Fitch Solutions, an agency that fuels better informed credit risk and strategy decisions with reliable data and powerful analytics across global markets, has projected Ghana’s total liquids production to see moderate growth in the near term, with crude, NGL and her liquids production increasing from 142,440b/d in 2022 to 145,390b/d in 2024 following recent investments by Tullow Oil in the Jubilee and Tweneboa-Enyenra-Ntomme (TEN) fields.
According to Fitch, while these investments will prevent significant short-term declines, the key upside to Ghana’s long-term oil production outlook is the 110,000b/d Pecan Field Development, the future of which is currently in limbo following a dispute over the involvement of Russia-based Lukoil.
Provided that the controversy surrounding Lukoil’s participation be resolved and a final investment decision forecasted to be achieved by the end of 2024, Fitch Solution has disclosed its expectation for Ghana’s oil production to grow to nearly 200,000b/d by 2029.
“These investments consist of a multi-year drilling campaign at the Jubilee and TEN fields which currently account for approximately 80% of Ghana’s upstream output.”
Fitch Solution
These investments, as reported by Fitch, will enable Ghana’s oil industry to reverse natural declines and moderately boost short-term production with production at the Jubilee field expected to exceed 100,000b/d in 2024.
However, Fitch further noted that to maintain this level of output, a total of 49 production and injection wells are planned to be introduced to the fields by 2030. “As of February 2023, Tullow plans to invest approximately USD300mn in Ghana to support these projects,” it pointed out.
Jubilee Field Boost To Prevent Declines in 2023
According to Fitch Solutions, further progress on the Final Investment Decision (FID) in the Pecan development is essential for Ghana to return to pre-pandemic levels of oil production (which averaged 197,000 b/d in 2019).
Aker Energy, as indicated by Fitch, has been reluctant to put forward its updated Plan for Development to the Ghanaian government and commit to FID due to the Russian invasion of Ukraine, whilst Lukoil is involved in the project as the risk of sanctions levied on Russian oil and gas companies that could limit Aker’s ability to work with Lukoil and interfere with operations at the field.
“The Pecan field, which is part of the Deepwater Tano Cape Three Points license block, has estimated reserves of 334 million boe. It is operated by Aker Energy, who maintains a 50% stake, while the other partners include Russia-based Lukoil (38%), Ghana National Petroleum Corporation (GNPC) (10%), and Fuel trade (2%).
“The development of the field has faced a variety of headwinds over recent years such as concerns over the capital cost of the project and the size of GNPC’s stake.”
Fitch Solution
Nevertheless, “the key barrier since February 2022 has been the participation of Lukoil,” Fitch Solutions indicated.
The Chief Executive Officer of Aker, Mr. Øyvind Eriksen, in his speech communicated that development plans would not be passed to Ghanaian authorities until Lukoil’s participation was resolved.
To overcome this hurdle, the CEO averred that Aker has recommended that Lukoil divest their share.
“As of February 2023, the latest update on the dispute indicates that Aker is continuing a dialogue with Lukoil and the Ghanaian authorities to come to a solution and has not put the project itself on hold, instead just delaying their development plans.”
Mr. Øyvind Eriksen
Optimism For A BreakThrough
Fitch in its analysis disclosed that given the willingness of the Ghanaian government to support the project, potential for breakthroughs and compromise in the negotiations between the partners and the higher oil price environment, makes FID possible despite the dispute, “but not likely to be reached until 2024 at the earliest.”
“We forecast that it will take 35 months from FID for first oil at the field, meaning that if FID is reached in 2024, production will begin in 2027 at the earliest. With this in mind, we forecast that Ghana’s oil production will grow to a peak of 198,190 b/d by 2029, before declining by an average of 3% a year until 2032 due to the lack of other projects in the pipeline.”
Fitch Solution
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