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Sonangol Commences Due Diligence on 35 Proposals for its Divestment from Eight Blocks

Sonangol has commenced due diligence on 35 proposals submitted by the bidders of the Partial Divestment of its Participating Interests in eight offshore acreages.

Angola’s state hydrocarbon company says the bids were received from 19 companies looking to purchase its interests in Blocks 3/05, 4/05, 5/6, 15/06, 18, 23, 27, and 31.

A preliminary evaluation of the bids, which involved IHS Markit, was conducted between September 20 and October 6, 2021.

12 companies grouped themselves together into five consortia.  Seven companies applied as individual entities.

The due diligence process, being carried out by Trace International, will end on November 8, 2021, followed by negotiations with the candidates, which will lead to “signing of purchase and sale contracts with those that better reflect contractual procedures in accordance with the assessment criteria”, Sonangol says. 

The bidders were as follows: 

1. Block 3/05 a. Consortium Adisandra and Growth Axis Holdings b. Afentra c. Equinox d. Falcon Oil e. Consortium Somoil and Sirius f. Red Sky Energy 2. 

2. Block 4/05 a. Consortium Sancorp and Artic Securities.

3. Block 15/06 a. Consortium Adisandra and Growth Axis Holdings b. Falcon Oil c. MTI Energy d. Consortium Namcor, Sequa, and Petrolog e. Red Sky Energy f. Consórcio Sancorp and Artic Securities g. Consortium Somoil and Sirius h. SSI 15 i. TYR Conseil. 

4. Block 18 a. Consortium Adisandra and Growth Axis Holdings b. Falcon c. MTI Energy d. Consortium Namcor, Sequa, and Petrolog e. Consortium Sancorp and Artic Securities.

f. Consortium Somoil and Sirius g. TYR Conseil.

5. Block 23 a. Afentra b. Consortium Namcor, Sequa, and Petrolog.

6. Block 27 a. Consortium Namcor, Sequa, and Petrolog b. Red Sky Energy c. Consortium Somoil and Sirius.

7. Block 31 a. Consortium Adisandra and Growth Axis Holdings b. Equinox c. Falcon Oil d. MTI Energy e. Consortium Namcor, Sequa, and Petrolog f. Red Sky Energy g. Consortium Sancorp and Artic Securities h. Consortium Somoil and Sirius i. TYR Conseil.

For any further questions, interested parties should contact the Evaluation Committee, created for this purpose, by e-mail alienacaoblocospp@sonangol.co.ao.


Angolan Bid Round: In Search of El Dorado

By Gerard Kreeft

Angola’s recent onshore licensing round for the nine oil and gas blocks in the Lower Congo and Kwanza basins received 45 proposals from 15 different companies with a proposed investment sum of over $1 billion.

At first glance, it indicates a positive response to help kickstart an oil economy.

Angola’s National Oil, Gas, and Biofuels Agency (ANPG) stated that the bid round was designated to attract foreign companies not normally present in-country and Angolan companies to boost the national potential both in terms of business and workforce.

What can onshore developments offer?

It is assumed that the offshore rich oil source rocks also extend into the onshore.  But onshore, there has been more tectonics in the onshore area resulting in intense faulting and folding which will make the oil or gas fields to be found there smaller than the offshore. But the onshore economics will be better than offshore, so small discoveries could be economical, i.e., trucking the oil to the refinery in Luanda or building a jetty at Port Amboim and then exporting the oil overseas. 

Is it fair to assume that the onshore companies who have been granted concessions will usher in a new generation of oil and gas independents, much like Nigeria 20 years ago? Perhaps, but times have changed. In the past, it was commonplace for smaller independents to explore and then cash out to the majors. Now the majors are cashing out. Do these new independents have a Plan B?

Who are the new players?

MTI Energy, a Canadian company was successful in becoming an operator in four blocks, including KON 5, the most sought-after tract due to its history of oil production. It partnered with Sonangol P&P, Grupo Simples, and Monka Oil on the acreage, which hosts two producing fields — Quenguela South and Mulenvas South.

It is puzzling how MTI Energy could obtain operatorship of four blocks. On the company website, MTI Energy states it “has developed proprietary systems to accelerate the development of oilfields at marginal cost”. Yet there is scant evidence that MTI Energy is an energy company with a history of working as an operator of oil and gas production. Rather a service provider with a host of related service companies and no Angolan experience whatsoever.

Somoil, Grupo Simples, Alfort Petroleum, and Angola Integrated Services, all domestic players, also landed operatorships. Not surprising many of the successful companies had also bid for the same acreage in an aborted licensing round in 2015.

Somoil is the only one among the winners, who operates an acreage with crude oil output to its credit.

Missing from the list of participating companies is ACREP which has to date participated in 17 exploration and development wells, costing $150Million, and been part of the discovery of seven fields, one of which is in production.  

The cost of becoming an operator should not be ignored. The terms of reference demand a five-year work programme, including the drilling of one exploration well, the necessary seismic campaigns, and social projects. The average cost per concession could well be $5Million+.  Are these companies prepared to finance such campaigns? Or will they be looking for farm-ins from ENI and TOTALEnergies, the two dominant oil majors in Angola? 

Conclusions

1. Angola is struggling with the twin folly of COVID-19 and its economic crisis and at the same time trying to ensure that its oil and gas sector can be utilized to the fullest extent possible. 

2. Will onshore developments help to slow down oil and gas production decline? 

3. Will the companies participating in this onshore bid round be the new independents much like the creation of independents in Nigeria a generation earlier? 

4. The IOCs are consolidating, reducing, or abandoning their upstream assets in Angola and Africa. Will this be an impediment to their participation in any future farm-ins for onshore developments?

Gerard Kreeft, BA (Calvin University, Grand Rapids, USA) and MA (Carleton University, Ottawa, Canada), Energy Transition Adviser, was the founder and owner of EnergyWise. He has managed and implemented energy conferences, seminars, and university master classes in Alaska, Angola, Brazil, Canada, India, Libya, Kazakhstan, Russia, and throughout Europe. Kreeft has Dutch and Canadian citizenship and resides in the Netherlands. He writes on a regular basis for Africa Oil + Gas Report and contributes to the Institute of Energy Economics and Financial Analysis(IEEFA). His book entitled The 10 Commandments of the Energy Transition, is scheduled for publication in early 2022.


Cheiron, Cairn Energy Finally Get Hold of Shell’s Western Desert Assets in Egypt

London listed Cairn Energy and Egyptian homegrown independent Cheiron, have finally received the Government’s nod, to acquire AngloDutch Shell’s oil and gas assets in the Western Desert under an agreement signed as far back as March 2021.

The purchase is for a base consideration of $646Million and additional payments of up to $280Million between 2021 and 2024, contingent on the oil price and the results of further exploration, Shell says in a statement.

The two juniors are splitting ownership 50/50, meaning that each will initially pay $323Million.

The prize includes 13 onshore concessions with proven and probable reserves amounting to some 113Million barrels, and Shell’s stake in Badr El-Din Petroleum (BAPETCO) — a joint venture company established with the state-owned Egyptian General Petroleum Corporation.

Cheiron will receive assets producing almost 40,000 barrels of oil equivalent per day on a working interest basis, while Cairn will add between 33-38,000BOEPD of production to its portfolio.

“Cheiron will operate the producing and development concessions, leveraging its extensive mature fields development expertise, and Cairn will operate three of the exploration blocks, drawing on its international exploration experience”, the partners say in separate statements. The field activities will continue to be managed by the BAPETCO Joint Operating Company. Cairn said earlier this month that it intends to increase investment during the first half of 2022.

Shell, meanwhile, says it is refocusing its business in Egypt on its existing infrastructure position, the West Delta Deep Marine, and LNG joint-venture.

 


Angola Announces 2020 Bid Round Winners, with MTI the Top Beneficiary

Angola’s National Agency for Petroleum, Gas and Biofuels (ANPG), has announced the winners of the country’s 2020 Bid round for hydrocarbon property in the Lower Congo (CON) and Kwanza (KON) Onshore Basins.

Six companies were handed operatorships of the nine acreages on offer, while 10 companies are non-operating partners in all the blocks. MTI Energy is the bid round’s major beneficiary, as it gets to be operator of four out of the nine blocks and has no less than 50% equity in all the blocks it is allocated to operate.

Other designated operators are Somoil (40%, CON 1 Block); Mineral One (35% CON 6 Block), Simples Oil (50% KON 6); Alfort Petroleum (50%, KON 8) and AIS Angola (60%, KON 9).

MTI Energy will operate Blocks CON 5 (with 50%), Block KON 5 (with 60%), Block KON 17 (with 60%) and Block KON 20 (with 50%).

Of all the winners, Somoil is the only one currently operating in the country as an oil producer.

Several of the winners, operators and non-operators alike, are Angolan homegrown companies, untested in oilfield development. But this could easily be Angola’s “Nigeria Marginal Field 2003 Moment”, a reference to that period, 18 years ago, when 24 home grown companies, with nary an experience in E&P development, were granted operatorships of small discoveries. That bid round is partly credited for the emergence of the Nigerian independent and much of the capacity building that has happened in the industry in the last decade.

The full details of the award are described below:

BLOCK CON 1
COMPANY QUALITY SHARE
SOMOIL OPERATOR 40,00%
INTANK OIL NON-OPERATOR 40,00%
MONKA OIL NON-OPERATOR 10,00%
OMEGA NON-OPERATOR 10,00%
BLOCK CON 5
COMPANY QUALITY SHARE
MTI ENERGY OPERATOR 50,00%
PRODOIL NON-OPERATOR 15,00%
PRODIAMAN NON-OPERATOR 11,67%
UPITE NON-OPERATOR 11,67%
SERVICAB NON-OPERATOR 11,67%
BLOCK CON 6
COMPANY QUALITY SHARE
MINERAL ONE OPERATOR 35,00%
SOMOIL NON-OPERATOR 35,00%
AIS ANGOLA NON-OPERATOR 20,00%
PRODOIL NON-OPERATOR 10,00%
BLOCK KON 5
COMPANY QUALITY SHARE
MTI ENERGY OPERATOR 60,00%
SONANGOL P&P NON-OPERATOR 20,00%
MONKA OIL NON-OPERATOR 10,00%
SIMPLES OIL NON-OPERATOR 10,00%
BLOCK KON 6
COMPANY QUALITY SHARE
SIMPLES OIL OPERATOR 50,00%
MTI ENERGY NON-OPERATOR 50,00%
BLOCK KON 8
COMPANY QUALITY SHARE
ALFORT PETROLEUM OPERATOR 50,00%
SIMPLES OIL NON-OPERATOR 20,00%
MTI ENERGY NON-OPERATOR 20,00%
MONKA OIL NON-OPERATOR 10,00%
BLOCK KON 9
COMPANY QUALITY SHARE
AIS ANGOLA OPERATOR 60,00%
SIMPLES OIL NON-OPERATOR 20,00%
BRITE’S NON-OPERATOR 20,00%
BLOCK KON 17
COMPANY QUALITY SHARE
MTI ENERGY OPERATOR 60,00%
BRITE’S NON-OPERATOR 20,00%
MINERAL ONE NON-OPERATOR 20,00%
BLOCK KON 20
COMPANY QUALITY SHARE
MTI ENERGY OPERATOR 50,00%
BRITE’S NON-OPERATOR 50,00%

 

 

 


NPDC Requests Interests for Development of Kolmani River Discovery in Bauchi State

Deadline for submission of bids is October 12, 2021

Nigeria Petroleum Development Company NPDC, has requested for expression of interest (“EOI”) as a financial and technical service partner for the integrated development of Oil Prospecting Leases  (OPLs) 809 and 810 assets, in the Gongola Basin, a part of the Upper Benue Trough.

“At the heart of the blocks is Kolmani River where exploratory activities began in the mid-90s and till date significant discoveries has been made with huge commercial quantities of oil and gas in place”.

Kolmani River 2 was the well that NNPC announced as “significant discovery” in October 2019. That announcement was vague in details, but the corporation said it had drilled to a total depth of 13,701feet, and “a Drill Stem Test (DST) was going to confirm the commercial viability and flow of the Kolmani River reservoirs”. NNPC added that “preliminary reports indicate that the discovery consists of gas, condensate and light sweet oil of API gravity ranging from 38 to 41, found in stacked siliciclastic cretaceous reservoirs of Yolde, Bima Sandstone and Pre-Bima formations”.

The advertorial for the EOI says that OPLs 809 and 810, which reside in Bauchi State in Nigeria’s north east, “are located at over 700km from the coast, thus limiting the export and utilization options of the hydrocarbon resources”.

NPDC anticipates “an integrated development consisting of upstream development which feeds an onsite midstream refinery and power plant is the most optimal approach for monetizing the hydrocarbon in place.

“This plan would optimize the development by reducing the cost associated with evacuation for both crude and product, pipeline protection and integrity and ancillary cost. Ultimately, the plan is to create an industrial hub that will spur national economic growth, create employment opportunities”.

For whoever wins the bid for Financial and Technical partnership, the scope of work shall include all activities to accomplish in the minimum, the following:

Upstream

  • Merged re-processing of about 738sqkm high resolution 3D seismic data with an expected output in both time and depth domain (PSTM/PSDM) to further high grade the perspectivity of the Kolmani Main, Kolmani South-east fields and other satellite leads/prospects area.
  • Carry out further de-risking and maturation (Quantitative interpretation) of the Kolmani Main and Kolmani South-east discovery and associated leads/prospects area.
  • Accelerate integrated Field studies/development Plan for Kolmani Main and Kolmani South-east fields.
  • Drilling of Exploration/Appraisal/Production oil and gas wells
  • Sidetracks/completions/re-entries or other Wells
  • Development of other upstream facilities
  • Operation of oil and gas upstream assets.

Midstream

  • Establishment of gas processing facilities and power plant with a minimum of 150 MW capacity
  • Operation of oil and gas midstream assets
  • Construct Operate and Maintain a Condensate Refinery with minimum refining capacity of 50,000Barrels Per Stream Day (BPSD.

The full advertorial is in this link..

 

 


Angola to Announce 2020 Bid Winners Tomorrow

Angola will award the nine onshore concessions offered in the 2020 round, to winners on September 23, 2021.

The country has meanwhile launched a bid round for the award of eight offshore oil blocks, in the same week the government says it has selected winners for the 2020 awards.

A total of 16 companies, of which 13 are Angolan and three foreign, submitted 45 investment proposals for the exploration of CON 1, CON 5, and CON 6 (onshore Lower Congo) and KON 5, KON 6, KON 8, KON 9, KON 17, and KON 20 (onshore Kwanza Basin) in the 2020 bidding process. The contestants include Monka Oil, Brightoil, Mineral One, PRODIAMAN, Alpha Petroleum, Sonangol P&P, MTI Energy, Tusker Energy, Somoil, AIS, PRODOIL, UPITE Oil Company, Simples Oil Group, Service Cab, Omega Risk Solution, and Intank Group. 

Once the award for the 2020 round is over, however, the focus will move to the competition for the eight acreages on offer in the 2021 round.

The 2021 round, announced on September 14, 2021, features three acreages in the Kwanza Maritime Basin (Blocks 7/21, 8/21, and 9/21) and five in the Lower Congo Maritime Basin (Blocks 16/21, 31/21, 32/21, 33/21, and 34/21).

The tender for the attribution of blocks under bidding takes place under the terms of numbers 1 and 2 of article 45 of Law 10/04, of 12 November (Petroleum Activities Law) and in accordance with Presidential Decree no. 297/10, of December 2nd, (Establishes the rules and procedures of the Limited Public Tenders)”, the National Agency of Petroleum, Gas, and Biofuels (ANPG) says in a release.

Companies that show interest in this tender will be selected, based on their proven experience and accumulated knowledge in the field of hydrocarbon exploration in basins with recognized geological complexity.

To consult data in face-to-face and virtual format, interested companies must register via email: dataroom@anpg.co.ao

For additional information on the 2021 Bidding process and additional consultation on the legislation, ANPG invites worthy investors to contact the Negotiations Department through the e-mail: licitacoes@anpg.co.ao


Angola Announces New “Year-Round” Acreage Offers Outside Bid Processes

By Toyin Akinosho

Angola has decided to diversify the route to offering acreage licences to E& P Companies.

It would no longer be only through the bid round process.

The country’s National Oil, Gas and Biofuel’s Agency (ANPG) will “negotiate the exploration of available petroleum-based resources throughout the year without the need for bid round announcement”, the agency says in a statement.

Angola is keen on increasing its crude oil reserves, which amounted to Eight Billion barrels proved in 2020, according to BP Review of Statistics, July 2021. The country’s production has struggled below 1.2Million Barrels a day for all of the last eight months. Angola’s energy bureaucrats have always said that the way to improve these figures is by licencing  more acreages and putting them to work.

As it is, Angola’s preference has been to award acreage licences through the process of a bidding competition.

But some bid round programmes have failed, in the last 12 years, both in terms of dismal results of drilling the awarded acreages (2009 Bid round of blocks in the presalt, ultradeepwater Kwanza Basin) and the lukewarm attitude to post award negotiations (2014 Bid Round of onshore acreages).

The “new permanent negotiations programme”, approved in late August 2021, will allow the ANPG to proactively promote and negotiate oil and gas concessions independently from the rules and regulations of the Concession Allocation Strategy, which was approved by presidential decree 52/19 of February 18. It will enable the concessionaire to have robust competitive strategies to attract international investment in Angola´s energy sector.

ANPG administrator. César Paxe declares in a statement: “Investors are able to contact ANPG to submit investment proposal on available petroleum-based resources for exploration in Angola, in a fully transparent and compliant process,”

The permanent offer programme will allow for continued negotiations between operators and the concessionaire on fields where the concession period will expire or on concessions that were not included in the concession’s strategy. Under the new program, concessions will remain permanently available for negotiations with potential investors.


NNPC “Divestment” Statement Hints at Frustration, Distrust of Nigerian Independents

By Editorial Board of Africa Oil+Gas Report

NNPC’s “Divestment Policy Statement”, as outlined at the Society of Petroleum Engineers (SPE) conference in early August 2021, in some way hints at the corporation’s distrust of the competence and honesty of the average Nigerian E&P independent, with which it finds itself a Joint Venture partner.

The statement by Mele Kyari, CEO of the state oil firm, declared that NNPC would be very interested in “the competency of the buyer (of any asset divested by an oil major), as well as their post-purchase technical, operational, and financial capabilities.”

Mr. Kyari has several times expressed, in public, the view that Nigerian independents, as a rule, have not acquitted themselves very well in post-purchase operations of their assets. That view has been contested, mostly in private, by some of these companies, who counter that Kyari’s statements ignore the accomplishments of some of the exceptional Nigerian companies in the last 10 years. They also argue that the imposition of the NPDC-an NNPC subsidiary-as operator, of the five assets that Shell sold in 2012, precluded those investors from taking advantage of the prevailing high oil prices by deploying robust work programmes that could have high graded those assets and ring in the cash register.  Such arguments compare the trajectories that Seplat (which was allowed operatorship) and the five other companies (who were denied operatorship), took between 2010 and 2014 before crude prices crashed. Seplat ran a work programme that saw over 16 wells drilled in that period, whereas the most competent of the new buyers of Shell asset had their wings clipped by an NPDC that struggled with bureaucracy and a lack of urgency. Some have contended that, in that period, NPDC acted as a destroyer of value.

But despite NPDC’s failings, Mr. Kyari’s suspicion of Nigerian independents has a high approval rating in some respected quarters. He and his colleagues in the NNPC are not the only set of people who are a little disappointed with how many Nigerian independents have delivered, after purchasing stakes as high as 45% of several OMLs from Shell. There are several companies who never suffered operatorship issues with NPDC, and they don’t necessarily deliver top-notch performance. Companies are consistently so undercapitalized that they struggle to raise credit to drill even development wells. A number of them are not keen enough on their community engagements, they keep being shut down by their own workers, and contrary to their claims that as locals they understand the terrain better, they are sometimes more prone to shut ins by community gangs than the majors. There is a persistent accusation, even if it’s more whispered than publicly expressed, that several Nigerian E&P operators run shell companies to do their technical services, thereby shut out even Nigerian owned local contractors and when they are not using their own service companies, they create companies that act as a buffer between them and the contractors, who effectively have to go through one more layer to solicit contracts.

The key worry of the Nigerian state, about Nigerian E&P companies, is that the treasury is poorer for the fact that several of the indigenous independents have not placed payment of taxes and royalties high on their to-do lists.

This piece was originally published in the August 2021 edition of the monthly journal: Africa Oil+Gas Report. It’s a public service piece.


OML 11: Shell Appeals, Will Fight Up to the Nigerian Supreme Court

RoyalDutch Shell says it has filed an appeal against a Nigerian Appeal Court ruling which held that the Minister of Petroleum Resources has the discretion whether or not to renew the Oil Mining Lease (OML) 11. 

The Appellate court’s ruling of August 16, 2021, had upturned an August 23, 2019 ruling of the country’s Federal High Court in Abuja, which held that the Shell Petroleum Development Company (SPDC) was entitled to the renewal of the Lease on OML 11.

“We are disappointed by the decision of the Court of Appeal which overturned an earlier decision of the High Court upholding our right to a renewal of Oil Mining Lease 11 for 20 years”, the European oil major says in a statement. “We have therefore filed an appeal against this judgment”.

By choosing to appeal and thereby fight for the right to renewal of the asset all the way to the Supreme Court, Shell has pointedly responded to the statement by NNPC, the state hydrocarbon company, which declared that “further legal action by Shell will not only be futile, it would be depriving Nigeria of an opportunity to make meaningful gains from OML 11 when the nation needs all the revenue it can get to move Nigeria forward,”

Shell says that its preference “remains to engage the Nigerian authorities on available options for an amicable resolution of issues around the lease”, but it believes it has “fulfilled its obligations under the Petroleum Act for the renewal of OML11”.

NNPC’s statement on the Appeal Court ruling, released to the press last Friday, August 2021, had been filled with glee.

“We now have an opportunity to reconstruct a new beginning on OML 11, driven by global best practices and a social contract that would put the people and environment of the Niger Delta above pecuniary considerations”, it said. NPDC, the corporation’s operating subsidiary, “has taken over the assets and operations are in full gear…the company is working closely with all stakeholders and partners to achieve the new vision of “responsible, smart engineering, and environmental sustainability that the Federal Government has endorsed for OML 11”.


Ghana’s $1Billion GNPC/Aker Transaction Throws Up Intriguing Questions

By Toyin Akinosho

A fierce debate has erupted in Accra, capital of Ghana, following the announcement that the state hydrocarbon company was considering paying $965Million to purchase equity in two deepwater blocks from two European firms perceived, by some, to have ‘captured’ the country’s regulatory apparatus.

The Ghana National Petroleum Corporation (GNPC) is in negotiation with Aker Energy and AGM, both Norwegian led companies, to acquire significant interests in Deepwater Tano Cape Three Points (DWT/CTP) and South Deep Water Tano (SDWT) blocks.

GNPC will acquire directly and indirectly 37% of the Aker Energy stake in the DWT/CTP block and 70% of the AGM stake in the SDWT block.

The transaction calls for GNPC Explorco, the operating arm of the GNPC, to inherit pre acquisition development cost amounting to S$965Million as at 30th June 2021 as a tax advantage (Capital Allowances), the company said in a presentation to the country’s cabinet.

Of this calculated pre-acquisition development cost, $811Million is the GNPC’s share of the costs incurred by Hess Corporation (previous operator of DWT/CTP) and Aker Energy, current operator of the block; $154Million is the GNPC’s share of the cost incurred by AGM so far in developing the SDWT block.

GNPC says it has analyzed the Transaction and has concluded that it “offers an opportunity for GNPC to acquire operatorship capacity to enable it play a major role as an Exploration and Production company.

“It will enable GNPC and Ghana to, not only face the emerging Energy Transition in a well-prepared manner, but also create significant value for Ghana”, the state firm declares.

The proposition is that GNPC will be partnering with Aker Energy and AGM to jointly develop the DWT/CTP and SDWT blocks, after forming a joint operator company with 40% GNPC Explorco and 60% Aker/AGM through a fund. The Joint operator company will hold 10% stake in each of the blocks.

But a concert of civil society groups, numbering 15, and including such highly influential ones as Africa Centre for Energy Policy (ACEP), IMANI Centre for Policy and Education and Natural Resource Governance Institute (NRGI), collectively disagree with the terms of the transition and the very basis of the initiative.

Their concerns  highlight a kind of dejavu. In 2019, the Ghanaian parliament, at the request of the executive, which itself was pressured by Aker/AGM, made extensive amendments to Ghana’s (Exploration and production) Act, 2016 (Act 919) and its regulations “to allow companies to hold on to contract areas at the Energy Minister’s discretion rather than automatically relinquishing part of exploration blocks as practiced before the entrance of Aker”, the group notes. The CSOs remind the public that in the 2019 event, “two Petroleum agreements were amended for Aker to limit the regulatory powers of the Petroleum Commission (PC) on the activities of the company and the participation of GNPC Explorco on the SDWT block was significantly reduced, with all such amendments captured in the law and regulations in the agreements”.

Tackling the numbers in the transaction specifically, the CSOs declare:

“Aker claims it has invested about $800Million so far on the blocks in a document submitted to Parliament. While GNPC claims it has verified the expenditures, it still appears inflated if juxtaposed against the amount of work done by Aker and the value of its acquisition three years ago. Aker acquired Hess’s interest in the DWT/CTP for $100Million in 2018. Before selling its interest to Aker, Hess had appraised the field with estimated recoverable oil of 450Million barrels. In total, Hess drilled 12 wells (seven exploratory wells and five appraisals well). With that amount of work done, the highest valuation Hess got was about $400Million in 2016 when it farmed out 40 percent to Lukoil and FuelTrade for the entire field. Akers claim it has spent about $420Million on five wells drilled on the two blocks.

In another document presented to the country’s Economic Management Team (EMT), the $420Million relates only to the three wells on DWT/CTP. Given that the DWT/CTP cost is shared among the partners of the block the total expenditure claims for the wells could be in the region of $600 or $750Million compared with $400Million by Hess for 12 wells, depending on which of the documents used. This is very high regardless of which of the information is used”.

The group then asks: Is it worthwhile, realistic—or even advisable—for GNPC to pay so much

public money for the chance to become an “operator”?

It answers its own question. “GNPC is attempting to convince Parliament that it will learn to become a world-class upstream operator through this acquisition. However, the structure

of the transaction only makes GNPC Explorco a relatively passive “joint operator”, with limited opportunity to learn by doing.

“The proposals we have seen don’t accurately detail how Aker would transfer the needed skills,

knowledge or technology into Ghanaian hands. Instead, it proposes setting up a Special Purpose Vehicle (SPV), which Aker will control with 60 percent interest, and GNPC Explorco will have 40 per cent. This structure cannot make GNPC the operator it wants to become as the SPV is not the same as Explorcoin the Petroleum Agreement (PA)”

 

 

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