ExxonMobil In Talks With Ghana Over Exploration Project
Zacks Investment Research | Nov 14, 2017 03:47AM ET
ExxonMobil Corporation (NYSE:XOM) has been presented with an opportunity by Ghana for carrying out deepwater exploration off the country’s coast.
Ghana has initiated talks with the oil giant and negotiations are underway as per current regulations. Per sources, the government had chosen to negotiate directly with ExxonMobil instead of resorting to competitive tendering. Also, regulations relating to open competitive tendering are yet to be passed by the country.
Per a new petroleum law, oil contracts should be awarded through open and competitive tender. However, direct negotiation is also allowed if deemed necessary and reasonable.
In 2015, ExxonMobil inked a Memorandum of Understanding with Ghana relating to the examination of its Deepwater Cape Three Point (DCTP) region. The region was situated 150 kilometers (100 miles) off the coast in water depth ranging between 2,000 and 4,000 meters (6,500 and 13,000 feet). The DCTP represents the second effort by ExxonMobil to purchase oil assets in Ghana. The company’s first attempt was takeover of Kosmos' stake in the flagship Jubilee field in 2009. This attempt was blocked by the government.
Per the government, two firms had separately decided not to explore the field due to its depth and the risk involved. However, ExxonMobil was highly favored by the government because of its expertise and understanding of deepwater operations.
Ghana anticipates oil production to reach about 250,000 barrels per day by 2019. The yield is expected from four oil fields including Jubilee, which currently has a combined average annual output of about 100,000 barrels per day. These transactions will add significantly to ExxonMobil’s assets portfolio.
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