Licensing Round: Ghana’s Energy Ministry Explains Why Most Oil companies Pulled Out

Ghana’s Ministry of Energy has blamed the lack of comprehensive data on Ghana’s oil blocks as well as the small size of the blocks as some of the reasons for the low interest in the maiden licensing bid rounds for the six oil blocks.

The government, through the Energy Ministry, in October 2018, earmarked six oil blocks for exploration and production.

Sixteen oil and gas firms were initially selected early this year to the final stage of the Oil Licensing Round.

Three of the oil blocks-two, three and four were to go through competitive bidding process, while two blocks-five and six were supposed to begin direct negotiations.

Block One was reserved for the Ghana National Petroleum Corporation (GNPC).

The bidding round attracted multinational oil companies such US oil and gas giant ExxonMobil, British Petroleum, China National Offshore Oil Corporation, Qatar Petroleum and Aker Energy.

The rest are Cairn Energy, Global Petroleum Group, First E&P, Sasol, Equinor and Harmony Oil and Gas Corporation, Tullow Ghana Limited, Total, ENI Ghana, Vitol and Kosmos Energy.

However, most of the major oil firms pulled out of the bidding process at the eleventh hour.

ENI and Vitol, as well as Tullow Ghana Limited, were the only companies that submitted bids for block three, with First E&P submitting bid for block two.

Explaining the issue, deputy Minister for Energy in-charge of Petroleum, Dr. Mohammed Amin Adam explained that the government has done its assessment on the responses it received from the companies and has taken steps to address them.

“Basically, two major issues emerged, the first one is that the data that we already have on those blocks was not comprehensive enough and therefore they didn’t have enough data to enable them to make commercial decisions so we have to improve on the quality of the data,” he stated.

According to him, the second issue that came up was the size of the acreage, which he said was too small for most of the companies compared to the offers they get from other oil-rich countries.

“For some of them, their exploratory strategies require them to operate in larger acreages and there are a number of countries that will give larger acreages to companies. If they compare what they get as per their strategies with what they were offered, our acreages or blocks were smaller in size and therefore it was inconsistent with their strategies”

The Deputy Minister stated further that his outfit will take a decision after discussions with stakeholders and consultants to decide whether to revise the size of the blocks for future bidding rounds to make Ghana’s upstream sector more competitive.