Lack of data, small size, reasons for low interest in oil blocks - Energy Ministry

The Energy Ministry has cited the lack comprehensive data and small size of oil blocks as reasons for the low interest expressed by investors in the maiden licensing bid for the six oil blocks.

In October last year, government allocated six oil blocks for exploration and possible production.

In the process, sixteen oil and gas firms were initially selected early in 2019 for the final stage of the Oil Licensing Round.

Three of the oil blocks-two, three and four were to go through competitive bidding processes; two blocks-five and six – were supposed to begin direct negotiations; while block one, was reserved for the Ghana National Petroleum Corporation.

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

The rest were 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, some of the major oil firms unexpectedly pulled out of the process at the last minute.

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

Giving reasons for this, Deputy Minister for Energy (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.

“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,” he stated.

The second issue that came up was the size of the acreage, which the Minister 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,” he noted

Government is expected to take key decisions 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. It will also strive to improve the data being made available to bidders.