Former Chief Executive of the Ghana National Petroleum Corporation (GNPC), Alex Mould, has said government has no justification to amend the petroleum agreement with AGM Petroleum, for oil exploration.

He also said Parliament’s decision to ratify the deal for exploration in the Deep South West Tano oil block was a bad one.

Speaking at a forum organised by the Caucus for Democratic Governance, Ghana, he said AGM’s push for the amendment of the agreement which was first signed in 2013 without any major work on the block, was against international standards in the industry.

He explained that while he was the CEO, the GNPC agreed with AGM to give its 49% because the Corporation had invested a lot of resources in the block before handing it over to AGM for oil exploration.

He questioned why the government would agree to review the deal knowing that AGM is yet to commence work on the oil block.

“It seems that AGM has been given a new lease of land through a sole tender and Government has reduced its stake from 49% to 18%. Be mindful that AGM was originally given this block from a competitive tender and 3 other companies...changing the terms before they start work is akin to our controversial road contractors who bid slowly only to come back before the work starts and add to the variation.

“Even in road construction, this is not allowed. Also, it is our understanding that the original local content partner is being replaced by a new local content partner called Quad Energy. This company was set up months ago before Minister of Energy brought this ridiculous amendment to Parliament and they shamefully approved, given the questions and issues raised.”

Controversial oil agreement

The amended deal was ratified at an emergency Parliamentary sitting last Friday amid opposition by some civil society groups and the Minority.

Under the previous deal, Ghana will receive 10% royalties and in addition to that, the GNPC will secure 10% free carried interest.

The GNPC under the previous deal was also expected to benefit from additional participating interest of 15%.

GNPC’s Exploration and Production Company Limited (Explorco) will also get 24%.

The existing Petroleum Agreement gives Ghana a potential 43% stake, made up of Carried and Participating Equity Interests of 25% and a Commercial Interest of 24% of the remaining 75%.

Per the renegotiated agreement ratified by Parliament, Ghana’s 10% royalties have been maintained. However, the free carried interest of GNPC has been increased to 15%.

Under the newly approved agreement, GNPC’s additional interest has also reduced to 3%, but GNPC’s Explorco will not take up shares in the new agreement.

Watch Tuesday’s PM Express which discussed the controversial deal in the video link below.