An International Chamber of Commerce tribunal has upheld Ghana’s claim for $196.5 million in corporate income tax from Tullow Oil relating to insurance payouts the company received between 2016 and 2019. The tax assessment covers proceeds from Tullow’s Business Interruption insurance policy during those years.
Tullow Oil expressed its disappointment with the ruling in a statement on its website. The company said the tribunal found the tax assessment “is not in breach” of its Petroleum Agreements with Ghana. It added that the tribunal also ruled the 100% penalty on the assessment falls outside the contractual protections in those agreements.
“Tullow is disappointed that the Tribunal has come to this decision and will now consider next steps after further engagement with the Government of Ghana,” the company said. It promised to provide updates on the matter in due course.
Ghana’s government welcomed the ruling. It said the decision comes as talks continue between Ghana and Jubilee partners on maximising the potential of the Jubilee and TEN oil fields. The government revealed it had been in discussions with Tullow to resolve outstanding tax issues before the tribunal’s decision.
Those discussions, it said, will continue to cover both the tribunal’s ruling and separate proceedings over the disallowance of loan interest. “The discussions are ongoing and would be resolved in the mutual interest of both parties,” the government’s statement said.
Despite the dispute, the government stressed Tullow remains an important partner in Ghana’s petroleum sector and its largest petroleum producer. It said Tullow’s operations in the Jubilee and TEN fields contribute to Ghana’s energy security, domestic gas supply, and provide thousands of jobs.
The Finance Minister said the government plans to implement the tribunal’s award in line with Ghanaian law, while taking care to maintain operations in the two fields. “In doing so, the Government will have due regard to the continuity of operations in the Jubilee and TEN fields and Tullow’s capacity to sustain the investments required in those fields,” the minister noted.
Ghana’s laws give the Ghana Revenue Authority authority to decide the timing and manner of payment for assessed tax liabilities. The government said its goal is to secure revenues owed to the Ghanaian people while preserving Tullow’s ability to operate and invest in the country as a going concern.
Tullow Oil’s tax dispute dates back to the insurance proceeds it received under a Business Interruption policy during a period of suspended operations between 2016 and 2019. The Ghana Revenue Authority assessed $196.5 million in corporate income tax on those proceeds, including a 100% penalty.
The company has argued that the tax assessment and penalties do not align with its Petroleum Agreements with Ghana. The ICC tribunal’s ruling rejects that argument.
Tullow is a major operator in Ghana’s offshore oil sector. The Jubilee and TEN fields are among the country’s largest producing assets, supplying gas to domestic markets and supporting local jobs.
The ongoing talks between Ghana and Tullow will now need to address how to implement the tribunal’s award while keeping production stable. The government’s approach suggests it wants to avoid disrupting operations or investment in the oil fields.
The tribunal’s decision confirms the Ghana Revenue Authority’s right to tax the insurance proceeds as corporate income, despite Tullow’s objections. It also limits contractual protections Tullow had hoped would shield it from penalties.
The ruling adds clarity to tax disputes involving multinational oil companies operating under petroleum agreements in Ghana. But the final outcome depends on how Ghana and Tullow manage their ongoing discussions over payment terms and other tax issues.
For now, Tullow remains Ghana’s largest petroleum producer, with its Jubilee and TEN operations critical to the country’s energy supply and economy. The company’s next steps following the tribunal ruling will be closely watched by the government and industry alike.
According to 3News.
