Ghana could face a judgement debt over the stalled decommissioning of a 65-year-old oil rig at Saltpond in the Central Region, the Institute of Energy Research and Policies (INSTEPR) has warned.
INSTEPR indicated that the local company contracted in January to retire the old rig, HANS & Co had stalled work on the decommissioning, which was expected to go through three phases.
A statement signed by the Executive Director of INSTEPR, Kwadwo Poku said the consortium only completed phase one of the decommissioning.
It said works on the decommissioning subsequently stalled after the appointment of a new acting Managing Director and the Board of Directors.
“The big question is why are the new acting Managing Director and the board of directors acting to frustrate the decommissioning of the Saltpond field? Our investigation has not yielded any concrete reasons yet.”
“There is one thing for certain, the cost of the project could quadruple if the posture of the Managing Director continues and possible multi-million-dollar judgement debt for breach of contract,” the statement said.
It asked the government to ensure that the old rig is decommissioned to avoid an environmental catastrophe.
“INSTEPR will want to advocate for the law wilfully causing financial loss to the state, to be applied when a person’s actions like what Mr. Opoku Danquah seems to be doing results in GNPC being sued and judgement debt incurred,” it added.
Read the full unedited statement:
IMPENDING JUDGEMENT DEBT AT GNPC OVER STALLED SALTPONG FILD DECOMMISSION PROJECT
Last year, INSTEPR wrote about the looming environmental disaster offshore Ghana. The 65 years old Oil Rig, ‘‘Mr. Louie’’ which is severely pitted and rusted needed decommissioning immediately. The attention of the Environmental Protection Agency (EPA), the Ministry of Energy and all stakeholders were drawn to this imminent disaster. Any high winds in the coastal area and this Rig can break into pieces, causing the biggest oil spill in West Africa.
Through the leadership of the sector minister, GNPC and Petroleum Commission were tasked to expedite the tender process and award the contract for decommissioning. A consortium of international companies led by Hans & Co Oil and Gas Limited, a Ghanaian company, won the tender and started negotiation with GNPC in September 2021. GNPC wrote a notification of award letter to Hans & Co. Oil and Gas Limited on the 27th October 2021 and a contract was eventually signed in January, 2022.
The decommissioning project is divided into 3 phases and each phase into milestones according to documents sighted by INSTEPR. After the signing, the consortium has completed milestone 1 of phase 1 of the project and has been paid USD $5.0 million. A technical team from GNPC went to Port Harcourt, Nigeria to inspect equipment and a jack up drilling Rig for the next phase of the project. After this inspection, a meeting was scheduled to discuss and start the phase 2.
On 20th April 2022, Mr. Opoku Ahweneeh Danquah was appointed acting Managing Director of GNPC. After his appointment, he postponed the scheduled meeting to start phase 2 of the project and subsequently cancelled the said meeting indefinitely. Mr. Opoku Danquah before his appointment was the DEC Technical Operations, which means he was present at all discussions and negotiations of the project. This is not a case of a new person needing time to familiarize with the project.
INSTEPR have seen a letter written by HANS & Co. to Petroleum Commission on the 15th June 2022, complaining about the delay to start the phase 2 of the project. This delay is costing the project since all logistic to move the Rig (Trident VIII) from Nigeria to Ghana has already been contracted and paid. The company has committed to service boats, paid for fuel in storage and hired personnel for the work.
Anyone familiar with the upstream drilling industry will know that Jack up Rigs are only available during certain windows, and it might take years to get another Rig available if Hans & Co. does not use the Rig Trident VIII within the specified period in this contract.
The big question is why is the new acting Managing Director and the board of directors acting to frustrate the decommissioning of the Saltpond field? Our investigation has not yielded any concrete reasons yet. There is one thing for certain, the cost of the project could quadruple if the posture of the Managing Director continues and possible multi-million-dollar judgement debt for breach of contract.
Ghanaians are tired of individual actions causing the country to pay millions of dollars in Judgements debts. Not long ago, the cancellation of Power Purchase Agreement (PPA) for GPGC led to the award of USD$ 135 million against Ghana. It’s about time we hold CEOs and Ministers accountable for their actions that lead to these judgement debts. INSTEPR will want to advocate for the law willfully causing financial loss to the state, to be applied when a person’s actions like what Mr. Opoku Danquah seems to be doing results in GNPC being sued and judgement debt incurred.
We believe it is the only way to safeguard our little resources as a nation. In 20 years, Ghana has paid over USD$ 2 billion to Judgement debts alone. Individual selfish decisions costing mother Ghana money that can be used for the construction and establishment of various social amenities for the benefit of the citizenry.
Institute For Energy Policies and Research