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Another article, How Overpriced is Ghana’s Jubilee Field Expansion Project?, questions the projected cost of the Jubilee expansion. The higher the costs, the lower the revenues for Ghana. “It is important to note,” the article states, “that the more money that is spent on the project the longer it takes for the field to be profitable, the lower the taxes Ghana can collect, and the longer it takes for even those meagre taxes to show up.” Besides providing an important public service, the IMANI articles have also prompted a response from the Ghana National Petroleum Corporation.  You can read the lengthy GNPC press release on Ghana Oil Watch: Recent Media Discussions on GNPC and Jubilee Oil. The press release refutes IMANI’s allegations and IMANI has since issued a final statement backing up the think tank’s original estimates and statements.

Rather uncharacteristic of the secretive organisation, the Ghana National Petroleum Corporation (GNPC) finally issued a press statement to respond to concerns raised by civil society about Ghana’s underperforming oil industry. While the GNPC is to be commended for its increasing responsiveness and transparency … The truth is that the information the GNPC has now supplied to inform the public debate about Ghana’s oil sector would not have received broad coverage had IMANI not engaged in strong advocacy to demand such information.

On a somewhat related note, a U.S. law firm has announced it investigation of potential claims against KOSMOS Energy, one of the Jubilee partners: The investigation concerns allegations that the Registration Statement and Prospectus issued in connection with the Company’s initial public offering (the “IPO”) were materially false and misleading and misrepresented or failed to disclose that:

An Energy Analyst, Muhammed Amin Adam has told Citi Business News, the current delays in the completion of the gas infrastructure project could allow the Jubilee Oil field partners minimum flaring opportunity.This is as a result of the current operational challenges government is having with the lead contractor on the SINOPEC project.China’s SINOPEC has threatened to abandon the project following serious financial challenges government is confronted with in paying SINOPEC for pre-financing the project.

“in this case the law also allows that you can flare for operational reasons and you can flare when you are compelled to. So in this circumstance when we are not ready with our gas infrastructure they are compelled to flare, in that case we will have no course to make any case against them”.

the Jubilee Ghana MV 21 BV – a special purpose company[5] comprised of energy corporations – is incorporated in the Netherlands, one of the world’s leading tax havens that provides specific loopholes for corporate activities. The consortium owns the Kwame Nkrumah MV 21 – the Floating Production Storage and Offloading (FPSO) facility that will be used to exploit Ghana’s offshore oil during the first phase of development. Commenting on the Jubilee Ghana special purpose vehicle (SPV), Elmer explains that the intent is manifold: Protecting secrecy and providing legal, tax and regulatory relaxation. ‘In this case,’ he says, ‘there is a strong suspicion that the SPV [will] charge certain services to the company, therefore reducing the profit and the taxable profit. Another option is that certain currency or derivative deals with the company [will be] made with the same effect that the taxable profit is reduced in Ghana.’ The use of the Netherland’s opaque legal and financial vehicles are likely to facilitate revenue leakage, diminishing Ghana’s projected oil revenue, estimated to inject US$800 million into the economy from 2011 and 2029 (beginning with US$20 per person in 2011 before increasing to US$75 per person by 2017, if revenues are directly remitted to citizens).

Ironically, though corporate mispricing accounts for 60 per cent of illicit flight from resource-rich developing nations, specifically those in oil and-mineral rich West Africa, Ghana vies to become the Netherlands of Africa. ‘Under the IFSC, Barclays Bank has been given the license to operate the first Offshore Bank in the sub region.’[10] Cumulatively, US$13 trillion in private wealth is stashed by tax evaders and avoiders in secrecy jurisdictions. If taxed at a moderate 7.5 per cent rate of return, these funds would yield US$865 billion dollars annually.

The oil was discovered in the western part of C100 which extends to the Tano basin, and it’s home to several fields including Ghana’s Jubilee. This latest development could have some implications if Ivory Coast decides to develop this field.

"The Ghanaian government must establish a legal framework that ensures transparent publication of oil payments received, open and competitive contract bidding and contract disclosure, and active monitoring and participation by civil society," Oxfam America urged.

Richard Hato-Kuevor, Oxfam America's Extractive Industries Advocacy Officer in Accra, says "The Ghanaian Parliament is currently debating an oil revenue bill, and important provisions - such as a prohibition against using oil revenue as collateral for loans - have already been stripped out of the bill. A Petroleum Exploration and Production Bill, which had numerous weaknesses, has been shelved. Celebrations of first oil are clouded by the fact that the government has yet to establish an independent regulator since the Jubilee discovery was announced in 2007."

Despite overwhelming public support for the provision baring oil-backed loans, Parliament last week voted to remove the bar and allow for oil-backed loans. Following on that, Ghana has signed the STX housing agreement, which many believe uses oil as collateral.

The World Bank Board today approved a credit of US$38 million to the Government of Ghana for implementation of an Oil and Gas Capacity Building Project.

Ghana and its partners in the Jubilee field have worked hard to bring it into production in barely three years a record time by industry standards but institutional development for sector management by the state and education and skills development face significant challenges.

Given the strategic role civil society is expected to play in promoting accountability and community participation, an additional grant of US$2 million is being provided under the Banks Governance Partnership Facility (GPF) to support a wide range of activities to be championed and implemented by civil society and community based organizations.

Forecast estimate that Jubilee oilfields can produce 55,000 barrels of light sweet oil per day. With further development of more oil wells, production could reach 120,000 barrels per day. At that rate, Ghana would soon be awash with petro-dollars, which if properly managed, would provide much-needed funds for the development of infrastructure and enhance the living conditions of the people. Before it struck oil, Ghana depended on cocoa and minerals like gold, diamond and bauxite as foreign exchange earners which it prudently utilized to build a fairly decent economy with a modest but steady four per cent yearly growth rate. With democracy now well into the third decade under a succession of enlightened and committed leadership, the country is now being touted as a model for the continent. With new-found oil wealth, the future promises to be rosier.

The World Bank is providing funding for the gas project and Bank officials do not understand why the project is stalling.

Yeboah’s article focuses on citizens’ grievances in Bonyere and the neighboring communities.  Although it is unlikely that community concerns are the main cause of the project delays, it does appear that the government still has some significant community relations issues to resolve.

Gary explains that, “too often, projects suffer from an ‘original sin’ – affected communities were not adequately consulted prior to the investment decision and had little say about how and whether these projects were developed.”