After several years of fruitless talks between Ghana’s energy ministry and ENI/Vitol for Block 3, First E&P/Elandel Energy for Block 2, Koka Energy for Block 4 and CNOOC for five blocks in the Keta Basin, negotiations on the terms of future oil contracts, have now come to an end.
As a result, these blocks, which were first put on the market in 2018, are once again considered available.
Africa intelligence, an online news portal, disclosed that the government and oil operators each claim to be behind the decision to put a stop to negotiations begun over two years ago to acquire new offshore blocks in Ghana. Meanwhile, the country’s oil industry is in a critical condition.
By doing so, the authorities wanted to gain the upper hand and lay the blame on the oil companies for the failed negotiations, suggesting behind the scenes that their demands were too high.
For their part, the operators claim that they slammed the door and not the other way round, while refusing to officially reveal the reason for the failure of the negotiations. The oil firms have stressed that the fact they all decided to walk out points the finger of blame on the authorities.
CNOOC’s new leadership is said not to be giving much priority to the project. In December 2021, ENI explained to Africa Intelligence that it was “fully engaged in a normal discussion process” with the project’s teams which included lawyer Akoto Ampaw and Benjamin Asante, who used to worked at the Ministry of Energy, with a view to finding an agreement (AI, 09/12/21).
Ministry officials suggest that the success of recent block promotion roadshows in the UK and the US tipped the balance in favour of ending the talks to make way for other potential investors. But with the oil sector having suffered a number of setbacks in recent years, Accra’s official position on the matter appears difficult to justify. Ghana’s oil output, currently at 120,000 b/d, has been declining steadily.
Tullow Oil, operator of the Jubilee and TEN (Tweneboa, Enyenra, Ntomme) fields, produced less than 45,000 barrels of oil equivalent (boe) per day in 2022, whereas it was close to 60,000 boe/d in 2019. Relations have declined between the British junior and Accra, which has blamed the oil producer for not giving local executives enough say (AI, 09/12/20).
On top of the current climate, investors have also been put off by the government’s attitude towards ENI and the unification of its Sankofa field with Afina, operated by Springfield Energy.
ENI considers the measure, which the government wants to impose, to be particularly favourable to the local junior headed by Kevin Okyere, whose wife is the niece of first lady Rebecca Akufo-Addo (AI, 05/07/21).
The country’s lack of attractiveness is also down to the critical state of its economy: Ghana’s public debt has risen to 80% of its GDP. In 2022, inflation exceeded 54% on an annual basis.