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PIAC urges government to hedge its share of crude oil

By: Fred Yaw Sarpong- Daily Express

The Public Interest and Accountability Committee (PIAC) is urging the government to consider hedging it share of crude oil from the Jubilee Field.

According to PIAC, in order to help mitigate the impacts of the volatility of crude oil prices on the world market and following the successful hedging programmes being implemented by Tullow Ghana Limited and Kosmos, the government should consider resuming its hedging programme on crude oil export.

Professor Kingsley Buah-Bassah, the Chairman of PIAC in an interview said Ghana stand the chance of getting a lot of revenue from the hedging.

“The advantage of hedging is that if the price of crude oil is low as US$40 per barrel and Ghana decided to peg it oil price at US$70 per barrel, because of the lower price on the world market Ghana will gain. But if its vas versa Ghana will rather lose heavily,” he explained further.

“This hedging system is a lottery and now that the price is not on the higher side Ghana can consider that, not for a longer period but at least for a period of five years,” he stated.

PIAC 2015 report on Management of Petroleum Revenues revealed that actual petroleum receipts of US$396.17 million (GHc1,449.92 million) was realized last year, which was approximately 46% lower than projected revenue and approximately 60% lower than revenues that accrued in 2014.

“The huge variance between the actual and projected revenues is attributable to a significantly lower than expected crude oil, which experienced a year-on-year decline of nearly 49.4%,” the PIAC report mentioned.

PIAC said a total of US$387.83 million, representing about 98% of the total petroleum receipts was allocated leaving an undistributed balance of US$8.35 million in the Petroleum Holding Fund (PHF) as at December 2015.

It said approximately 33% of the total receipts was given to the Ghana National Petroleum Company (GNPC) in respect of it equity financing cost and net of Carried and Participating Interest (CPI).

“An amount of US$239.30 million, representing 61.7% of the net amount of US$260.97 received by the Government of Ghana (GoG), in addition to the US$53.69 million withdrawn from the Ghana Stabilization Fund (GSF) during the first half of 2015 to shore up shortfall in Annual Budget Funding Amount (ABFA), was allocated to the ABFA in 2015, bringing to US$292.98 million (GHc1,086.28 million) total funds allocated to the ABFA account in 2015 and to US$1,428.76  million the cumulative allocation to ABFA from 2011 to 2015,” PIAC said.

PIAC mentioned that an amount of US$21.67 million, representing 9% of net receipt by GoG and 5.59% of total petroleum revenues in 2015 was transferred to the Ghana Petroleum Funds (GPFs) of which GSF received US$15.17 million and US$6.5 million to GHF.

The report stated that the total volume of crude oil produced from the Jubilee Field in 2015 was 37,411,661 barrels, compared to the 2014 production volume of 37,201,691 barrels of oil representing a marginal increase of 0.6% in production.

“The 2015 production figure brings the total number of barrels produced from the Jubilee Field since first oil in 2010 to 161,929,171 barrels of oil,” it added.


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