Sankofa-Afina oil fields unitization to build operatorship capacity of Springfield – IES
Energy think tank, the Institute for Energy Security (IES), has opined that the execution of the Unitisation and Unit Operating Agreement (UUOA) by ENI Ghana and Springfield is expected to build the operatorship capacity of the latter oil firm.
This is aside the billions of dollars the State is expected to earn from the unitization of the two oil fields.
The IES’ study finds that Ghana stands to derive an upwards of US$8.4 billion from the unitisation of the Sankofa and Afina fields, as opposed to US$2.065 billion that it will derive from the production from the Sankofa fields, assuming no incidence of unitisation.
|GOVERNMENT-TAKE ANALYSIS FOR THE AFINA AND SANKOFA FIELDS|
|Government Entitlement||No Unitisation (US$ Million)||Unitisation (US$ Million)|
|(+) Bonuses, Fees and Levies||37||75|
|(+) Additional Oil Entitlement||125||1,433|
|(+) Income Tax Paid||1,252||4,317|
Source: IES 2021
According to the IES in its Policy Paper titled Looking for That Fairway: Towards the Resolution of ENI-Springfield Unitisation Dispute, Ghanaian ownership and operatorship of the country’s petroleum assets upstream, is something the country have been struggling with over the past decade to achieve, since the country commenced oil production in commercial quantities.
“It is a feat the GNPC mandated to leading the sustainable exploration, development, of production of petroleum resources of the country through its subsidiary GNPC Explorco, is working around the clock to achieve.”
“As a result, the breakthrough recorded by Springfield in 2019 by discovering oil in commercial quantity in the WCTP-2 was hailed as a major milestone in the country’s quest to build Ghanaian ownership and operatorship capacity,” stated the IES.
“Unitizing the Afina and Sankofa fields comes with the added advantage of building operatorship capacity of the indigenous Ghanaian company,” added the IES.
Springfield made history as the first independent Ghanaian and African company to discover hydrocarbons in deep-waters, and within a block that lies adjacent to ENI Ghana’s Sankofa field in OCTP.
Springfield currently holds 84 percent interest in the WCTP Block 2, while GNPC and GNPC Explorco is holding the remaining interest, thus making it an all Ghanaian partnership and showing the Ghanaian capacity to deliver, given the opportunity.
It demonstrates that value local content can produce when Africans and indigenous entrepreneurs are given a fair playing field in the upstream petroleum sector.
The Afina oil field discovered by Springfield in 2019, is said to contain 1.5 billion barrels of oil and 0.7 trillion cubic feet of gas.
Touching on the year-long unitization impasse between the two oil firms, IES notes that immediate steps are required to address the impasse between ENI and Springfield on the unitization directive from the government in compliance with the acceptable industry standards and interpretation of the legal provisions on unitization in a manner that adequately responds to the emerging risks in the country’s oil industry.
Meanwhile, the energy think tank has urged government to state its current stance on the ongoing unitisation impasse between ENI Ghana and Springfield.
The call on the government to break its silence on the matter and assert its position falls among the many recommendations made by the IES following the think tank’s research into the ongoing impasse.
The recommendation also comes on the back of the belief by the Ghanaian citizenry that government is to be largely blamed for the ongoing unitisation stalemate.
Per the IES’ findings, the government’s “actions and inactions were identified as key factors contributing to the stalemate.”
The key findings drawn from sampling the opinions of persons in the media, government, academia, think tanks, CSOs, petroleum industry, and the business community, however, asserts that despite being the ‘cause’ of the stalemate, the government is still the only “body most capable of bringing finality to the impasse.”
According to the IES, the government stating its position on the matter is necessary to clear any misconceptions and misgivings held by the public as well as the two oil firms involved in the impasse.
Additionally, the government has been urged to continue to play the role of a mediator to help the two oil firms overcome the resistance to a workable solution providing guidance to the parties and assist in the implementation of agreed roadmaps.