*FACTS

Aker ASA, a Norwegian company and Chemu Power Company Ltd, a Ghanaian company negotiated for and entered into a Petroleum Agreement with the Government of Ghana represented by Ministry of Energy and the Ghana National Petroleum Corporation on 24th October, 2008 with regards to Aker ASA’s interest consisting of approximately 2,583 square kilometers of acreage in the Deep Water Cape Three Points Block.

The Petroleum Agreement was preceded by a Memorandum of Understanding dated 15th October 2008 involving the same parties which contained the terms of the Agreement reached at the negotiations. The Parliament of Ghana ratified the Petroleum Agreement on 5th November, 2008.

After the signing of the Agreement and before ratification by Parliament, Aker ASA incorporated a company known as Aker Ghana Ltd with the object of carrying out petroleum operations in respect of the Petroleum Agreement.  Aker ASA owns 100% shares in Aker Ghana Ltd. The Certificate of Incorporation and the Certificate to Commence Business of Aker Ghana Ltd were issued on 29th and 30th October, 2008 respectively.

Chemu Power Company Ltd was incorporated in Ghana on 7th February, 2008.

*ISSUE

* THE IMPLICATION OF FAILING TO EXPRESSLY LIST AKER GHANA LTD AS A PARTY TO THE SOUTH DEEP WATER TANO PETROLEUM AGREEMENT

*DOCUMENTS AND AUTHORITIES CONSIDERED

The documents authorities referred to and studied:

MOU dated 15th October, 2008

Petroleum Agreement dated 24th October, 2008

Petroleum(Explanation and Production) Law, 1984 PNDCL 84
The Companies Code 1963 (Act 179)

General Legal Principles of Corporation

*OPINION

Section 23 (15) of the Petroleum (Exploration and Production) Law, 1984 PNDCL 84 provides for the incorporated of a company in Ghana under the provisions of the Companies Code, 1963 (Act 179) by a contractor or subcontractor which is not an incorporated company in Ghana for the company which is incorporated in Ghana to be authorized to carry out solely petroleum operations in respect of which a signatory to any Petroleum Agreement.

The law in clear and simple terms states “…shall register an incorporated company in Ghana…”

In drafting of Contract or Agreements, the usage of the word “shall” places a mandate or an obligation on the parties to the Contract or Agreement
That mandate or obligation was fulfilled by the incorporated of Aker Ghana Ltd.

The Drafters of PNDCL 84 foresaw a situation such as the one under consideration, hence the usage of the important word “shall”.

Furthermore, the intention of the parties which was expressed in a Memorandum of Understanding dated 15th October, 2008 was to agree to certain provisions which were to bepart of a Petroleum Agreement which was eventually signed and given legal backing by its ratification by Parliament. The legal question to be asked is “could a procedure lapse that could be cured or resolved be a clog or impediment to a proper performance of a contract?”

The procedure lapse of failings to list Aker Ghana Ltd as a party to the Ghana Ltd as a party to the Petroleum Agreement was cured by the incorporation of AKER Ghana Ltd as required under PNDCL 84 before the ratification seals and in simple language completes and gives legal validity to the Petroleum Agreement.

At the time of ratification Aker Ghana Ltd had been registered and was in existence as legal entity and yet without questioning the status of Aker ASA Parliament went ahead and ratified the Agreement. Why was the issue under consideration not raised at the ratification stage? The onus was on the Government of Ghana to have addressed the issue and ensure that it was rectified.

In addition all the requirements of a basic contract have been satisfied and due diligence conducted has revealed that Aker Ghana Ltd in collaboration with its principal shareholder Aker ASA has paid all monetary considerations and are on site working. Latest due diligence conducted has revealed that Aker Ghana Ltd and Chemu Power Company Ltd have done the single largest 3D seismic shooting on the block allocated to them which is over 2,500 square kilometers and have spent several millions of dollars to that effect.

Furthermore it must be pointed out that it was incumbent on Ghana National Petroleum Corporation and the Ministry of Energy as representatives of Government to have timeously informed Aker Ghana of the necessity to incorporate a company in Ghana with the object of carrying out the operations specified under the Petroleum Agreement.

Having delayed in informing Aker ASA, the Government of Ghana cannot turn around and blame Aker ASA for its failure to make Aker Ghana Ltd a party to the Petroleum Agreement for the sake of the equitable maxim. “He who comes to equity must come with clean hands”. It would not paint a good picture to the international investment community.

*CONCLUSION

After careful review and study of the documents and conducting research in corporate and contract law including legal principles and maxims in equity, our conclusion is that even through Aker Ghana Ltd is not a signatory to the petroleum agreement, section 25 of the agreements permits the transfer or assignment of the agreement to Aker Ghana Ltd.

When that is done Aker Ghana Ltd would step into the shoes of Aker ASA as if Aker Ghana Ltd did in fact sign the Petroleum Agreement and by doing so would take over all its rights, obligations and liabilities under the agreement.