After being delayed for nearly three years, a possible start of the development of the Deepwater Tano / Cape Three Points (DWT/CTP) block offshore Ghana is underway, however, the escalating tensions between Russia and the West, and the resultant slew of sanctions risk delaying the take-off of the DWT/CTP block offshore, which Russia’s Lukoil is a partner.
In its financial and operational results for 2021, released on February 8, 2022, Aker Energy revealed that with its license partners, they “are working to submit a revised Plan of Development for the DWT/CTP block by the end of second quarter 2022”.
Since the conflict between Russia and Ukraine began, Russia’s oil and gas sector has been hit, as the sanctions bite hard at the financial and operational activities of Russian oil companies. This has tendencies of impacting available investments of Russian oil companies, and particularly, Russia’s Lukoil where it holds interests in Ghana’s Pecan field.
Russia’s Lukoil, is a partner in the Pecan field together with Aker Energy, the Ghana National Petroleum Corporation (GNPC) and Fueltrade. Aker Energy is the operator of the block, holding 50 per cent interest, Russia’s Lukoil (38 per cent), the Ghana National Petroleum Corporation (10 per cent) and Fueltrade (2 per cent). Total reserves at the Pecan field development in the Deepwater Tano/Cape Three Points (DWT/CTP) block are estimated at 334 million barrels of oil, with plateau production expected at 110,000 barrels per day.
Delay of the Development of Pecan Field
Since 2019, when Aker Energy submitted an Integrated Plan of Development and Operations (PDO) for the Deepwater Tano / Cape Three Points (DWT/CTP) block offshore Ghana, the project has undergone several delays, including the emergence of the COVID-19 pandemic in 2020. Ordinarily, when the development plan was developed in 2019, subject to approval by the government, the project was expected to start production in the next three years or as early as 2022, yet, this is yet to materialize.
In March 2021, Aker Energy announced that a final investment decision (FID) for the Pecan field development project had been placed on hold, postponing the project. While no new date was set for the Final Investment Decision at the time, the company said it was working actively to confirm the feasibility of a phased Pecan field development by executing conceptual studies.
Etienne Kolly, Associate Director, Upstream Intelligence for IHS Markit, said:
“In Ghana, operator Aker Energy and partner Lukoil might submit in 2022, a reviewed field development plan (FDP) for the Pecan and satellites project, in the DWT/CTP block. Aker has been reviewing the FDP since 2020, when total capital costs were cut significantly. If the development plan is submitted and approved in 2022, the first oil could be reached in 2025. However, this project is also at risk due to possible international sanctions that Russian partner Lukoil might face.”
Etienne Kolly, IHS Markit
According to Aker Group’s financial results for full year 2021, Aker Energy and its license partners have secured the FPSO Dhirubhai-1, from Ocean Yield for US$ 35 million, for the Pecan field development and are working to firm up cost, schedule and further optimize the concept to mitigate cost inflation.
During the fourth quarter of 2021, Aker Energy secured further financing from African Finance Corporation of an additional 100 million dollars in senior secured convertible bonds. Aker Energy is evaluating different strategic options for its ownership in the DWT/CTP block, the report stated.
In August 2021, Ghana’s Parliament approved a mandate for GNPC to negotiate a transaction with Aker Energy regarding a potential acquisition of a stake in the DWT/CTP block. GNPC sought parliament’s approval for a loan of US$ 1.65 billion to acquire a 70% stake in the South Deep Water Tano (SDWT) operated by AGM Petroleum Ghana Limited and a 37% stake in the Deep Water Tano/Cape Three Points (DWT/CTP) operated by Aker Energy Ghana Limited.
The move when finalized will mean GNPC will possess significant stakes in the offshore oil blocs, with Ghana’s shares in Aker Energy increasing to 47% while that in AGM blocs goes up to 85%. However, this is faced with several hurdles, as the proposed amount of US$1.65 billion for the two blocks are regarded to be on the high side by CSOs and thus, negotiations are still undergoing review.
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