ExxonMobil’s Exit Puts Upstream Petroleum Sector On Life Support- Kofi Buah

 A former Minister for Energy and Petroleum in the Republic of Ghana, Emmanuel Armah Kofi Buah, believes Ghana’s petroleum upstream sector is on the verge of collapse if the Akufo-Addo-administration fails to handle the sector better than it is currently doing.

His comments follow the decision by the US oil and gas supermajor to relinquish its 80 percent stake in the Deep Water Cape Three Points Oil Block and pack out of the West African nation.

In an opinion piece, the former Minister, describing the state of the upstream sector prior to the assumption of office of the current administration, said: “In January 2017 when this government began, Ghana had 16 offshore licenses: three were producing fields-Jubilee, TEN and Sankofa Gye Nyame; Hess Pecan Field-Deepwater Tano Cape Three Points was appraised and ready for development; Hess left and sold out to Aker and the rest was history. That field is still begging to be developed.”

He said all 12 blocks in exploration stages had obligations to either acquire some amount of 2D or 3D seismic and or drill an exploration well.

This obligation was well negotiated for in the various Petroleum Agreements signed by the then government.

He, however, said: “From 2017 to date, only four exploration wells have been drilled by AGM (2 wells under amended terms-if you recall these amended terms reduced Ghana’s take from 43 percent to 18 percent. Eni (1 well) and Springfield (1 well) for which three oil and gas discoveries were made.

“Thanks to the good leadership under the NDC, the only producing fields in Ghana today are Jubilee, Sankofa, and TEN fields, none has been added. Unfortunately, these fields are declining as we continue production each day of the year.

“Jubilee has been producing oil and gas since 2010. We have already produced about 50 percent of the Field Reserves.

“TEN and Sankofa are also going down. If exploration is not prioritized, the industry will die off. If Ghana does not find more hydrocarbon resources and develop these fields, the worse fear is that the service industry, which is already feeling the impact of the lack of activity and is dying slowly, will go into bankruptcy if the trend continues and this must worry well-meaning Ghanaians,” Mr. Kofi Buah stated.

Below is the full opinion piece by Hon. Kofi Armah Buah

GHANA’s UPSTREAM PETROLEUM SECTOR ON LIFE SUPPORT WITH THE EXIT OF EXXONMOBIL- KOFI BUAH

• In January 2017 when this government began, this was the state of Ghana’s upstream petroleum sector
.Ghana had 16 offshore licenses.

3 were producing fields-Jubilee, TEN, and Sankofa Gye Nyame
• Hess Pecan Field-Deepwater Tano Cape Three Points was appraised and ready for development- Hess Left and sold out to Aker and the rest was history. That field is still begging to be developed.

• 12 blocks in exploration stages all had obligations to either acquire some amount of 2D or 3D seismic and or drill an exploration well. This obligation was well negotiated for in the various Petroleum Agreements signed by the then government.

From 2017 to date, only 4 explorations wells have been drilled by AGM (2 wells under amended terms- if you recall these amended terms reduced Ghana’s take from 43% to 18%. Eni (1 well) and Springfield (1 well) for which 3 oil and gas discoveries were made. The question must be asked how is it that most of the operators are not performing as expected? If the companies are breaching termination clauses in the various Petroleum Agreements, why are the Agreements not being terminated? Under the NDC government, 3 non-performing petroleum agreements were terminated as required by law.

• In 2018, ExxonMobil entered Ghana under pump and pagentry having been given very juicy terms by the government. The petroleum agreement signing ceremony was done at the flagstaff house by President Akuffo Addo himself a clear departure from the normal practice where the minister of Energy normally supervises the signing ceremony.

They were obligated to acquire 3D seismic and later drill an exploration well. Having enjoyed preferential treatment in the sector, most Ghanaians and industry watchers were expecting an aggressive exploration on their Block.

ExxonMobil managed to license data from a seismic contractor called PGS and worked on the data. It was expected that Exxonmobil will go ahead after the geological and geophysical study to drill the obligated well. However, ExxonMobil has served notice to the Ghana Ministry of Energy that they will not continue into the next phase to drill the exploration well.

 In 2018, Government organized Block licensing rounds which were publicized around the world. It was reported that 3 companies won blocks offshore Ghana. However from 2018 to date, not much has been done to award the blocks to ensure that exploration activities pick up.

 
Thanks to the good leadership under the NDC, the only producing fields in Ghana today are Jubilee, Sankofa, and TEN fields, non have been added, unfortunately, these fields are declining as we continue production each day of the year. Jubilee has been producing oil and gas since 2010. We have already produced about 50% of the Field Reserves.

TEN  resources, and develop these fields, the worse fear is that the service industry which is already feeling the impact of the lack of activity and is dying slowly will go into bankruptcy if the trend continues and this must worry well-meaning Ghanaians. It is only fair to ask the question-Is of Ghana losing its place as the preferred investment destination of the upstream sector in the sub-region under this government.