Ghana’s Parliament Faces Tullow Oil Extension Dilemma
The Institute of Economic Affairs has raised serious concerns over government plans to extend Tullow Oil’s production licence to 2040, warning that the proposed memorandum of understanding could lock Ghana into outdated terms that no longer serve national interests.
Tullow announced in early June that it had signed an MoU with Kosmos Energy, PetroSA, Ghana National Petroleum Corporation, and Explorco to extend the West Cape Three Points and Deep Water Tano licences covering the Jubilee and TEN fields.
The MoU includes approval for drilling up to 20 additional wells in the Jubilee field, representing up to $2 billion in investment over the licences’ lifetime. The joint venture expects significant increases in gross 2P reserves from the extension.
Key provisions include commitments to increase gas supply from the fields to around 130 million standard cubic feet per day, reduced gas pricing for Jubilee associated gas, guaranteed reimbursement mechanisms for gas sales, and investment in GNPC and Petroleum Commission technical capacity.
However, the IEA argues that Ghana’s Constitution requires parliamentary approval for such significant resource transactions, citing Articles 181(5) and 268(1) alongside Supreme Court jurisprudence emphasizing substance over form.
Managing Consultant Victor Anku-Tsede warned against repeating past extractive missteps, noting that early petroleum agreements included overly generous terms resulting in government takes far below global averages, estimated at just 42 percent compared to typical 50-65 percent ranges.
Source: ghanaweb.com
