INSTEPR supports GNPC’s 37% acquisition stake in Aker Energy
Energy think tank, the Institute for Energy Policies and Research (INSTEPR), has expressed its support for plans by National Oil Company (NOC), Ghana National Petroleum Corporation (GNPC), to purchase 37 percent stakes in Aker Energy’s Pecan Oil field.
The think tank headed by energy analyst, Kwadwo Poku, is of the view that all efforts should be made by the GNPC to acquire the aforementioned stake in the Pecan field and be developed alongside alongside its partner – Aker Energy – given that the wells in the Pecan field have already been appraised with the next stage being Plan of Development (PoD).
In this transaction, GNPC should separate the DWT/CTP BLOCK which AKER bought from HESS from the SDWT AGM BLOCK. The PECAN field is your fresh tomatoes in this deal. All efforts should be made to acquire the 37% stake in this block and develop it with the partners. The wells in the DWT/CTP have been appraised and the next stage is PoD for development. PECAN phase 1 and 2 is a low hanging fruit in my analysis, stated Mr Poku, Executive Director of INSTEPR.
“We are advising GNPC to only engage AKER on DWT/CTP. The cost of the 37% stake is manageable,” he added.
The energy analyst has however, kicked against the 70 percent stake acquisition in the South Deep Water Tano (SDWT) oil field operated by AGM Petroleum Ghana Limited, describing it as a risky investment decision on the part of the GNPC.
According to him, the SDWT oil block has a water depth of over 3000 meters which is 100 metres more than the deepest developed oil field in the world which has a water depth of 2,900 metres, further stating that there is no available tecchnology to produce oil at a water depth of over 3,000 metres.
He adds that, per the GNPC’s estimates, both oil blocks have oil reserves of 717 million barrels with just the Pecan Phase 1 accounting for 250 million barrels, hence should there not even be a Pecan Phase 2 development for oil reserves, the remaining barrels of oil in the SDWT filed are less than 500 million.
This block [ SDWT ol block] has a water depth of over 3000 meters. The deepest developed field in the world is 2900 meters by SHELL. The field is called stones in the Gulf of Mexico and has significant upside potential and is estimated to contain over 2 billion boe of oil in place according to SHELL. The Nyankom field which was drilled by AKER has not been appraised.
According to GNPC’s estimate of 717 million barrels for the two blocks, if Pecan is 250 million barrels in phase 1, assuming there is no PECAN phase 2, the oil in Nyankom AGM BLOCK is less than 500 million barrels in 3000 meters water depth. Currently, there is no technology to produce oil at over 3000-meter water depth and if this assertion is not true, we are open for GNPC to show us and how much it will cost, opined the Executive Director of INSTEPR.
Meanwhile, a group of Civil Society Organisations (CSOs) have outrightly rejected the acquisition of both the 37 percent and 70 percent stakes in Aker Energy and AGM Petroleum Ghana by the GNPC.
According to the group of CSOs, the country will be shortchanged in the transaction, adding that the transaction poses threats to the country’s fiscal outlook.
“We are clear in our minds that the transactions if approved will shortchange Ghana, the transactions cannot be a guise for poor decisions that threaten the country’s economic and fiscal outlook.”
“Therefore we request Parliament to intervene given that the deal has already gone through all the relevant branches of the Executive ostensible glossing over important threats of the transaction to the country’s fiscal situation,” argued the group of CSOs.
GNPC, through its GNPC Explorco, is allowed to participate in the upstream petroleum sector and it plans to purchase a 70 percent stake in the South Deep Water Tano (SDWT) operated by AGM Petroleum Ghana Limited and a 37 percent stake in the Deep Water Tano/Cape Three Points (DWT/CTP) operated by Aker Energy Ghana Limited.
The company will form a joint operating company with the two entities and acquire the said stakes at different agreed prices.
GNPC has already secured Cabinet approval and is seeking $1.65 billion loan.
The company has justified the deal saying such a partnership with the two entities is critical because of the exiting of oil majors from the country.
It said it needed to build its capacity and take up a large part of the exploration activities before Ghana’s oil reserves hit a level of terminal decline.
Read below details of INSTEPR’s position on the acquisition of stakes in the two oil blocks: