Fitch Solutions, research arm of rating agency, Fitch Ratings, says its near term-outlook for oil production in Ghana is positive as targeted investments in oil production in the country is set to rise by 50 per cent in 2021.
The positive outlook comes on the back of an announcement by Tullow Oil to increase its net capital expenditure (capex) on the Jubilee and TEN oil fields from $120 million in 2020 to $180 million in 2021.
Tullow Oil is the operator of Ghana’s two largest oil fields – TEN and Jubilee. The oil firm has plans to commence a multi-well drilling campaign in the second quarter of 2021.
According to Fitch Solutions, the $60 million more capex investment in Tullow Oil’s production will be significant for the country’s upstream sector since TEN and Jubilee are responsible for 80 per cent of Ghana’s total oil production.
Fitch Solutions in its report on Ghana’s oil and gas sector noted that given the planned investment by Tullow Oil, it had revised its previous forecast of stagnation in the country’s oil production and now expects an increase in production by 2 per cent from 2022 to 2024.
“Given the planned spending, we have revised our previous forecast, which anticipated a stagnation in production until Aker Energy’s Pecan Field comes online. We now expect an uptick in production to average 2.0% y-o-y between 2022 and 2024, as the planned drilling activity will help offset the declining output rates at Ghana’s fields. However, due to comparably weaker capex spending in 2020, we maintain our expectation that production will decline by 2.0 per cent in 2021,” Fitch Solutions said.
“The forecasted boost in Ghana’s oil output will be partly a result of improved gas offtake performance and higher water injection rates, which both help maintain higher production,” added Fitch Solutions.
In the second half of 2020, gas offtake nominations from the Ghana National Gas Corporation increased by 63 per cent at the Jubilee and TEN fields, to 106mmscf/d. Tullow Oil targets gas offtake to increase beyond 130mmscf/d in 2021.
Meanwhile, water injection rates at the Jubilee field are set to increase by 50 per cent in 2022, to average 270,000 b/d supporting higher oil production rates.
