“We have always believed, and we have not hidden the intention, that hydrocarbons oil and gas will continue to be a major stage in championing our economic survival” – Dr. Yusif Sulemana (Technical advisor to the Ministry for Energy and Green Transition)
For a county that significantly depends on the oil and gas industry to keep its economy afloat like Ghana cannot afford to leave structural and legal provision open should any major company face restriction whether locally or internationally that hinders their production especially in this fragile geopolitical atmosphere.
Ghana’s upstream oil and gas industry is regulated by the Petroleum Sharing Agreement .For decades, offshore operations in Ghana have operated on the assumption that all partners will remain stable throughout the production phase, but recent happening in the case of Lukoil Overseas’ exposure to political and regulation shocks that has put them out of operations calls for a need to address this assumption. Is an investor’s initial investment a complete measure of its value as a partner in the oil and gas space? NO, Lukoil Overseas has given us a precedent to answer that. But a more imperative question is whether the project can keep operating when major partners’ financial obligation is impaired by restriction. Clearly, the PSA does not address that.
The Deepwater Tano/Cape Three Point (DWT/CTP) block has Lukoil Overseas as a major stakeholder controlling about 38% of it with Peacan, GNPC and Fuel trade doing 50%, 10% and 2% respectively. Ghana’s 2021-2022 EITIS report and Petroleum Commission’s register (regulator of upstream industry) outlines partners interest and describes the project as pre-development phase. This simply means that continuous funding is essential to the fields’ development. The PSA clearly states that the state only gets it share after production has been completed and capital expenditure (CAPEX) as well as Operational expenditure (OPEX) has been accounted for, so the country has a need to see to it that every project see completion, this is more than enough reason to make provision for when partner loses their financial ability to operate due to restriction.
On 22nd October 2025, the U.S treasury sanctioned Lukoil under executive order 14024. This sanction does not in any way imply that Lukoil’s investment in Ghana is blocked. How does it affect their Operation in Ghana? The restriction directly affect all U.S involvement, US dollar clearing, properties within US and risk tolerance of all global parties affects all transaction across their entire portfolio throughout the world. The scope of the general restriction is capture in the treasury’s notice.
The Current Contract Architecture
Ghana’s Petroleum (Exploration and Production) Act, 2016 (Act 919) is focused on how the government acquire interest, risk allocation between the government and the investors and finally how those around the said projects can benefit or be protected through enforcing essential safety measures and corporate social responsibilities. These provisions do not help with provision of replacement capital, ensuring lenders continued interests and others when there arises; Act 919 section 58-59. A detailed examination of the PA and the JOA does not make provision to respond to sanction-driven nonperformance.
Beyond Acquiring Interest, What’s next?
Available public frameworks and commentaries have established the need for an operational sanctions playbook due to their incomplete loud silence especially on continuity when geo-political effects hit just like the Lukoil overseas case study. The current state of the industry calls for a DWT/CTP agreement review.
- Current legal framework governing upstream oil and gas operations needs urgent amendment. This amendment should explicitly address general sanctioning both locally and internationally. Policy framer can leverage on the existing JOA to get major partners on near block in good financial and expertise standing to buy the entity facing sanctioning either as a whole or for parts. As part of this amendment, there should be prompt notice of designation, change of ownership of blocks, material payment as well as service interruptions.
- There is a need for the creation of a separate oil and gas financial architecture. This initiatives should have separate regulations from the normal banking regulations. A key part of this is establishing a smooth pathway for transferring credit, utilization of facilities at established rates, clear cut acquisition framework and others that are not affected by external happenings like geo-politics and others.
By: Alhassan-Atta Shaibu
Alhassan-Atta Shaibu is a petroleum engineering professional, energy system analyst and researcher with a deep interest in compliance and regulation of oil and gas, and renewables. He is the co-founder of Lillah Foundation which seeks to bridge the educational gap in less deprived areas in Ghana.
