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The Ghanaian State and Governance of the Upstream Oil and Gas Industry

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Petroleum Resource Management in Africa

Abstract

Good governance of the national petroleum sector has become a topical issue in the past several years, more so as several petroleum-producing countries have failed to translate their resource wealth into broad-based developments and socio-economic outcomes. The failure is often due to the perceived weaknesses in the governance structures of these countries, institutional arrangements and the wider industry. This chapter identifies the measures and institutions put in place to ensure good governance in Ghana’s oil and gas sector. This chapter also highlights the evidence (outcomes) of the country’s oil and gas governance arrangements based on indicators such as the Resource Governance Index (RGI) and other industry metrics. The chapter reviews the governance framework and uses case studies to illustrate how political economy and political settlement variables impact oil industry governance outcomes. Specifically, this includes governance issues in (1) the award of contracts, (2) regulation and monitoring of operations, (3) collection of taxes and royalties, (4) revenue distribution and management and (5) implementing sustainable development policies and projects. The findings show that Ghana has achieved a marked improvement in its resource governance within the decade compared to international benchmarks. However, there are teething issues of enforcement, capacity building and resourcing of the governance institutions and participation of local entities in the oil and gas economy beyond revenue accruing to the State.

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Notes

  1. 1.

    Offshore Technology (2021). Jubilee field—Ghana. Available at: https://www.offshore-technology.com/projects/jubilee-field (Accessed: 2 October 2021).

  2. 2.

    BBC NEWS (2007). Ghana ‘will be an African Tiger’ (2021). Available at: http://news.bbc.co.uk/1/hi/world/africa/6766527.stm (Accessed: 2 October 2021).

  3. 3.

    Ghana Business News (2021). Ghana earns over $6.5b in oil revenue in 10 years—PIAC— Available at: https://www.ghanabusinessnews.com/2021/09/17/ghana-earns-over-6-5b-in-oil-revenue-in-10-years-piac (Accessed: 2 October 2021).

  4. 4.

    Petroleum Commission Ghana (2021). Exploration history. Available at: https://www.petrocom.gov.gh/exploration-history (Accessed: 2 October 2021).

  5. 5.

    Ferdinand, D.A. and Godson-Amamoo, N.S. (2019). In a nutshell: Oil and gas law in Ghana. pp. 142–165. Available at: https://www.lexology.com/library/detail.aspx?g=ce582eec-0d8e-4157-a88c-d5c3bb134dd0 (Accessed: 2 October 2021).

  6. 6.

    National Energy Policy (February 2010), Ministry of Energy.

  7. 7.

    Ibid.

  8. 8.

    Ibid.

  9. 9.

    Ibid.

  10. 10.

    A member of the Aker Group.

  11. 11.

    A member of the Aker Group.

  12. 12.

    An indigenous Ghanaian E&P company.

  13. 13.

    Section 2 of PNDCL 84.

  14. 14.

    Bloomfield, S. (2011). The Niger Delta: The curse of the black gold. Available at: https://www.independent.co.uk/news/world/africa/the-niger-delta-the-curse-of-the-black-gold-882384.html (Accessed: 2 October 2021).

    Hartzok, A. (2004). Citizen dividends and oil resource rents: A focus on Alaska, Norway and NigeriaEarthrights.net.

  15. 15.

    Darkwah, A.K. (2010). The impact of oil and gas discovery and exploration on communities with emphasis on women. Department of Sociology, University of Ghana. Available at: https://genderandsecurity.org/sites/default/files/Darkwah_The_Impact_of_oil_gas_discovery_exploratn_on_communities.pdf.

  16. 16.

    Ibid.

  17. 17.

    Stevens, P. (2003). Resource impact: Curse or blessing? A literature survey. Journal of Energy Literature, 9(1), pp. 3–42; Larsen, E.R. (2006). Escaping the resource curse and the Dutch disease? When and why Norway caught up with and forged ahead of its neighbors. American Journal of Economics and Sociology, 65(3), pp. 605–640.

  18. 18.

    Acemoglu, D., Johnson, S. and Robinson, J.A. (2012). An African success story: Botswana (pp. 80–120). Princeton University Press.

    Rodrik, D. (2012). In search of prosperity (Vol. 2, No. 3). Princeton University Press.

    Acemoglu, D., Johnson, S. and Robinson, J.A. (2001). An African success story: Botswana. Available at: https://economics.mit.edu/files/284 (Accessed: 2 October 2021).

  19. 19.

    Ross, M.L. (2015). What have we learned about the resource curse? Annual Review of Political Science, 18, pp. 239–259; Auty, R.M. (1993). Sustaining development in mineral economies: The resource curse thesis. London: Routledge; Siakwah, P. (2017). Political economy of the resource curse in Africa revisited: The curse as a product and a function of globalised hydrocarbon assemblage. Development and Society, 46(1), pp. 83–112; Obi, C. (2010). Oil as the “curse”of conflict in Africa: Peering through the smoke and mirrors. Review of African Political Economy, 37(126), pp. 483–495.

  20. 20.

    Ibid.

  21. 21.

    Pegg, S. (2009). Briefing: Chronicle of a death foretold: The collapse of the Chad-Cameroon pipeline project. African Affairs, 108(431), pp. 311–320.

  22. 22.

    Ibid.

  23. 23.

    Quartey, P. and Abbey, E. (2018). Ghana’s oil governance regime: Challenges and policy solutions. CRPD Working Paper No. 70. Available at: https://soc.kuleuven.be/crpd/files/working-papers/crpd-no-70-quartey-abbey-full.pdf, p. 1.

  24. 24.

    supra (n 19).

  25. 25.

    Section 4 of Act 919.

  26. 26.

    Repealed PNDCL 84.

  27. 27.

    1992 Constitution, Article 257(6).

  28. 28.

    Ibid., Article 269.

  29. 29.

    1992. Constitution, Article 268(1).

  30. 30.

    Ibid., Article 174.

  31. 31.

    Act 919, section 7.

  32. 32.

    Act 919, section  8.

  33. 33.

    Act 919, section 10.

  34. 34.

    Ibid.

  35. 35.

    Act 919, section 13.

  36. 36.

    Act 919, section 15.

  37. 37.

    Act 919, section 27.

  38. 38.

    Act 919, section 29.

  39. 39.

    Act 919, section 34.

  40. 40.

    Act 919, section 57.

  41. 41.

    PNDCL 64, section 2.

  42. 42.

    Act 919, section 10(14).

  43. 43.

    Ibid. Article 269.

  44. 44.

    Section 2 of Act 821.

  45. 45.

    Section 3(g) of Act 821.

  46. 46.

    Section 56 of Act 919.

  47. 47.

    Petroleum (Local Content and Local Participation) Regulations, 2013 (LI 2204), regulations.

  48. 48.

    Section 3(f) of Act 821.

  49. 49.

    Section 10 of Act 821.

  50. 50.

    Section 3(b) of Act 821.

  51. 51.

    Petroluem Revenue Management (Amendment) Act, 2015 (Act 893).

  52. 52.

    Act 815, section 3.

  53. 53.

    Act 919, section 2.

  54. 54.

    Ndi, G. (2018). Act 919 of 2016 and its contribution to governance of the upstream petroleum industry in Ghana. Journal of Energy & Natural Resources Law, 36(1), pp.5–31.

    Stephens, T.K. (2016). The long meandering journey: The development of Ghana’s Petroleum (Exploration and Production) Act 2016, (Act 919). University of Ghana Law Journal, 29, p.103.

    Stephens, T.K. (2019). Framework for petroleum revenue management in Ghana: Current problems and challenges. Journal of Energy & Natural Resources Law, 37(1), pp. 119–143.

  55. 55.

    Ibid.

  56. 56.

    Memorandum to the Petroleum (Exploration and Production), Bill 2016, 30th May 2016.

  57. 57.

    Act 919, section 3, section 4.

  58. 58.

    Act 9191, section 10(9).

  59. 59.

    Act 919, section 10, section 56.

  60. 60.

    Act 815, section 3 and 16 as amended by Act 893, section 6.

  61. 61.

    Act 815, section 18 to 21, as amended by Act 893, section 8.

  62. 62.

    Act 815, section 9.

  63. 63.

    Act 815, section 10 as amended by Act 893, section 3.

  64. 64.

    Section 3 of Act 821.

  65. 65.

    LI 2204, Regulation 1.

  66. 66.

    LI 2204, Regulation 3.

  67. 67.

    LI 2204, Regulation 10.

  68. 68.

    LI 2204, Regulation 5.

  69. 69.

    LI 2204, Regulation, 28–32.

  70. 70.

    Income Tax Amendment Act, 2015 (ACT 902); Income Tax (Amendment) Act, 2016 Act 907; Income Tax (Amendment) Act 2016 (Act 924); Income Tax (Amendment) Act 2017 (Act 941); Income Tax (Amendment) (No. 2) Act 2017 (Act 956); Income Tax (Amendment) Act, 2018 (Act 973); Income Tax (Amendment) (No. 2) Act, 2018 (Act 979); Income Tax (Amendment) Act 2020 (Act 1017); Income Tax (Amendment) Act, 2019 (Act 1007); Income Tax (Amendment) Act 2021 (Act 1066).

  71. 71.

    Act 896, First Schedule, section 5.

  72. 72.

    EITI (2021). Ghana overview. Available at: https://eiti.org/ghana (Accessed: 2 October 2021).

  73. 73.

    ibid.

  74. 74.

    Open Government Partnership (2021). About. Available at: https://www.opengovpartnership.org/about/#sthash.4S0KW9vf.dpuf (Accessed: 2 October 2021).

  75. 75.

    Ibid.

  76. 76.

    Republic of Ghana (2011). National Anti-Corruption Action Plan (NACAP) (2012–2021). Available at: http://www.gaccgh.org/publications/National%20Anti-Corruption%20Action%20Plan%20.pdf (Accessed: 2 October 2021).

  77. 77.

    United Nations Office on Drugs and Crime (2021).Convention against corruption. Available at: https://www.unodc.org/unodc/en/treaties/CAC (Accessed: 2 October 2021).

  78. 78.

    Ackah, I., Lartey, A., Acheampong, T., Kyem, E. and Ketemepi, G. (2020). Between altruism and self-aggrandisement: Transparency, accountability and politics in Ghana’s oil and gas sector. Energy Research & Social Science, 68, p. 101536.

  79. 79.

    Fraser Institute (2017). Global petroleum survey. Available at: https://www.fraserinstitute.org/sites/default/files/global-petroleum-survey-2017.pdf (Accessed: 2 September 2021).

  80. 80.

    Act 815, section. 11 as amended by Act 892, section 4.

  81. 81.

    Act 815, section. 9.

  82. 82.

    Act 815, section 10 as amended by Act 893, section 3.

  83. 83.

    Act 893, section 4.

  84. 84.

    Ibid.

  85. 85.

    Act 815, Sects. 3 and 7.

  86. 86.

    PIAC (2017). Simplified guide to petroleum revenue management in Ghana. https://www.piacghana.org/portal/files/downloads/simplified_guide_to_ghana's_petroleum.pdf. Available at: (Accessed: 2 September 2021).

  87. 87.

    L.I.2381, section 23.

  88. 88.

    Act 815, section 56.

  89. 89.

    PIAC 2021.

  90. 90.

    Public Interest and Accountability Committee—Annual Report, 2011.

  91. 91.

    Act 815, section 57.

  92. 92.

    Act 815, section 57 as amended by Act 893.

  93. 93.

    Licensing Compliance In Ghana’s Upstream Petroleum Sector, Mohammed Amin Adam.

  94. 94.

    PNDCL 84, Sects. 2(2) and 32(2 m).

  95. 95.

    Licensing Compliance In Ghana’s Upstream Petroleum Sector, Mohammed Amin Adam.

  96. 96.

    Section 10(4), Act 919.

  97. 97.

    Section 10(5), Act 919.

  98. 98.

    Section 10(7), Act 919.

  99. 99.

    Section 10(8), Act 919.

  100. 100.

    Regulation 9(5), LI 2359.

  101. 101.

    Regulation 9(3), LI 2359.

  102. 102.

    Regulation 9(4), LI 2359.

  103. 103.

    Regulation 9(1), LI 2359.

  104. 104.

    Regulation 14(3), LI 2359.

  105. 105.

    Regulation 14(1), LI 2359.

  106. 106.

    Regulation 16(7), LI 2359.

  107. 107.

    Regulation 16(5), LI 2359.

  108. 108.

    Regulation 16(6), LI 2359.

  109. 109.

    Public Interest and Accountability Committee Annual Report On The Management And Use Of Petroleum Revenues For January—December 2020, Table 2, pg. 19.

  110. 110.

    Public Interest and Accountability Committee Annual Report On The Management And Use Of Petroleum Revenues For January—December 2020, pg. 18.

  111. 111.

    Bigg, M.M. (2013). Ghana cabinet clears oil block exploration Deal with AGR. Available at: https://www.rigzone.com/news/oil_gas/a/128548/ghana_cabinet_clears_oil_block_exploration_deal_with_agr (Accessed: 2 October 2021).

  112. 112.

    Adam, M. A. (2015). Licensing compliance In Ghana’s upstream petroleum sector. Africa Centre for Energy Policy. Available at: http://www.jstor.org/stable/resrep31200 (Accessed: 2 October 2021).

  113. 113.

    Ndi, G. (2018). Act 919 of 2016 and its contribution to governance of the upstream petroleum industry in Ghana. Journal of Energy & Natural Resources Law36(1), pp. 5–31.

  114. 114.

    CAMAC (2013). Annual report before the us securities and exchange commission (p. 10). http://www.camacenergy.com/documents/annualreports/2013-annual-report.pdf

  115. 115.

    Regulation 16(6), LI 2359.

  116. 116.

    GHEITI (2021). GHEITI open data policy. Available at: https://www.gheiti.gov.gh/site/index.php?option=com_content&view=article&id=232&Itemid=71 (Accessed: 2 October 2021).

  117. 117.

    ODC (2021). The International open data charter. Available at: https://opendatacharter.net (Accessed: 2 October 2021).

  118. 118.

    2018 Ghana EITI Annual Progress Report, Page 1 of 38,

  119. 119.

    Ghana extractive industries transparency initiative report on the oil and gas sector 2017 & 2018.

  120. 120.

    Ibid.

  121. 121.

    Ibid.

  122. 122.

    Improving Contract Transparency in Ghana’s Petroleum Sector, NRGI 2018.

  123. 123.

    Ghana extractive industries transparency initiative report on the oil and gas sector 2017 & 2018, p. 27.

  124. 124.

    Section 23(1), PNDCL 84.

  125. 125.

    Section 23(12), PNDCL 84.

  126. 126.

    Section 22, PNDCL 84.

  127. 127.

    Section 23(13 & 14), PNDCL 84.

  128. 128.

    Section 23(7), PNDCL 84.

  129. 129.

    DeepWater Tano Cape Three Points PA, Articles 7(3) and 20(1).

  130. 130.

    MPA 2010, Article 6(1).

  131. 131.

    Section 17(3), Act 919.

  132. 132.

    Section 63(1), Act 919, Regulation 7(2), LI 2204.

  133. 133.

    Section 63(2), Act 919, Regulation 7, LI 2204.

  134. 134.

    Ibid.

  135. 135.

    Regulation 10, LI 2204.

  136. 136.

    Regulation 11, LI 2204.

  137. 137.

    Regulation 27, LI 2204.

  138. 138.

    Regulation 28, LI 2204.

  139. 139.

    Regulation 31, LI 2204.

  140. 140.

    Section 17(1), Act 919.

  141. 141.

    LI2204, Regulation 16.

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Adadzi, F.D., Godson-Amamoo, N.S., Nunoo, J. (2022). The Ghanaian State and Governance of the Upstream Oil and Gas Industry. In: Acheampong, T., Kojo Stephens, T. (eds) Petroleum Resource Management in Africa. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-83051-9_12

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