Comatose GNPC Being Pushed Into Another Deal -As US$1.6 Billion Aker/AGM Transaction Goes On Ice

KK Sarpong and Kevin Okyere KK Sarpong and Kevin Okyere

The Ghana National Petroleum Corporation (GNPC) which is on its knees as result of poor management, is being forced into another transaction with Anadarko/Occidental under the claim of increasing its stakes in the country's oilfields.

The Asaaseradio.com report had claimed that as part of the Akufo-Addo government's new focus to up GNPC's stake in Ghanaian oil blocks that are in at least the development stages, the national oil company is being offered a 7percent stake in the TEN and Jubilee fields formerly owned by Anadarko.

Also in the GNPC loop, is Kevin Okyere's struggling Springfield E&P, which has being in discussions with the Corporation towards offering between 7percent and 10percent stake in its oilfields, despite its controversies with the Italian oil and gas firm, Eni, leading to a lawsuit at the International Tribunal in London challenging a directive by Ghana's Ministry of Energy, asking them to unitise Sankofa offshore oil field and the Afina oil block operated by the cash-strapped Springfield E&P.

A news report emanating from Gabby Asare Otchere- Darko's Asaase Radio, has disclosed that a confidential letter to Mr K. K Sarpong, Chief Executive Officer of the GNPC dated September 20, had Kevin Okyere offering GNPC a 10percent stake in the fields at no charge to itself and agreeing to drop its claim to US$37 million still owed Anadarko by the Ghanaian state.

The report is coming at a time when the same GNPC is struggling to convince the ordinary Ghanaian as to why it has to go seeking a loan of US$1.6 billion dollars to purchase stake in the Aker/AGM wells without a thorough assessment of the wells to ascertain the quantity of the crude oil they contain.

The transaction has been described as the biggest corrupt practices in the history of the corporation, with the buyer; GNPC moving around with the seller Aker Energy from office to office bribing journalists and Civil Society Organization (CSOs) influencing them with cash to support the transaction when it is presented to Parliament.

The Anadarko transaction, according to the media report, will be paid for by GNPC at a pro-rata price, based on the valuation given to the corporation under the terms of the deal.

The government backed Asaase radio, quoted unnamed sources as saying that the transaction with the other party will see GNPC's shares in the TEN and Jubilee producing blocks increase significantly.

Meanwhile, information available to asaaseradio.com, indicates that Anadarko/Occidental are in the advanced stages of concluding negotiations with another international oil company on all its assets in Ghana.

What is left to conclude, our sources say, is official consent from the Government of Ghana. The information is that this may be done in the coming week.

Nonetheless, the trench warfare is said to be continuing between the companies engaged in the battle for the stakes in Ghana's Jubilee and TEN (Tweneboa, Enyenra and Ntomme) oilfields. Kosmos Energy has been leading the pack for many months.

Reports say that in mid-September, in an attempt to get final approval from the Energy Ministry, Kosmos offered the 7percent stake in Jubilee and TEN.

Asaaseradio.com further reports that a new arrival has joined the battle with an offer that appears to be even more attractive for the state-owned GNPC.

Executives from the local oil firm Springfield Energy, led by Kevin Okyere, are said to have met the GNPC chief executive, Mr. Sarpong, in September to present an offer that would give GNPC a 7percent stake in the fields at no direct cost to itself.

Asaaseradio, claims to have sighted a confidential letter to Sarpong dated 20 September, Okyere went further, offering GNPC a 10percent stake in the fields at no charge to itself and agreeing to drop its claim to US$37 million still owed Anadarko by the Ghanaian state.

The state-owned company needed only to convince the Ministries of Finance and Energy to accept the deal. Springfield is said to have estimated in its letter that Anadarko's former 24% stake in Jubilee and its 17% interest in the TEN fields was worth $750 million in total.

Vicki Hollub, chief executive of Occidental, previously said she was confident the company would raise about $700 million from asset sales to reach a near-term goal.

While Hollub, has not specified which assets are being actively marketed, the Ghana stakes were earmarked for sale on the company's books as of 31 December, according to a 10-K filing with the Securities and Exchange Commission.

Asset sales are a key part of Occidental's strategy to pay back the debt after long-term borrowing surged nearly five times to more than $48 billion following the 2019 purchase of Anadarko Petroleum Corp.

Occidental has sold nearly $9.2 billion of assets since then, according to data compiled by Bloomberg.

Occidental acquired the Ghana assets under the Anadarko takeover.

In a related development, sources in the industry say that GNPC, the Ministry of Energy and partners in the Aker/AGM blocks spent the whole week negotiating in Dubai.

The sources say the talks were not conclusive. The Government of Ghana is seeking to negotiate the two blocks separately, unlike Aker's preferred option, which is to sell the two as a whole.

Last month, the Italian company ENI, in a statement filed by three renowned lawyers namely; Craig Tevendale, Andrew Cannon and Charlie Morgan from Herbert Smith Freehills LLP, Eni is seeking five reliefs from the Tribunal.

This follows the foreign company's dissatisfaction with proceeding in a Ghana court, following Akufo-Addo's government's directive that the companies must unitize - is the joint development of a petroleum resource that straddles territory controlled by different companies.

In June this year, a High Court in Ghana, presided over by Justice Mariama Sammo, ordered the Italian oil and gas firm, ENI and Vitol, to set aside 30 percent of oil proceeds from the Sankofa Field in an escrow account, pending the final determination of an application filed by Springfield E&P, a wholly Ghanaian upstream player.

Springfield E&P filed a suit at Ghana's Commercial Court '3' Division of the Accra High Court following Eni's refusal to unitise the Afina oil block held by Springfield E&P and Sankofa Field operated by Eni and Vitol because the two oil blocks are said to straddle.

The ENI wants the Tribunal to declare that the purported 9th April Directive, 14th October Directive, 6th November Directive and any other steps taken to implement those directives represent a breach of contract under the Petroleum Agreement.

The claimant also wants the Tribunal to declare that the respondents take no further action to implement the purported unitisation of the Sankofa Field and Afina Discovery on the terms of the purported 14th October Directive, the Draft Unitization and Unit Operating Agreement (UUOA) sought to be imposed by purported November Directive or otherwise.

The third relief the claimant is seeking is an order that the respondent pays damages in an amount to be quantified for the losses suffered by the claimant arising out of the respondent's breaches of the petroleum agreement, Ghanaian law and International law on a joint and several basis.

Additionally, the claimant is seeking and order that the respondent pays all of the costs and expenses of the arbitration including the fees and expenses of the claimant counsel and any witnesses and/or experts in the Arbitration, the fees and expenses of the Tribunal and the fees of the SCC on a joint and several basis and /or an order such further or other relief as the tribunal may in its discretion consider appropriate.

It would be recalled that in April 2020, Ghana's former Minister for Energy, John Peter Amewu issued a directive to Eni and Springfield E&P to begin talks and combine their adjacent oil and gas fields in April and gave them until September 18 to reach an agreement.

The Minister's directive said that seismic data had indicated Eni's Sankofa offshore field, which entered production in 2017, and Springfield's Afina Discovery had identical reservoir and fluid properties.

"Regrettably, it has become obvious that the parties do not intend to comply with the ministry of energy's directives," the letter signed by Minister John Peter Amewu said.

More than a year after the directive, both Eni and Springfield E&P have failed to unitise the Sankofa offshore field and Afina Discovery.

Unhappy with the development, Springfield took the case to a high court in Accra, capital of Ghana.

The court in its ruling recently directed Eni to escrow 30 percent of proceeds from the Sankofa offshore field pending the final determination of the case.

The two oil companies were directed to unitise the two fields by the Ministry of Energy about a year ago but it has since not happened.

Among the reliefs sought by Springfield was an order directed at the Defendants to comply with the directive issued by the Minister of Energy in the letter of 9th April 2020 and enter into an agreement forthwith Plaintiff to produce and develop the accumulation of the petroleum in the Sankofa and Afina fields as a single unit.

The oil firm also wanted the court to direct that "any income, profits and other finds due Plaintiff from Defendant's exploration and production activities in the Sankofa Fields be paid to the Plaintiff upon account having been taken".

Eni and Vito are expected to pay an amount approximately $40million a month which will be directed to an account agreed by both parties.

Commenting on the ruling, Kevin Okyere, CEO and founder of Springfield, described the ruling as a "welcome vindication of Springfield's position on the issue of unitization and a positive result". He said that the Company was forced to take the legal route following Eni's reluctance to follow the Minister of Energy's directive and for all parties to reach an amicable resolution to this unfortunate impasse.

Kevin added "Springfield is not interested in stalling ongoing crude oil production on the Sankofa Field, and believes in fairness and justice for all, irrespective of their size and position. The consequences of this case for the Ghanaian oil industry will be systemic and immediate".

Regional oil and gas actors have been under severe pressure following disruptions caused to supply chains in the wake of the Covid-19 pandemic and market changes triggered by the global energy transition. In the light of such unprecedented challenges, Springfield believes Ghana cannot afford to delay development of a flagship project capable of contributing significantly to the State's coffers and ultimately improve the standard of living of Ghanaians.

Kevin concluded by saying that, "Springfield looks forward to working with Eni as the operator of the unitized field in maximizing the production and the economic benefits for all stakeholders, including the Government and citizens of Ghana".

Source: www.theheraldghana.com