Monday, 13 November 2017

NPP gov’t begins ‘chop chop’ in the oil sector

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The Energy Ministry has announced plans to invite Exxon Mobil Exploration and Production Ghana Limited for direct negotiations without public tender for Petroleum Agreement in respect of Deepwater Cape Three Points (DWCTP) Block, Offshore the Republic of Ghana.

“Respectfully, am I missing something here? The current government inveighed against the former for sidestepping the procurement process in several instances which have cost the country millions of dollars, we are still expecting some prosecutions according to the new head of the Public Procurement Authority, Agyenim Boateng Agyei. So why are they repeating this same "mistake"?

Ministry of Energy (Ghana) why this move now?, Rabiu Alhassan, broadcast journalist has quizzed.

Below is the notice:


Pursuant  to section (10) subsection (9) of the Petroleum (Exploration and Production)Act   2016 (Act 919) and in  accordance with principles of Good Governance ,Transparency and Accountability, the  Minister for Energy by this  public  notice, hereby invites Exxon Mobil Exploration and Production  Ghana Limited for direct  negotiations without public tender for Petroleum Agreement in respect of Deepwater Cape Three Points (DWCTP) Block ,Offshore the Republic of Ghana.

The Deep water Cape Three Points (DWCTP) Block has been relinquished twice by Vanco Energy and Lukoil which has increased the risk profile of the DWCTP Block. The DWTCP Block  lies in water depth ranging between 2,000  to 4,000 meters  and is located approximately 150km offshore Ghana. It is one of the ultra-deep water blocks which severely tests the limits of  modern technology and would take Research and Development to optionally develop and exploit any discovered resources.
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On 30th April 2015, the Government of the Republic of Ghana represented by the then Minister for Petroleum and Ghana National Petroleum Corporation (GNPC) entered into Memorandum of Understanding (MoU) with  ExxonMobil Exploration and Production Ghana  (Venture) Limited for acquisition of Petroleum Exploration  and Production rights  parties  agreed  to negotiate  in good faith  a Petroleum Agreement, with exclusivity period  of seven(7)months.

Exxonmobil is the  world’s largest Integrated International Oil Company  with daily production of 3.921 million BOE(barrels of oil equivalent) and with  revenue  stream of US$218.6 billion as at 2016. ExxonMobil  has  the track  record of delivering project on time  and within  budget which is very good for the country.
The reason for inviting ExxonMobile  for direct negotiation are based on value proposition for Ghana. These are as follows:
Critical success factor in any Petroleum Basin such as Ghana is the attraction and retention of International Oil Company (IOC) such as Exxon Mobil with the relevant technical expertise and sound financial capability with access to both capital and project finance.
Ghana’s offshore basin falls geologically within the West Africa transform margin, which is highly fragmented and has much of its potential in Ultra Deep Water.  The fragmented nature requires that in order  to fully understand  the transform margin, IOCs need to take positions in multiple  countries, and  on both sides of the Atlantic(West Africa and South America were connected in geological time). For instance  exploration success in Guyana is relevant  to better understanding Ghana’s  geology, therefore ExxonMobil exploration success in Payara license  in Guyana  will positively impact exploration success in DWCTP Block.
The setting in Ultra Deep Water as results in high drilling cost, therefore increased emphasis on full regional technical understanding prior to drilling is essential, therefore ExxonMobil’s regional geological understanding will reduce drilling cost.
Ultra-Deep Water exploitation is beyond the reach of current technology, therefore IOCs with strong Research and Development capability such as ExxonMobil are needed to develop future technology to unlock UDW exploitation potential.
Exploitation in Ghana’s Tano Basin to date has led to the discovery of one petroleum system, Jubilee, and all subsequent discoveries from part of the same petroleum system. A thorough basin wide approach is needed to discover Ghana’s other petroleum system (Jubilee/TEN/Sankofa etc), which will enter decline in the next five (5) years. The majority of recent awarded acreage (2014) is targeting minor /smaller discoveries within  the existing  petroleum system.
Ghana is one of the few African oil producer countries without the presence of a super major and ExxonMobil entrance into Ghana would validate the country’s hydrocarbon potential. In view of this, Government ‘s policy is to bring into Ghana, a super Major like ExxonMobil
ExxonMobil entering into Ghana at current global and local business environments is a good investments climate which will positively impact the country’s credit rating.