The amount is about 25 per cent of the corporation’s allocations for exploration and equity financing cost, which was US$8.9 million in 2015.
The expenditure was captured in the 2015 half-year report of the Public Interest and Accountability Committee (PIAC), released in March, this year.
Checks by the GRAPHIC BUSINESS at the GNPC showed that the amount was used to pay legal fees, logistics, travel expenses and other costs incurred by the country and the corporation during the arbitration process in Hamburg, Germany.
“The boundary dispute directly affects the oil productions in the country and the GNPC is a key interest in the industry.”
“So, any dispute like the one we have on the boundary demarcation is an issue of concern for the corporation,” a source familiar with the expenditure said off record.
The Chairman of the PIAC, Professor Paul Kingsley Buah Bassuah, however, explained that the corporation erred in financing the arbitration expenses.
“I think they were not supposed to do so because that money (their 2015 budget) was given to them for exploration and equity financing only for them to use to finance court expenditure. That is wrong,” Prof. Bassuah told the GRAPHIC BUSINESS in Accra.
“Did the event get approval to do that? I do not know and it will be good to find out,” he added.
In addition to the boundary dispute expenditure, the PIAC report found that the corporation spent US$1.74 million as its share of field development cost at Tweneboa-Enyenra-Ntomme (TEN) project .
Area under dispute
The expenses by the corporation, which is coordinating the country’s case against neighboring Cote d’Ivoire, gives a sneak peep into the expected cost of the arbitration process to the national oil company (NOC) and the country in general.
The arbitration process started in late 2014 after Ghana dragged Cote d’Ivoire to the ITLOS, the judiciary arm of the United Nations (UN) Convention on the Law of the Sea, over claims by the latter that parts of the oil and gas-rich Cape Three Points, off the shores of the Western Region, belonged to it.
The decision to resort to arbitration at the ITLOS followed 10 rounds of negotiations between the two countries, which failed to arrive at an amicable conclusion.
The disputed area covers portions of the Jubilee Field, the Tweneboa-Enyenra-Ntomme (TEN) project, which is being developed for production, the Owo discoveries, West Tano-1X find and the Deep Water Tano block, all found in the West Coast of Ghana’s territorial waters.
Secretariate on dispute
Following the commencement of the arbitration process, a secretariat, comprising experts and officials from the Attorney-General’s Department (AGD), the petroleum sector and maritime issues, was established and headquartered at the GNPC, the source said, declining to be quoted.
“Because it is a legal process that GNPC is directly affected, the corporation shoulders the cost but the AGD coordinates the legal part,” the source added.
Indications, are however, that should the country win the case against Cote d’Ivoire, which will likely include costs awarded against the latter, the accompanying revenue would be used to defray the current expenditure, the source added.
The PIAC Chairman, however, said such an assumption should not be entertained.
If anything at all, Prof. Bassuah said the government, not the corporation, should have been the one funding the arbitration process.
Also, once records showed that none of the partners of the TEN Project incurred such expenditure within the period, he said it was curious to know if GNPC’s expenditure on the arbitration was on behalf of the other four partners.
“That is a question we will be asking GNPC for further information,” he said.
Maritime dispute between Ghana and Cote d’Ivoire
2007: Ghana discovers oil and gas in commercial quantities. Cote d’Ivoire stakes claim of ownership to portions of the West Cape Three Points.
2010: Cote d’Ivoire renews claim of ownership of the disputed sea, days after Vanco, an oil exploration and production company, announced the discovery of oil in the Dzata-1 deepwater-well.
2010: Ivorian government petitions the United Nations asking for a completion of the demarcation of its maritime boundary with Ghana.
March 2010: Ghanaian authorities responded with the setting up of the Ghana Boundary Commission (GBC) tasked with the responsibility of negotiating with Côte d'Ivoire towards finding a lasting solution to the problem.
September 2014: Ghana drags Cote d’Ivoire to ITLOS after 10 failed negotiations.
April 2015: ITLOS makes first ruling, places moratorium on new projects and asks old projects to continue.
2017: Case expected to be concluded and judgement given.