier signing has changed significantly.

"They have made some savings. We signed the agreement under some terms, all prices and other, at that time, the drilling cost was also very high, some $650,000 per day. But when the oil prices went down, everybody has to squeeze themselves as all the service companies would have to have a haircut," he said.

He said once they had the haircut, they would have to also benefit from it, stressing that would be considered later as the Petroleum Commission approves every contract that the oil companies sign.

"They know whichever contract they want to sign the Commission is following up on all of them, the reductions and re-negotiation, they have to go through us," he said.

He said a revisit of some of the contract will give the Commission some 10 percent to 20 percent reduction in the contract but the values will depend on the individual contracts. 

Deputy Executive Director of the Africa Centre for Energy Policy, Ben Boakye, welcomed the decision saying it is long overdue.

"We did a paper on that project and we insisted that there were too many giveaways. We have our own gas and its like we are compelling them to produce the gas at any rate," he said. 

He said it did not make any sense in Ghanaians buying their own gas at that price adding "because the companies knew that they are getting this much they made us securitise the investment so we are providing sovereign guarantees.

"They said our sovereign guarantee is not enough and we need World bank to guarantee us before they can produce and that is what we are doing...beyond that also, we have to escrow our oil revenues and pay ENI before everybody else," he said.

Mr Boakye laments that is how raw a deal Ghana has been given with the ENI project.