March 13, 2015

Outspoken Minority Spokesperson on Energy, KT Hammond has alleged that the lead operator in the Jubilee Oilfield, Tullow Oil, is defrauding Ghana.

According to KT Hammond, following the fall in oil prices on the international market, Tullow “declared a whopping $2 billion loss arising out of their operations in other jurisdiction,” and the company wants to use profits from Ghana to reduce their losses.

KT Hammond said even though the falling crude oil prices have taken a toll, it is not enough to totally distort their operations especially when according to him, Jubilee’s cost of production hovers around $10 and $12 per barrel, hence they are still making a lot of profits.

“I do know for a fact that in our jubilee field, production cost is between $10 and $12 per barrel…So there is no way these guys are running out of resources or production cost outstripping their revenue,” the ranking member on energy said.

“Indeed, at the time of the signing of the plan of development, the world price of crude was about 42, 43, 45 better than it is and even then, they agreed to go on with production because they knew they were never going to incur losses,” he added.

He was of the view that claiming to have been hit by the development in the industry is not accurate, hence, attempts to layoff Ghanaian workers is also not fair.

Tullow oil Ghana has confirmed that it has started consultations with some of its employees who are likely to be laid off in the coming months.

“The extent of redundancies and organisational changes will be determined on a case by case basis and may therefore differ from one Tullow operation to the other,” a statement from Tullow Oil Ghana said.

According to the company, the move is as a result of challenges in the oil and gas industry which have taken a heavy toll on crude oil prices.

KT Hammond’s claim follows a statement made on the floor of Parliament by the Finance Minister that due to the fall in crude prices, Ghana’s oil revenues have been affected greatly.

This, according to Seth Terkper, compelled the government to reduce oil revenue targets from $4.2 billion to $1.5 billion, about 64% cut.

He said the sharp decline in the price of oil on the world market continues to pose serious challenges to the achievement of the 2015 economic program.

The price of a barrel of crude has hit as low as $49 per barrel in the international market.

According to a former Deputy Minister of Finance, Fiifi Kwetey, there must be course for concern if indeed this is truly the situation.

“KT Hammond is the ranking member of the committee I belong to so naturally he is a bit more in touch with things more, so in recent weeks it’s not always been easy for me to be part of meetings. But a position for Ghana is a position we should encourage, meaning anything that can inure to Ghana’s benefit across the digital divide we must make sure that we push…I’m not privy to what some of the things he is saying but they are verifiable for example in terms of numbers pertaining to the production cost.”