GH¢5.7 billion petroleum revenue lost to COVID-19

• Posted on March 4, 2021March 4, 2021
• by Nana Kwesi Coomson
• Comment

GHANA lost some GH¢5.7 billion in petroleum revenue in the first half of 2020 as a result of the COVID-19 health crisis, a report published by the Public Interest and Accountability Committee (PIAC) has revealed.

PIAC explained that the outbreak of the pandemic led to a freeze on the work programmes of almost all the operators of Ghana’s oil fields as well as the cancellation of critical operations and maintenance works on production facilities scheduled for that year.
The report said, “although oil production remains at approximately 200kbpd, production and revenue forecast for the year have been significantly affected. According to the Ministry of Finance, the total estimated fiscal impact from the shortfall in petroleum receipts, import duties, other tax revenues, the cost of the preparedness plan, and cost of Coronavirus alleviation programme is $3.89 billion or GH¢21.42 billion with shortfall in petroleum revenues alone being $1.04 billion or GH¢5.7 billion.”
It will be recalled that the Petroleum Commission last year revealed that 98 upstream oil and gas contracts, valued at $389 million, had been cancelled due to the outbreak of the COVID-19 scourge
Contracts awarded by Aker Energy, AGM, Eni, GOSCO and Springfield between the fourth quarter of 2019 and the first quarter of 2020 were affected and as a result, a minimum of 500 Ghanaians were to lose their jobs.
Chief Executive Officer of the Petroleum Commission, Mr Egbert Faibille Jnr. had at an oil and gas webinar disclosed that “the cancellation of these contracts such as a five-year Maersk Drilling contract, which was terminated in June 2020 together with associated sub-contracts will have a devastating toll on local businesses.”
Contractors and sub-contractors had laid off more than 100 temporary and permanent workers, while more than 450 potential direct and indirect temporary jobs and opportunities were also lost due to the suspension of drilling by international oil companies such as Amni, GOSCO, Eni and Eco Atlantic.
In spite of the ravages of the pandemic, there was sustained production in the country’s three offshore producing Fields. A total of 34.23 million barrels of oil was produced, of which the Jubilee Field produced 15.41 million bbls, TEN – 9.26 million bbls, and OCTP (SGN) – 9.56 million bbls., PIAC reported.


Petroleum Funds suffer losses

PIAC found out that during the period, an amount of US$72.64 million was received by the Ghana Petroleum Funds (GPFs) from the Petroleum Holding Fund (PHF)  compared to the US$99.78 million received by the Funds in quarter one of
2019.


The Ghana Stabilisation Fund (GSF)  and Ghana Heritage Fund (GHF) received US$50.85 million and US$21.79 million respectively.

The GSF and GHF receipts in quarter one of  2020 represented a 27.20 percent decrease from their respective quarter one of  2019 receipts.

The income on investments of the GPFs was US$8.57 million, compared to the US$11.20 million realised in quarter one of  2019.

Of the net income, the GSF contributed 17 percent (US$1.43 million) as compared to 40.01 percent (US$4.48 million) in quarter one of 2019, while the GHF contributed 83 percent (US$7.15 million) as compared to 59.99 percent (US$6.72 million) in quarter one 2019.

COVID-19 delays negotiations
The report indicated that negotiations with ENI & Vitol Upstream Ghana Limited, winners of Block GH_WB_03, continued in the first half of 2020. The negotiations commenced soon after July, 2 2019, when the winning bids were announced the meetings had been delayed by the COVID-19 pandemic.

Story: Isaac AIDOO, ACCRA