For the past two decades, Africa has been considered the new frontier of oil and gas exploration, with many of the major global petroleum companies scrambling to acquire assets in an as-yet undeveloped reserve of natural resources which are crucial to the way we live our lives today.
While the East African powerhouse of Kenya, Uganda, Rwanda, Burundi and Tanzania has seen massive development in its oil and gas infrastructure since then, Ghana has emerged as an alternative destination for oil majors looking for ways in which to diversify their portfolio of assets.
Ghana’s first commercial oil and gas resources were discovered as recently as 2007.
One of the major companies that played a critical role in that early development, Tullow Oil, recently announced its “Value Maximisation Plan”, with the intention of investing more than US$4 billion over the next decade to deliver over 50 wells and consistent revenue to Tullow and the Government of Ghana.
The Ghana “Value Maximisation Plan” is also focusing on a programme of operational turnaround which is targeting in excess of 95% uptime at both FPSOs.
Tullow is also making sure that both fields continue to be consistent and reliable suppliers of natural gas. Gas from the Jubilee and TEN fields contributes significantly towards Ghana’s domestic energy supply, and so ensuring stability from both fields is a welcome step towards securing energy demand.
“Low-risk” campaign
In April 2021, Tullow began a multi-year, multi-well drilling campaign, and will drill four wells in total in 2021, consisting of two Jubilee production wells, one Jubilee water injector well and one TEN gas injector well. The J56 production well came on stream in July 2021 and is slightly ahead of pre-drill expectations.
Elsewhere, other oil companies are also finding success.
In July, the Italian oil and gas company Eni made an important oil find offshore Ghana, close to its existing Sankofa hub, which will allow it to fast-track production in the region.
This follows another successful discovery, at Akoma in May 2019. The two wells are predicted to contain between 500 and 700 million barrels of oil equivalent.
Heritage Oil is doubling down on its investment in the country, too, which began in 2014 with the acquisition of interest in both the Offshore South West Tano Block and the East Keta Block.
The company is midway through an attempt to secure a partner to drill two exploration wells offshore Ghana, targeting the extraction of more than 400 million barrels of oil in the area.
A major stake in their deepwater block is on offer, in return for funding a “low-risk” exploration and appraisal campaign.
The promising oil and gas market in Ghana is not immune from external pressures and stresses, however.
A shift in focus for oil majors from fossil fuels to renewable energy in recent years has led some to abandon their assets in Ghana altogether – ExxonMobil quit the country this year without drilling a single well, for example. Meanwhile, that perennial investor in African infrastructure programmes, China, has begun to look elsewhere.
Gaps in the market
Where there is uncertainty, there is also opportunity. Ministers in Ghana are seeking parliamentary approval to borrow as much as $1.65 billion to accelerate oil and gas exploration by acquiring and developing stranded assets, with the hope to incorporate these assets into the Ghana National Petroleum Corporation (GNPC) portfolio.
According to Finance Minister Ken Ofori-Atta, for Ghana to become an operator in its own right, legal amendments may be required that allow the state-owned oil company to enter into reserve-based lending transactions. Though the risk is clear, the potential is enormous.
A panel of speakers will be discussing how the energy transition will impact the national economic growth of established hydrocarbon producers at Africa Oil Week. The panel will include esteemed guests such as Matthew Opoku Prempeh, the Minister of Energy.
Also on the table for consideration will be the renewed pressure put on fossil-fuel-dependent African governments to improve their fiscal and regulatory regimes and explore new industries or policies to diversify their economies.
These include fiscal policies such as tax incentives, oil subsidies, investor protection and price-setting mechanisms; navigating the risk of stranded assets; transparency initiatives and stakeholder dialogue; and flexibility and resilience to respond to fluctuating market conditions and operating environments.
Egbert Faibille Jnr, the chief executive officer of Ghana’s Petroleum Commission, and Dr K K Sarpong, chief executive of Ghana National Petroleum Corporation, will also be joining the Ghanaian delegation to present a dedicated showcase on Ghana’s upstream prospects.
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