By Basiru ADAM
The law establishing the Ghana National Petroleum Corporation (GNPC) is under review to make the national oil company focus attention on its commercial role and leave the function of regulating the oil and gas industry to the newly-created Petroleum Regulatory Commission.
This means that the GNPC will not play second-fiddle in future oil licences but be an ?operating partner?, whereby it will play an active role in oil exploration and production.
?Moving forward, we are actually positioning ourselves to become an operator in the oil and gas licences. So we will be the lead partner in the licence just as the case for Tullow for Deepwater Tano, Kosmos Energy for West Cape Three Points etc.? Mr. Theo Ahwireng, Geophysics Manager at GNPC, told the B&FT.
?The aim is to enable GNPC undertake roles in the whole value chain in the petroleum upstream sector as an operator with its own resources in the near-future.
A restructuring of the organisation is underway to enable it fulfil the above aim,? said a statement read for the Minister of Energy at the ongoing AGI Oil and Gas Conference.
Established in 1983, the GNPC used to own drilling rigs and won contracts to drill in Angola. ?But because inactivity and the de-emphasis on the finding of oil reduced the GNPC to just managing data and selling Ghana?s prospects rather than finding it themselves, they have lost most of their skilled staff to other countries and other companies,? said Bishop Akologo, Executive Director of the Integrated Social Development Centre.
The role of national oil companies (NOCs) is a hotly debated issue in the international area. While some see NOC?s as an imperative in winning for resource owners a key stake in the industry, others argue that NOC?s tend to be inefficient and opaque.
Robert Pirog, a US Energy Economist, suggests that national oil companies in less developed countries do not do well — largely because government objectives tend to displace commercial objectives ?and the companies are under pressure to maximise the flow of funds to the national treasuries?. Many of the NOCs, he says, have been found to be inefficient, with relatively low investment rates.
Franklin Cudjoe, Executive Director of Ghana?s policy think-tank, IMANI, agrees and says that it would be better for the GNPC to play the role of a regulator and leave the real business of exploration to International oil companies.
It would be ?economically unwise?, he says, for the GNPC to go into oil exploration since the bigger players are already struggling. Oil, he says, is a finite resource and the GNPC should not use the country?s resources to engage in ?jack where are you? by way of exploring for oil.
?GNPC is a very opaque institution. You can quote me on that,? he says.
But Mr. Ahwereng says that there is no looking back for the GNPC. ?We will continue to explore. But this time we will not just be a partner, we will be in the driving seat. We will actually go out there to explore, generate prospects, drill and conduct the other operations as well.?
Bishop Akologo, Executive Director of the Integrated Social Development Centre (ISODEC), argues that ?We need a central role for our national oil company? in the form of increasing GNPC?s stake in the sector.
?We can force international companies that come to operate here to hand-hold the GNPC and help it acquire the necessary technology and skills to be able to operate in deep waters,? he says.
?Now that we know roughly what is in there, we need to raise the stakes and raise the participation rate of our oil company… I don?t think that they should be going for anything less than 20 to 30 percent.
Eventually, we should be going to 51percent, minimum — because if you become the operator, you can actually now implement your local content better??
Dr. Yao Graham of the Third World Network Africa also argues that the role GNPC should play depends on the kind of economy the country wants to build.
?Do we want an economy where, increasingly, local companies — whether publicly or privately owned — are key actors across the economy; or do we want to build an economy dominated by foreign investment??
If the country chooses the first option, he says, there is a greater assurance that profits will be invested locally and the benefits will strengthen local capital accumulation –while the latter option will result in the ?externalisation? of profits.
?In all developing countries, from Saudi Arabia to Brazil, state-owned companies are very important actors in the petroleum sector. Take Petronas, the Malaysian firm that is winning concessions in Africa; the Chinese National Oil Company — these are all public enterprises. In a country where our domestic capital is weak, why not strengthen our companies to ensure Ghanaian presence around a key resource?? he said.
But the GNPC cannot become a lead player overnight. There must be a plan and a strategy including capitalisation, legislation and political support to enable it develop and over time assume a commanding position in the industry, Dr. Graham said.
To achieve its aim of becoming lead operator, the GNPC says it has a four-pillar strategic plan that includes building capacity and an expansion of exploration and production activities; replacing and growing reserves, efficient capitalisation and optimum participation.
?Countries that have done very well on the back of oil and gas have been countries that have very vibrant national oil companies. Examples abound in the oil and gas industry,? Mr. Ahwireng said.
In Escaping the Resource Curse, Joseph Stiglitz et al (2007) posit that international oil and mining companies have, historically, benefited from asymmetric information and asymmetric bargaining power — a reason they were able to capture most of the natural resources in the less-developed world.
They add, however, that ?The creation of national oil companies has largely cured the asymmetry in information, and the formation of OPEC has shifted the bargaining power in favour of oil-producing countries.
Since then, international oil companies have been largely confined to newly-emerging oil-producing countries where they still enjoy informational and bargaining power advantages.?
