Coronavirus freezes US$4.7 billion worth of oil projects

More than US$4.7bn worth of projects lined up in Ghana’s hydrocarbons sector have been postponed indefinitely after the coronavirus scourge decimated the oil market and dampened investors’ appetite, the Chief Executive Officer of the Petroleum Commission, Egbert Faibille Jnr., has said.

Mr. Faibille, speaking at a webinar organised by the think tank Africa Centre for Energy Policy (ACEP) to discuss COVID-19 response strategies in the oil and gas industry, said the pandemic has sent significant shock waves across the industry and has crippled both local and international oil companies doing business in Ghana.

Explaining the immediate impact of the virus on the industry, the Petroleum Commission boss cited the postponement, in March, of the US$4.4bn Aker Energy Pecan field development.

The Norwegian oil firm had been expected to receive approval from the government for its plan of development in the second quarter of 2020 and to subsequently commence operations. But the company, at the onset of the virus, put a freeze on the project as oil prices crashed.

The country’s current producing oilfields, Jubilee, TEN and Sankofa, generate about 200,000 barrels of oil per day, and the Pecan project was expected to nearly double that output by 2023 if it went ahead on schedule.

According to Mr. Faibille, an additional US$324m worth of projects relating to companies carrying out exploration and appraisal activities have also been put on hold.

“The companies were due to undertake various drilling campaigns, acquisition and interpretation of seismic, geological and geophysics data. The Eban 1X exploratory well of Eni, Nyankom 1X and Kyenkyen-1X appraisal programme of AGM, Afina -1X appraisal programme of Springfield, exploratory well drilling campaigns of Amni, Eco Atlantic and GOSCO have all been postponed,” he said.

Supply chain disruptions

The Petroleum Commission chief stated that the pandemic has revealed weaknesses in the local supply chain relating to manufacturing, construction and the industrial base.

The border restrictions imposed as a result of Covid-19 have led to the unavailability of critical spares, goods and materials in the industry.

“The compelling need to fly in expatriate specialists required for critical maintenance works on offshore installations in the midst of the pandemic has contributed to delayed schedules. The rude awakening of this pandemic should afford the industry the opportunity to invest in local supply chains as well as training and development of indigenous Ghanaians,” he said.

He added that, as the industry regulator, the commission is assessing the potential that can be exploited in the current challenges and the risks posed to local firms in the industry.

“We should also adhere to the discipline of finding the optimal balance between sourcing globally and locally to ensure business continuity. The big difference now, however, is that our calculus for optimisation of local content must take into consideration new values and cost drivers related to the risks associated with pandemics and their impact on business continuity,” he said.