Close down loss-making Saltpond Field — PIAC
The Public Interest and Accountability Committee (PIAC), has asked the government to close down the Saltpond Oilfields, which it says has lost its shine due to the rising cost of production in the midst of dwindling oil prices.
With oil prices hovering at US$52 per barrel and cost of production in the field estimated at US$31 per barrel, PIAC said it was not commercially sensible to continue oil production at Saltpond, where oil production has been taking place since the 1970s.
The field is about 65 miles west of Accra and operated by the Saltpond Offshore Production Company Limited (SOPCL).
“As at now, production in the field is not commercially viable. If you look at the analogy given, oil price is around US$52 and you operate at a cost price of US$31. The difference is US$21 dollars. Looking at the difference, you cannot be in a position to pay workers, cater for maintenance and production cost,” the Chairman of PIAC,
Professor Paul K. Buah- Bassuah, said in interview.
He told the paper on the sidelines of the sixth regional media training on oil, gas and mining in Accra that present production and revenue figures showed that the company could not meet its cost and was, therefore not profitable in the long term.
“In short, it will be difficult to meet your expenses, let alone declare profit. The Petroleum Commission has more details on this but if you look at it on the face value, there are technical reasons why Saltpond Oil Field should either be closed or we see how best oil production can be increased there,” he added.
Declining revenues
In 2014, all the major components of petroleum revenue exceeded their forecasts, with the exception of royalties from the Saltpond field.
The field’s revenues fell short of its target by 57 per cent. In the case of gas receipts, no payments were received, according the 2014 report of the PIAC.
Out of the US$192.66 million that was received in 2014 in royalties, payments from the Saltpond Field accounted for 0.08 per cent, with much of the money coming from the Jubilee Field.
The report showed that royalties from Saltpond declined by 43 per cent, dropping from US$217,214 in 2013 to US$151,986 in last year.
Conflicting production figures
Production figures on the Saltpond Field are always full of discrepancies, with the SOPCL and the Ministry of Finance (MoF) showing variations.
In 2014, for instance, figures from the company showed that oil production increased year-on-year.
It showed that 79,602 barrels of oil were produced from the field in 2014 compared to the 76,995 barrels that were produced in 2013.
This represented a 3.4 per cent increase in production. Data from the Ministry of Finance, however, showed a decline in oil production.
It showed that 95,093 barrels were produced in 2014, about 9.5 per cent down from the 105,040 barrels produced in 2013.
Although Professor Buah-Bassuah could not readily explain why there are discrepancies in the production figures, he said the 2014 report of PIAC had recommended that “the Saltpond Oil field, the Ministry of Finance and the Ghana National Petroleum Corporation (GNPC) must resolve the discrepancies in the production and lifting figures from the field to help determine the actual royalties that should be paid.
“It will also help establish the true performance and true state of affairs at the Saltpond Field, he added.” – GB