1st Ghanaian indigenous oilfield discovery generates IOC frenzy

Following its announcement earlier this week of a huge oil discovery off the shores of Ghana’s Western Region, Springfield Exploration and Production has become arguably the most attractive African partner for the world’s biggest international Oil Companies (IOCs). The wholly indigenous oil company has discovered what could be as much as 1.2 billion barrels of oil at its West Cape Three Points Block 2. This makes it easily the biggest oil find in Ghana, amounting to one and a half times the combined reserves of the three oilfields already in production.

Importantly, the find results from the first ever deep water well drilling programme to be drilled by an African independent. Indeed, it results from the second well to be drilled under that programme, the first being Oak 1 drilled a few weeks earlier. It was drilled through a work programme that only began on October 7, involving the Stena Forth Mobile Offshore Drilling Unit, a drilling ship contracted by Springfield from Stena Unicom Offshore Services which drills to depths of up to 35,000 feet and operates in up to 10,000 feet of water.

The new discovery comprises 50 metres of light net oil pay at Springfield’s Afina 1 well, with a gross thickness of 65 metres.

However, the discovery having been made by a Ghanaian independent, this creates an entirely new situation in that Springfield will require a major partnership to secure the financing and the technology required to develop the new oilfield and bring it into actual production. Field development will require several billions of dollars and even though Springfield is one of the largest Bulk Distribution Companies in the country – it has been responsible for 12.5 percent of refined petroleum product imports over the past five years – and has been actively involved in upstream oil and gas activities in both Ghana and Nigeria, this is well beyond its own financial capacity.

The impending battle among leading IOCs to win the partnership mantle will be fierce; Springfield already has working interactions with several of them including British Petroleum, Chevron, Total, SK Energy, Braskem, Vitol, Trafigura and Glencore, although the leading contender may be Aker, the Norwegian oil firm with which it has a joint venture called Aker Solutions Ghana. Instructively, Aker itself is on the brink of commencing development of the Pecan oilfield which will be Ghana’s fourth and largest field to date.

With Ghana National Petroleum Corporation entitled to a 10 percent freely carried equity participation in the new field to be developed out of Springfield’s new discovery plus the likely option for a paid for further equity stake of up to another 15 percent, there will be plenty of shareholding available to whichever IOC the Ghanaian company accepts as its partner in order to secure the requisite finance and technology for field development and production.

Already some IOCs in the running have started reaching out to Springfield. Partnership deals will have to be signed before Springfield can prepare a plan of development for the new field and present it to government for approval; and government itself, in dire need of extra revenues will be eager to support Springfield in getting it up and running.

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