Ghana Upstream Fiscal and Regulatory Report - First licensing round to test new fiscal terms

Ghana Upstream Fiscal and Regulatory Report - First licensing round to test new fiscal terms


  • Products Id :- GDGE0153UFR
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  • Pages: 35
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Executive Summary

Ghana Upstream Fiscal and Regulatory Report-First licensing round to test new fiscal terms

Summary

In October 2018, Ghana launched its first licensing round to gauge investor appetite for its newly introduced upstream fiscal and regulatory framework. The round is scheduled to close in May 2019 and offers six offshore blocks. Royalties, which are biddable under the new regime combined with the additional oil entitlement (which acts as a windfall tax) will determine the competitiveness of future petroleum agreements and the fiscal burden faced by winning bidders. Additionally under the new regulations, the government is promoting local content and domestic participation in the sector, which may present barriers to investment or limit opportunities for international companies to deeper waters.

"Ghana Upstream Fiscal and Regulatory Report-First licensing round to test new fiscal terms", presents the essential information relating to the terms which govern investment into Ghana's upstream oil and gas sector. The report sets out in detail the contractual framework under which firms must operate in the industry, clearly defining factors affecting profitability and quantifying the state's take from hydrocarbon production. Considering political, economic and industry specific variables, the report also analyses future trends for Ghana's upstream oil and gas investment climate.

Scope

- Overview of current fiscal terms governing upstream oil and gas operations in Ghana

- Assessment of the current fiscal regime's state take and attractiveness to investors

- Charts illustrating the regime structure, and legal and institutional frameworks

- Detail on legal framework and governing bodies administering the industry

- Levels of upfront payments and taxation applicable to oil and gas production

- Information on application of fiscal and regulatory terms to specific licenses

- Outlook on future of fiscal and regulatory terms in Ghana.

Reasons to buy

- Understand the complex regulations and contractual requirements applicable to Ghana's upstream oil and gas sector

- Evaluate factors determining profit levels in the industry

- Identify potential regulatory issues facing investors in the country's upstream sector

- Utilize considered insight on future trends to inform decision-making.



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1 Table of Contents

1 Table of Contents 1

1.1. List of Tables 3

1.2. List of Figures 3

2. Regime Overview 4

3. State Take Assessment 6

4. Key Fiscal Terms 7

4.1. Royalties, Bonuses, and Fees 7

4.1.1. Signature Bonus 7

4.1.2. Production Bonus 7

4.1.3. Permit Fees 7

4.1.4. Acreage Fees 8

4.1.5. Training Allowance 9

4.1.6. Technology Allowance 10

4.1.7. Royalty 10

4.2. Special Gas Provisions 11

4.3. Decommissioning Fund 11

4.4. Direct Taxation 12

4.4.1. Corporate Income Tax 12

4.4.2. Deductions and Depreciation 12

4.4.3. Additional Oil Entitlement 12

4.4.4. Withholding Tax 17

4.4.5. Capital Gains Tax 17

4.5. Indirect Taxation 17

4.5.1. Value Added Tax (VAT) 17

4.5.2. Import Tax 17

4.5.3. Export Tax 17

4.6. State Participation 18

4.7. Stability Clause 19

5. Regulation and Licensing 20

5.1. Legal Framework 20

5.1.1. Governing Law 21

5.1.2. Contract Type 21

5.1.3. Title to Hydrocarbons 21

5.2. Institutional Framework 22

5.2.1. Licensing Authority 22

5.2.2. Regulatory Agency 22

5.2.3. National Oil Company 22

5.3. Licensing Process 23

5.3.1. First Licensing Round (2018) 23

5.3.2. Open Competitive Licensing Round (Blocks 2, 3 and 4) 23

5.3.3. Direct Negotiations (Blocks 5 and 6) 23

5.3.4. GNPC Allocation (Block 1) 23

5.4. License Terms 24

5.4.1. Duration and Relinquishments 24

5.4.2. Work Obligation 24

5.5. Local Content 24

5.6. Domestic Market Obligation 28

6. Outlook 29

7. Appendix 31

7.1. References 31

7.2. Contact Us 34

7.3. Disclaimer 34

1.2 List of Figures

Figure 1: Regime Flow Chart 5

Figure 2: Ghana, Indicative NPV10/boe, IRR and State Take Comparison, Regional 6

Figure 3: Ghana, Legal Framework 20

Figure 4: Ghana, Institutional Framework 22

1.1 List of Tables

Table 1: Regime Overview 4

Table 2: Ghana, Exploration and Development Permit Fees (USD ), 2016 7

Table 3: Ghana, Production Permit Fees (USD ), 2016 8

Table 4: Ghana, Annual Acreage Fees, USD /sq. km, 2018 9

Table 5: Ghana, Annual Acreage Fees (USD /sq. km) 9

Table 6: Ghana, Annual Training Allowances (USD ) 10

Table 7: Ghana, Technology Allowance (USD ) 10

Table 8: Ghana, Royalty Rates (%), Various Agreement, 2004-2014 11

Table 9: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, 2016 13

Table 10: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, Shallow Water Cape Three Points Offshore License, 2014 13

Table 11: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, Deepwater Cape Three Points West Offshore Agreement, 2014 14

Table 12: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, South-West Saltpond Agreement, 2014 14

Table 13: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, East Keta Ultra-deepwater Agreement, 2014 14

Table 14: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, Keta Agreement, 2010 15

Table 15: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, Offshore Saltpond Agreement, 2008 15

Table 16: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, Shallow Water Tano Agreement, 2006 15

Table 17: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, Deepwater Tano Agreement, 2006 16

Table 18: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, Offshore Cape Three Points Agreement, 2005 16

Table 19: Ghana, Internal Rate of Return Thresholds and Corresponding AOE Tax Rate, West Cape Three Points Agreement, 2004 16

Table 20: Ghana, GNPC Interest (%), Various Agreements, 2004-2014 18

Table 21: Ghana, Top-level Minimum Local Content Percentages (US%), 2014 25

Table 22: Ghana, Minimum Local Content (%) of Specific Goods and Services, 2016 25

Table 23: References 31

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