Finance Minister Ken Ofori-Atta has asked the Chief Executive Officer of the Ghana National Petroleum Corporation (GNPC), K. K. Sarpong, to provide answers to why the state oil firm sold Ghana’s TEN crude oil for a price lower than the lowest on the market.
A letter addressed to Mr Sarpong said, as a result of the low pricing of the crude by the GNPC, the state lost revenue amounting to US$9.83millon.
“The ministry has observed with great concern that the achieved price for the Ghana Group’s crude oil has fallen short of expectation, in comparison with Brent oil prices – sources from Bloomberg.
“For the TEN field, GNPC gives the off-taker the option to choose whichever 5-day moving average of prices to use for determining the value of the cargo. This price is determined within 30 days before the Bill of Lading (B/L) date. GNPC’s letters regarding TEN lifting states the price determination thus: ‘Any 5 consecutive quotations within a period commencing 30 quotations prior to Bill of Lading’.
“This has given the off-taker the latitude to choose lower prices of value of TEN crude oil. Our analysis reveals that in 5 out of 6 cases, TEN crude oils was priced lower than the lowest possible Brent crude oil price based on different 5-day moving average within the 30-day window before the B/L date. All liftings except the 5th, were affected by this low-pricing phenomenon. The potential loss, based on the low case scenario, is approximately US$9.83 million.
“If GNPC had insisted on the highest possible price within the pricing window, the state would have gained a total of US$34.12 million more, as shown in Table 1. High case price scenarios yielded price variances between US$0.76/bbl and US$8.80/bbl. A total of US$8.76 million was lost to the state on the 3rd TEN transaction, for example,” the letter addressed to the GNPC boss in July stated.