Ghana New Oil Blocks
The Ministry noted that it will accommodate different financial products such as risk capital as well as concessional facilities for the development of oil and gas resources. The effort is part of the Government’s enhanced exploration strategies aimed at accelerating extraction to generate revenue, create jobs, and support economic growth.
Legal Framework for Licensing:
Ghana’s Energy and Petroleum Act mandates the award of petroleum licenses through competitive bidding and direct negotiations with potential investors. Until now, the majority of petroleum agreements were awarded by direct negotiations, although there were few awarded through competitive processes developed by the Ministry of Energy, the Ghana National Petroleum Company (GNPC), and the Petroleum Commission. Under the current regulatory framework, there is strong emphasis on awarding petroleum agreements through competitive tendering, although the Minister of Energy still has power to award blocks without a competitive tender albeit within defined circumstances and in a fair and transparent manner.
The key processes for a licensing round by competitive tender include the following:
• the publication of an invitation to tender or invitation for direct negotiations by the Minister of Energy;
• the submission of expression of interest;
• a formal invitation to tender;
• the submission of bids;
• the decision on bids;
• negotiations; and;
• entry into petroleum agreements.
An expression of interest should include, inter alia, general corporate information of the interested person, the specific block they are interested in, a preliminary geological survey of the area, financial and technical capabilities, and the bidder’s objective for engaging in petroleum activities in Ghana.
The formal invitation to tender will state the nature of blocks on tender, the timeline for the tender process, applicable fees, information on access to data and bidding documents, etc. Bids submitted by interested investors must conform to the terms of the tender documents and will include notarized corporate documents of the bidder, nationality and corporate structure, areas of interest, the proposed work programme, fiscal terms, rate of return, carried interest for the state, local content levels, performance security and strategy to meet the policy objective of the bid round. Bids are evaluated based on their responsiveness to the bid requirements and objective criteria prescribed by law, including rate of proposed royalty, bonus, knowledge transfer plan and health and safety.
Bids are required to be opened publicly, and a list of participating bidders is to be published in the national gazette, national newspapers and the website of the Ministry of Energy. Following the evaluations, all bidders will be notified of the outcome of the tender and the details of the winners formally published in the gazette, national newspapers and the website of the Ministry of Energy. The preferred bidders are invited to negotiate the terms of the petroleum agreement. The Minister’s petroleum agreement negotiation team usually comprises senior officials from the Ministry of Energy, Petroleum Commission, the GNPC, the Attorney General’s Department, the Ghana Revenue Authority and other advisers and consultants as required. At the close of negotiations, the draft petroleum agreement is submitted to cabinet for approval and then to Parliament for ratification. A petroleum agreement is effective and enforceable only when parliamentary ratification is secured.
Competitive Bidding
To complement awards by competitive tender, the Minister of Energy is also empowered to initiate direct negotiations with a qualified corporate body for a petroleum agreement without competitive tender. This option may be adopted where: only one interested investor expresses interest in a block after an invitation to tender; all or part of the area offered for tender in the competitive bidding process has not become the subject of a petroleum agreement, but the Minister determines that it is in the public interest for that area to be subjected to a petroleum agreement; the Minister, in consultation with the Petroleum Commission, determines that direct negotiations represent the most efficient manner to achieve optimal exploration, development and production of petroleum resources in a defined area.
For more information on this specific opportunity, including details on how to contact decision makers and maps regarding the areas under consideration, contact: U.S. Commercial Service Ghana Commercial Specialist Rita Adubra Asante at office.accra@trade.gov or +233 (0) 30 274 11715.