…amid concerns over risky instruments
By Eugene Davis
Parliament has asked the central bank – trustee of the proposed decommissioning fund to desist from investing in highly risky instruments.
The decommissioning fund is to cover the decommissioning obligations of the contractor parties in the Jubilee Field and to ensure that contractor parties provide adequate security towards their liability to contribute to decommissioning costs.
The Mines and Energy Committee before the approval of the report of the decommissioning fund, observed that the trust deed has appointed the BoG as the trustee of the decommissioning fund.
The decommissioning committee will determine the kind of investments that the decommissioning fund can be invested in.
This was contained in a Committee report on Mines and Energy for and concerning the Trust Deed among GNPC and JV partners in respect of establishing the decommissioning trust fund for the Jubilee Field Unit Offshore in the Republic of Ghana, and the Decommissioning Assumption and Release Agreement.
“Given the necessity to protect the decommissioning fund from exposures, the committee recommended to the managers of the proposed decommissioning fund to avoid investing the fund in highly risky instruments.” the report noted.
Projected money to be raised
Officials of the Ministry of Energy informed the committee that the Contractor Parties have committed to raise the sum of US$700m towards the decommissioning of the Jubilee Field at the end of commercial production.
They also informed the committee that this projected figure has already been approved by the minister of energy in the plan of development (PoD) for the development of the Jubilee Field.
The trigger date was originally forecasted to the December 1, 2020, for the Contractor Parties to contribute to the Fund through cash calls. The trigger date has since been extended severally and currently to January 31, 2024, to enable the Decommission Committee to finalize the agreements with the JV Partners with regards to all conditions and precedents to be fulfilled.
Lawmakers in approving the report, indicated that the establishment of the fund is critically required to guarantee the availability of funds for the decommissioning of the Jubilee Fields at the end of commercial production. They also added that the postponement of the trigger date warranted an urgent ratification by the House to achieve the current trigger date of January 31, 2024.
Urgency
The Trigger date was extended severally and currently to January 31, 2024, to enable the decommission committee to finalise the agreements with the JV Partners with regards to all conditions precedent
Purpose
The decommissioning fund is to cover the decommissioning obligations of the contractor parties in the Jubilee Field and to ensure that contractor parties provide adequate security towards their liability to contribute to decommissioning costs.
The fund is expected to be established once fifty percent (50%) of the recoverable crude oil has been extracted from the unit interval or if earlier, five years before the end date as defined in the UUOA.
Trust Deed
The Trust Deed is being executed among the Ghana National Petroleum Corporation (GNPC), Tullow Ghana Limited, Kosmos Energy Ghana HC, Kosmos Energy Ghana Investments (formerly Anadarko WCTP Company), PetroSA Ghana Limited, Jubilee Oil Holdings Limited (each “a unit party” and collectively as “unit parties”) and the Bank of Ghana [ (BoG as Trustee) in respect of establishing the decommissioning trust fund for the Jubilee Field Unit located offshore the republic of Ghana.
The decommissioning agreement is among the government (represented by the Ministry of Energy) and the GNPC, Tullow Ghana Limited, Kosmos Energy Ghana Investment (formerly Anadarko WCTP Company), PetroSA Ghana Limited, Jubilee Oil Holdings Limited (as parties)in respect of establishing the decommissioning trust fund for the Jubilee Field Unit located Offshore the Republic of Ghana.
A decommissioning committee led by the minister of energy and comprising representatives from the Ministry, Ministry of Finance, Bank of Ghana, GNPC, Office of the Attorney General and Ministry of Justice (OAGMoJ), and, the Petroleum Commission was set up to negotiate the Decommissioning agreements.
During the negotiation process, one critical point of disagreement between the government of Ghana team and the JV Partners was the issue of GNPC’s liability to contribute to the decommissioning fund.
The ministry in its bid to resolve the matter sought the opinion of OAGMoJ.
Obligation of GNPC under the Trust Fund
Officials of the Ministry of Energy told the committee that the Contractor parties have expressed their disagreement that GNPC is not required to contribute to the decommissioning fund.
They also informed the committee that the contractor parties have, however, initialed the documents for the establishment of the decommissioning fund and deferred the resolution of the disagreement after the establishment of the fund.
The committee took notice of the legal opinion from the OAGMoJ, indicating that GNPC is not liable to contribute to the decommissioning fund by WCTP PA, DWT PA, and relevant sections of the Petroleum(Exploration and Production) Act,2016, Act 919.
