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ExxonMobil’s decision to exit Ghana not surprising, says analyst

Dr Theo Acheampong on LPG

Dr Theo Acheampong, a UK-based international petroleum economist

Dr Theo Acheampong, an international petroleum economic analyst based in the United Kingdom says the decision by US oil major, ExxonMobil to abandon its exploration exercise in Ghana is not coming as a surprise. 

He said most of the international oil companies (IOCs) are now having to prioritise their portfolios across the board.

Speaking with Emmanuel Aboagye-Wiafe on the Energy 101 show on Monday (31 May), Dr Acheampong explained that as a result of the energy transition agenda, such decisions should be expected. 

He said the onus now lies on oil-producing countries to intensify efforts aimed at attracting other oil exploration companies which may not be under pressure to decarbonise their operations.

Dr Acheampong said, “The market has fundamentally shifted over the last one and half years. I mean market in terms of the upstream market where a lot of hitherto the big IOCs are now under significant pressure to decarbonise their operations and sort of refocusing their capital in other places or jurisdiction that offer the best returns for shareholders and investors.”

He said, “So it is within that landscape that ExxonMobil is feeling quite a bit of the pressure now…Most of the IOCs are now prioritising their portfolios across the board.

“Going forward, we still will need players that have the financial and technological muscles to carry on the exploration programme in our deep-water terrain,” he said.

He added, “The challenge is that you are going to struggle to attract the likes of an Exxon or even a BP or a Shell into some of these places in West Africa including Ghana just because their focus has shifted…”

US oil major, ExxonMobil has abandoned its exploration exercise in Ghana. This was contained in a letter addressed to the Minister of Energy and other stakeholders dated 18 May 2021. This comes at a time when major oil companies appear to be moving away from oil.

ExxonMobil, which recently established Exxon Low Carbon Solutions to commercialize its extensive low-carbon technology portfolio, is aggressively pursuing divestments, after suffering a US$22.4 billion loss last year. It is under pressure from shareholder groups pushing for the company to shift to cleaner fuels.

It, therefore, comes as no surprise news that ExxonMobil has determined not to apply for an extension to its exploration license to drill any exploration wells, thereby, relinquishing 100% of its rights in and to the Deepwater Cape Three Point block (DWCTP block).

 In the letter, ExxonMobil said it had resigned as operator of the block, having fulfilled its contractual obligations during the initial exploration period under the petroleum agreement of 28 November 2018. The work done included processing about 2222 sq. km of 3D seismic data. It, however, failed to drill the optional exploration well under the initial work programme.

GNPC and Goil are, therefore, free to search for a new operator to partner them on the DWCTP block. Insiders believe the prospects are promising. Documents sighted by Asaase News indicate that the work done so far on the block by ExxonMobil points to a current unrisked deterministic recoverable volumes estimated to be 494 million barrels for the low case and 1806 million barrels for the high case, using optimistic reservoir parameters. 

This puts the risked recoverable volumes for the medium case at 87 million barrels and at best around 319 million barrels.

ExxonMobil controlled 80% of the block, with the Ghana National Petroleum Corporation (GNPC) holding 15% and Goil Offshore Ghana Ltd having the remaining 5%.

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