Ghana Oil Company Ltd, GOIL Wednesday signed a Joint Operating Agreement with multinational oil exploration firm ExxonMobil for Deep-water Cape Three Points Area Oil exploration.
The agreement between GOIL and ExxonMobil followed the completion of an elaborate and rigorous due diligence done by ExxonMobil for a local partner.
Wednesday’s signing of the agreement comes after a no-objection approval from the Ghana Government represented by the Ministry of Energy given almost a month ago allowing ExxonMobil to partner the local downstream petroleum provider.
Having signed the agreement today fulfils the local content law which stipulates a 5% stake reservation for a local entity before any international oil exploration firm is allowed to begin operations in Ghana.
Speaking to JoyBusiness at the signing ceremony in Accra, the Group Managing Director and Chief Executive Officer of GOIL, Patrick Akorli stated that, “we are particularly excited at this agreement because it is an endorsement of our diligent and technically proficient work at the downstream sector over the years. GOIL, therefore, intends to fulfil its part of the agreement to become a strong, vibrant and competitive player in the Upstream Petroleum sector of the country’s burgeoning Oil industry.”
He added “Yes, the vision in the near future is to be a major player within the upstream oil industry – not only the downstream where we find ourselves. And so, we think that the company is well-structured and strong enough to be able to partner international firm like ExxonMobil in undertaking exploration and production activities within the country.”
The interest for GOIL to join the league of companies to move into upstream to become a major player in the exploration and production business was first disclosed publically by its current board chairman.
Kwamena Bartels told shareholders at GOIL’s 49th Annual General Meeting this year sometime around April that the company intends to partner an international player with proven technical competence to operate in deep-water.
“With regard to adding value to the supply chain in the petroleum sector, the company will strive to move upstream in order to maximise the wealth of shareholders as the future is bright,” he said.
The company’s interest in the upstream petroleum sector means they are going to deal also in exploration, drilling, production and transportation of crude oil having secured the 5% carried interest in the agreement the government had handed down to its partners.
Currently, GOIL is only into the downstream sector which comprises refining, storage, importation, transportation, distribution and marketing of petroleum products.
NEW COMPANY (GOIL OFFSHORE LIMITED)
The signing of this agreement has seen GOIL incorporate a new company named GOIL OFFSHORE LIMITED to undertake the upstream activities for and on behalf of the group.
The group is expected to support the new company with its balance sheet which then closes the chapter if the company has the financial muscle to play within the upstream space.
Mr Akorli told JoyBusiness that the company is financially sound to venture into the upstream space.
“We are very much prepared financially to invest in the sector, and that is why we have gotten the commercial interest in this petroleum agreement after months of rigorous due diligence done by our partners today.
Considering the amount needed in such areas, we have done some research work and analysis and I can say we are financially sound to participate in the upstream sector, bearing in mind how much we will be exposed to working in the sector. We think that GOIL is very strong enough to play that role by partnering any of the well-known exploration and oil producing companies in the world to operate here in Ghana,” he added.
2017 FINANCIAL POSITION
Figures available to Joy Business show that at the end of 2017, GOIL as a Holding Company recorded a profit before tax of GH¢84,523,000 while it made a profit of GH¢49,511,000.
Though sales did not meet the targets, GOIL made a profit after tax of GH¢65,089,000, which is an increase of 21% over that of the previous year which was GH¢53,648,000. The gross sales for 2017 were GH¢4.67billion.
Income tax paid by the company was GH¢10,176,000, while the group paid GH¢19,434,000.
The group in total paid a sum of GH¢1.128 billion, which comprises taxes and levies to the government – leading to the company being adjudged the overall best taxpayer in 2017.
Also in 2017 GOIL achieved a market share of 20%, which is 1.8% higher than the 18.2% achieved in 2016, which puts it on the right trajectory to achieve a target of 30% market share by 2020.
This position GOIL as the right partner for ExxonMobil in its exploration activities in the deepwater cape three points.
In 2013, Ghana passed a legislative instrument, the Petroleum Local Content and Local Participation Regulation, 2013, L.I. 2204 to provide legal backing to the Local Content and Local Participation Policy Framework that was designed in 2011.
This new law then opened the window for local companies to take part in the oil and gas or what we will call the petroleum upstream sector by ensuring that all petroleum agreement saw a joint venture which gave the 5% commercial interest.
An important part of the Local Content Policy is that it targets a minimum of 90 per cent local participation in all areas of the oil and gas value-chain by 2020.
As the biggest, indigenous Oil marketing entity in Ghana, GOIL is optimistic the agreement will also pave the way for enhancing training opportunities for employees and importantly, opening up more opportunities for employment.