AGM Petroleum Ghana to relinquish to Gov’t its SDWT Block rights
AGM Petroleum Ghana Limited (AGM) has decided to relinquish its rights to the South Deep Water Tano (SDWT) block after carefully considering all options. The SDWT block is located in ultra-deep waters and requires substantial investments to proceed with exploration. AGM has fulfilled all its obligations under the petroleum agreement and has contributed significantly to Ghana’s petroleum industry by drilling two ultra-deepwater wells, including the Nyankom discovery. AGM has also carried out CSR investments that have benefited the Ghanaian authorities and other industry players.
The decision to relinquish the SDWT block is a normal conclusion for exploration blocks, as the petroleum regime in Ghana presumes that the operator has to decide to drill or drop at specific times during the exploration period. As an independent company, AGM’s decision has no implication for Aker Energy’s plans in Ghana. Aker Energy is the field operator of the Pecan development project in Ghana’s Deepwater Tano Cape Three Points block.
However, Aker Energy may lose its interest in the Pecan field if it fails to submit its Plan of Development (PoD) by 15 April 2023. The PoD is a critical document that outlines the development plan for the offshore Pecan field. It is a prerequisite for the approval of the field development plan by the Ghanaian authorities. Failure to submit the PoD could result in Aker Energy losing its interest in the field.
Aker Energy has postponed submitting the PoD citing various reasons, including concerns about the possibility of its Russian partner Lukoil attracting sanctions due to Russia’s attack on Ukraine. Aker Energy has also mentioned uncertainties in the global energy market and the need for further optimization of the project as reasons for the delay. The postponement has raised concerns among stakeholders, including the Ghanaian government, which is keen to develop its petroleum resources and boost its economy.
The Pecan field is estimated to hold about 450 million barrels of oil and is expected to generate significant revenue for Ghana. Aker Energy has already made substantial investments in the project, including drilling appraisal wells and carrying out extensive subsurface studies. The postponement of the PoD has, therefore, created uncertainty about the project’s future and the potential benefits it could bring to Ghana.
The situation underscores the challenges that companies operating in the global energy market face. Geopolitical tensions, fluctuations in commodity prices, and regulatory hurdles can all impact companies’ plans and investments. Companies like Aker Energy must navigate these challenges and make strategic decisions to ensure the viability of their projects.
The situation also highlights the importance of effective stakeholder management. Companies must engage with the relevant stakeholders, including the government, local communities, and other industry players, to build trust and ensure a favorable operating environment. Effective stakeholder management can help companies navigate regulatory hurdles, secure social license to operate, and enhance their reputation.
AGM Petroleum Ghana Limited’s decision to relinquish its rights to the South Deep Water Tano block is a normal conclusion for exploration blocks. However, Aker Energy’s postponement of the Plan of Development for the Pecan field has raised concerns about the project’s future and the potential benefits it could bring to Ghana. The situation underscores the challenges that companies operating in the global energy market face and highlights the importance of effective stakeholder management. Companies must navigate these challenges and make strategic decisions to ensure the viability of their projects and enhance their reputation.
