Ghana is moving closer to the belated commencement of development of its 4th – and biggest to date – oilfield, the Pecan field whose discovery was announced in late January this year by Aker Energy. Approval by government of the requisite Plan of Development and Operations has dragged for the past eight months, although Aker now is nearing completion of the second – and expectedly last – revised version of the PDO.
The original PDO, submitted on March 28, was rejected by the Minister of Energy, Peter Amewu on the advice of the Ghana National Petroleum Corporation and the Petroleum Commission, on technical, commercial and legal grounds. The Minister consequently directed Aker to incorporate the comments of the GNPC and the PC and submit a revised PDO. On June 27, Aker submitted a revised PDO but this too was rejected by the Minister who demanded further revision.
That process is now nearing completion, and while government is determined to ensure Ghana gets the best possible value from the field, which at full production will be easily the country’s most productive, it is also keeping an eye on the timelines for its development. Initially, Aker hoped to have the first phase of the phased development for the field in production by the end of 2020 but delays in approval of the PDO have pushed the earliest possible date for first oil pour by at least a year at least to late 2021 or early 2022 at best.
This is worrying for government as the first of the several US$1 billion Eurobond issuances done annually since 2013 will fall due for repayment by 2023, and this leaves little room to spare, since it is relying heavily on the extra foreign exchange revenues accruable from the Pecan field to amortize the bond issuances as they fall due. Even if government opts to refinance most of the issuances rather than amortize them – as is likely – the existence of substantial revenues from the Pecan field would greatly strengthen its hand in negotiating terms for any new bond issues to be used to refinance the maturing ones.
The most recent discovery, by Springfield, a Ghanaian exploration firm promises an even bigger field than the impending Pecan field but this is still several years away from first oil pour and will not be ready in time to influence repayment or refinancing of the Eurobond issuances done during the first half of this decade.
Aker began operating the Pecan field last year with a 50 percent share. Its entry into Ghana resulted from its astute acquisition of Hess Ghana which had been operating the block, for a total cash consideration of US$100 million in February last year.
Aker Energy’s partners on the DWT/CTP block include Russian energy company, LUKOIL (38 percent), the Ghana National Petroleum Corporation (GNPC) (10 percent) and Fueltrade (two percent).
Already some 550 million barrels of oil equivalent (mmboe) have been identified at the field and
further exploration could increase total volumes to 600-1,000 mmboe, the company said in a statement issued at the time it announced the Pecan find in January.
The reserves already identified easily eclipse the finds behind the three existing oilfields. Jubilee has reserves of 370 million barrels, TEN has 240 million barrels and Sankofa has 204 million barrels. This means that the new find could conceivably have reserves that exceed the estimated reserves of the three existing fields put together.