IMANI recently issued a statement about what we believe are major fiscal risks that need to be managed by government. One of the two major risks we cited is the declining level of production in the Jubilee field. In simple words, the amount of oil being produced in Ghana’s only producing oil field is *falling*, and therefore generating less cash than expected for the government’s budget. Production has fallen from a peak of nearly 90,000 barrels per day in 2011 to nearly 60,000 barrels today. Even though the focus of the article was on the importance of Government taking urgent steps to rein in its expenditure to prevent slippages in major macroeconomic indicators and at the same time communicating more clearly with Ghanaians about how it intended to boost productivity in our oil fields, we also mentioned, almost in passing, that we believe the Jubilee project is overpriced. In that article, we justified our belief that the Jubilee development program was uncompetitive by comparing the cost/output ratio with similar projects elsewhere. In simple words, we looked at how much money had been spent on Jubilee and how much oil was being produced, compared those figures with the case elsewhere, and concluded that the project strategy was not giving Ghana value for money. It is important to note that the more money that is spent on the project the longer it takes for the field to be profitable, the lower the taxes Ghana can collect, and the longer it takes for even those meagre taxes to show up. We have received many reactions to that article, including some reassuring ones about how government of Ghana is stepping up to some of the challenges identified. But we received a couple from some apparently well-informed readers who took issue with our approach of benchmarking Jubilee costs against projects elsewhere. Despite our explanations that we selected projects that were more complex than Jubilee the challenge was thrown to us to evaluate the scale of the projects in Ghana in of and by themselves before coming to the type of conclusions that we did. We have taken up that challenge. We have looked at the Jubilee Phase 1a (Jubilee expansion) costs, and we are afraid to say: all we see are major discrepancies. We hope the Ministry of Energy - the entity that approved the project - shall help all of us clear these seeming discrepancies. Authoritative reports indicate that $1.1 billion shall be spent on Jubilee Phase 1a to drill 8 wells in total and to procure the necessary subsea systems that shall convey the oil from under the sea to the processing platforms on the surface. We have looked at the contracts that have been awarded by the Jubilee field operators and spent some time going over the reported activities being undertaken as part of the plan of development. We noted some reports suggesting 18-months of total project time. But we could not square these with other statements from the operators that first oil from the new phase shall begin flowing by end of 2012. How can a project which began on March 2012 and is expected to be commissioned by the end of 2012 last 18 months? What is important, at any rate, is the average drilling schedule of the wells, which is about 4 months per well. With four rigs working simultaneously, that makes 8 months of continuous drilling time. Our own assessment is that completion might take a bit longer and that first oil should be expected in 2013 rather than end-2012 but that does not in any way detract from the 4-month per well drilling schedule. Trends in the equipment market over the last 6 months establish a dayrate for floating rigs of about $220,000. That is to say, the cost of hiring a floating rig to drill each well is $220,000 per day. For 8 wells over 4 months each, that comes to a total of $215 million in drilling costs. Add a fudge factor of $35 million to compensate for West Africa’s notorious drilling environment, and you get $250 million. There are a number of nuances that put this matter in perspective. Firstly, the Jubilee phase 1a wells are in water depths of 1100 meters (3609 feet), and that is less than 4000 feet. Drillships capable of drilling in water depths of more than 4000 feet typically quote more than twice the dayrate of drillships that operate in *less* than 4000 feet of water. We know that the Jubilee wells are in 3609 feet of water because Modec, the company that installed the FPSO, says so. This is a huge cost factor. Secondly, the failure of Jubilee phase 1 to ramp up production to 120,000 barrels means that the existing FPSO is completely suitable to handle all the new production from the 5 production wells (the other 3 are for water injection to boost pressure). So no new FPSO work is anticipated. The other major set of activities in phase 1a concerns well completion/equipping and the procurement of sub-sea infrastructure. On February 6th of this year, Technip, the engineering services company, announced that it had won the full technical contract to roll out the entire subsea infrastructure. The cost? 122.5 million dollars (100 million euros). To estimate the costs for completing and equipping (including casing and ‘christmas trees’) the wells, we apply the industry-respected Mechanical Risk Survey (MRI) and Joint Assessment Survey (JAS) methodologies to the West African market to obtain 30% of total well costs, i.e. an additional $70 million is required for completion and commissioning works on the wells. This brings the total independently verifiable cost to $407.5 million. Let us add $42.5 million for management, consultancy (including the Intecsea contract) and contingency. That still brings us to just about $450 million. What are the other, unadvertised, expenditures that have ballooned the costs to $1.1 billion? *That is MORE THAN TWICE the costs that have been publicised*. Ghanaians deserve to know the full details. Are the operators budgeting more than $650 million in additional contingency because of a lack of confidence in their own technical plan and vendors? We have searched as diligently as we can but we still cannot identify those additional specific project components that make up the outstanding $650 million in expenditure quoted for Jubilee Phase 1a. Can the Ministry of Energy publish the full plan of development for Jubilee Phase 1a, or at least itemise the project components and their corresponding costs? IMANI should appreciate the education, and we are sure the general public would too.