Ghana’s Ministry of Energy is close to launching the countries first open bidding round, seeking to leverage the rising oil price to attract much needed investment in the sector.
Ghana’s oil and gas sector stagnated after a promising start. During the 8-year tenure of the previous NDC government, no new exploration wells were drilled. Many of the new license awards were made to small scale foreign companies with little or no track record.
The current NPP government has taken a different approach and on 15th October will initiate Ghana’s first open and competitive bidding round for oil and gas exploration licences.
Whilst this is a move away from the policy approach of the previous government, it comes as no surprise to industry watchers. Both the Minister of Energy, John Peter Amewu and his deputy, Dr Amin Anta, were the leading voices in the African Centre for Energy Policy (ACEP).
ACEP is a well-respected energy focused think tank based in Ghana which campaigned vociferously for both transparency and competition in the process of license awards. Now in government both Ministers have stuck to their guns and acted on their pre-election criticisms.
Monday’s licences round can already be labelled a tentative success having attracted interest from large scale international oil companies (IoCs) many of whom were noticeably absent under the previous government. Initial indications from sources in the ministry suggest that BP, Exxon Mobil, Total, Chevron Texaco, Rosneft, Sinopec and CNOCC will all be participating in the bidding process.
The tender process is specifically focused on expediting exploration activity in the underexplored Central Basin. 3 licenses will be awarded in the Central basin on a competitive basis, with the decision based on the following criteria;
1. Financial capacity and Technical competence of the parties, coupled with the timescale for work programme activity.
2. Fiscal terms, including royalty payments to government and GNC equity.
3. Local content, the equity and skills transfer to local partners.
Ghana has in recent years stood by and watched as its lost its status as the region’s leading exploration jurisdiction to Senegal and Cameroon, both of whom in recent years have seen major discoveries and subsequent developments.
In addition to the development of the Central basin our sources suggest that the Ministry is also targeting enhanced recovery from its proven and prolific Tano basin (Jubilee and Ten fields) and the exploration of its ultra-deep water, high impact Keta Basin, located on the border with Togo.
Both require the implementation of enhanced cutting edge technology and specialised operations. With this in mind, indications are that the Ministry has set aside a number of blocks for direct negotiations. In these direct negotiations the Minister will target those companies with a track record of expediting the development of smaller near infrastructure fields and those that can deliver ultra-deep water exploration and development.
The Minister at a recent workshop for indigenous companies also reiterated the importance of local content in all award processes.
“The law gives the first preference to indigenous companies to participate in upstream petroleum activities but most of the time, international oil companies that have the responsibility to encourage the local companies are not working in accordance with the law”
With a rising oil price and global increased deep-water activity, Ghana’s decision to open itself to a more rigorous and transparent award process once again means that the country is well positioned to attract petrodollars.
Ultimately whilst the increased activity is welcome, in the risky business of oil and gas exploration only time and the drill bit will tell if the efforts and capital will lead to discoveries and increased oil production, along with a boost to the local economy.
Source: The Statesman