The Africa Centre for Energy Policy (ACEP), a prominent think tank in Ghana, has raised significant concerns regarding the country’s oil sector policies.
In detailed press statement signed by Kodzo Yaotse, Policy Lead for Petroleum & Conventional Energy at ACEP, the organization addressed persistent governance and policy challenges in Ghana’s upstream petroleum sector.
ACEP has long advocated for the public interest, championing effective policy solutions in the energy and extractive sectors. At the International Monetary Fund (IMF) and World Bank Annual Meetings, the Executive Director of ACEP elaborated on these issues, pointing to the country’s struggling oil and gas sector as a major contributor to its fiscal difficulties.
“The Ministry of Finance’s projections, which underpinned significant borrowings, were based on assumptions of high oil production and corresponding revenue increases.
“These were meant to support Ghana’s financial commitments, including those to the financial markets and development banks.”
Africa Centre for Energy Policy (ACEP)
ACEP also criticized a lack of effective policies, which has stunted growth in Ghana’s oil industry. With foreign direct investment in the sector declining, Ghana’s petroleum industry has struggled to attract the international interest needed to maintain competitive production levels.
The absence of strategic, investor-friendly policies has made Ghana less attractive to global oil and gas companies, as investors prioritize stable environments with transparent regulations and predictable returns.
In discussing governance issues, ACEP criticized the government that “instead of addressing technical issues in the sector using sound scientific approaches, the government has prioritized litigating investors.”
“This has culminated in unfavourable outcomes, including the embarrassing arbitration result in July 2024, where Ghana was portrayed as unable to properly interpret its own laws.”
Africa Centre for Energy Policy (ACEP)
The ongoing legal and regulatory challenges between Ghanaian oil company Springfield Exploration and Production (Springfield) and Italian energy company Eni regarding the Afina and Sankofa fields have captured national and international attention.
The dispute centers on a unitization directive issued by the Ghanaian government, requiring that Springfield and Eni combine operations over the Afina and Sankofa fields. ACEP raised significant concerns about data discrepancies and financial burdens arising from this directive.
Appraisal Programme Costs and Regulatory Shortcomings
A critical issue highlighted in the ACEP statement is the data inconsistencies between Springfield’s appraisal program and the government’s calculations for unitization.
“This directive gave Springfield and its partners 54.545% and Eni and its partners 45.455%.
“Notably, Springfield’s estimate of the Oil Water Contact (OWC) at 3958m was about 172m less than the 4130m used by the Ministry of Energy to estimate a Stock Tank Oil Initially In Place (STOIIP) volume of about 642 million barrels.”
Africa Centre for Energy Policy (ACEP)
ACEP also criticized the cost implications of Springfield’s proposed plan to re-enter the Afina well to conduct reservoir tests. The plan is estimated to cost $50 million, a figure that ACEP deems excessive given that these tests could have been performed during the original drilling process.
The delay in conducting the necessary well tests has increased financial responsibilities for Ghana National Petroleum Corporation (GNPC) and its subsidiary Explorco, both partners in the Afina field.
ACEP contended that this situation reflects a failure in regulatory oversight by the Petroleum Commission and the Ministry of Energy, which are tasked with protecting Ghana’s financial and operational interests in the sector.
“The appraisal programme aims to establish connectivity between the Afina and Sankofa fields, as required for the unitization process.
“However, considering the recent arbitration ruling, ACEP believes that studies to confirm connectivity should have involved collaboration with the other party, Eni, to enhance the credibility of the process and avoid further disputes.”
Africa Centre for Energy Policy (ACEP)
While ACEP maintained that its criticisms are not aimed at undermining Springfield, it insists that protecting the public interest and ensuring a transparent oil and gas sector are paramount.
“There is a growing perception that hidden interests are being prioritized over investment and development in Ghana’s upstream sector.
“As the world shifts away from oil and gas through decarbonization, ensuring a fair and transparent oil and gas industry in Ghana is more important now than ever.”
Africa Centre for Energy Policy (ACEP)
ACEP signalled an urgent call to action for Ghana’s policymakers to take corrective measures that will restore investor confidence, protect public resources, and ensure the sustainable growth of the petroleum sector.
The think-tank’s report suggested that without immediate intervention, Ghana may face long-term financial repercussions in an increasingly decarbonized world.
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