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The Minister of Energy, Mr Boakye Agyarko, has invited Exxon Mobil Exploration and Production Ghana Limited for direct negotiations for a Petroleum Agreement for the latter to be able to undertake petroleum activities at the Deepwater Cape Three Points (DWCTP) Block off the western coast of the country.

The negotiations will be among the government of Ghana, the Ghana National Petroleum Corporation (GNPC) and the American multinational oil and gas company.
 
A public notice to that effect said the direct negotiations will be without public tender but will be carried out in accordance to section (10) subsection (9) of the Petroleum (Exploration and Production) Act 2016 (Act 919).

It explained that “the reasons for inviting Exxon Mobil for direct negotiation are based on value proposition for Ghana.”

It will also be in accordance with principles of good governance, transparency and accountability, it added.

The DWCTP block was relinquished twice by Vanco Energy and Lukoil and that has since increased its risks profile.

It lies in water depth ranging between 2,000 to 4,000 meters and is located approximately 150 kilometers (km) offshore Ghana, a release from the ministry said.

The release described the block as “one of the ultra-deep water blocks, which severely tests the limits of modern technology and would take research and development to optionally develop and exploit any discovered resources.”

It explained that on April 30, 2015, the Government of Ghana, represented by the then Minister for GNPC entered into a memorandum of understanding (MoU) with Exxon Mobil Exploration and Production Ghana (Venture) Limited for acquisition of a petroleum exploration and production rights and the parties agreed to negotiate in good faith a Petroleum Agreement, with exclusivity period of seven (7) months.

Exxon Mobil is touted as the world’s largest integrated international oil company with daily production of 3.921 million barrels of oil equivalent (BOE) and with revenue stream of US$218.6 billion as of 2016.

The statement said Exxon Mobil has the track record of delivering project on time and within budget, which is very good for the country.

The ministry’s reasons for the choice of direct negotiations over public tender include

1. Critical success factor in any Petroleum Basin such as Ghana is the attraction and retention of international oil company (IOC) such as Exxon Mobil with the relevant technical expertise and sound financial capability with access to both capital and project finance.

2. Ghana’s offshore basin falls geologically within the West Africa transform margin, which is highly fragmented and has much of its potential in Ultra Deep Water. The fragmented nature requires that in order to fully understand the transform margin, IOCs need to take positions in multiple countries, and on both sides of the Atlantic(West Africa and South America were connected in geological time). For instance exploration success in Guyana is relevant to better understanding Ghana’s geology, therefore ExxonMobil exploration success in Payara license in Guyana will positively impact exploration success in DWCTP Block.

3. The setting in Ultra Deep Water as results in high drilling cost, therefore increased emphasis on full regional technical understanding prior to drilling is essential, therefore ExxonMobil’s regional geological understanding will reduce drilling cost.

4. Ultra-Deep Water exploitation is beyond the reach of current technology, therefore IOCs with strong Research and Development capability such as ExxonMobil are needed to develop future technology to unlock UDW exploitation potential.

5. Exploitation in Ghana’s Tano Basin to date has led to the discovery of one petroleum system, Jubilee, and all subsequent discoveries from part of the same petroleum system. A thorough basin wide approach is needed to discover Ghana’s other petroleum system (Jubilee/TEN/Sankofa etc), which will enter decline in the next five (5) years. The majority of recent awarded acreage (2014) is targeting minor /smaller discoveries within the existing petroleum system.

6. Ghana is one of the few African oil producer countries without the presence of a super major and ExxonMobil entrance into Ghana would validate the country’s hydrocarbon potential. In view of this, Government ‘s policy is to bring into Ghana, a super Major like ExxonMobil.

7. Exxon Mobil entering into Ghana at current global and local business environments is a good investments climate which will positively impact the country’s credit rating.