Asaase News can report that the US oil major ExxonMobil has abandoned its exploration activities in Ghana. This news was contained in a letter, dated 18 May 2021, addressed to the Minister of Energy and other stakeholders. The development comes at a time when major energy 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 pursuing divestments aggressively after suffering a $22.4 billion loss last year. It is under pressure from shareholder groups pushing for the company to shift to cleaner fuels.
It comes as no surprise, therefore, that ExxonMobil has decided not to apply for an extension to its exploration licence to drill exploration wells, thereby relinquishing 100% of its rights in and to the Deepwater Cape Three Points (DWCTP) block.
In the letter, ExxonMobil said it was resigning as the operator of the block, having fulfilled its contractual obligations during the initial exploration period under the original petroleum agreement of 28 November 2018. The work done included processing over 2,200 square kilometres of 3D seismic data. However, it failed to drill the optional exploration well under the initial work programme.
GNPC and GOIL are free, therefore, to search for a new operator to partner them on the DWCTP block. Insiders believe the prospects are promising. They tell Asaase News that the work done so far on the block by ExxonMobil points to current unrisked deterministic recoverable volumes estimated to be 494 million barrels in the low case and 1,806 million barrels in 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.
Pullback from fossil fuels
ExxonMobil controlled 80% of the block, with Ghana National Petroleum Corporation holding 15% and GOIL Offshore Ghana Ltd the remaining 5%.
European and American oil and gas companies are actively transitioning from fossil fuels to renewable energy as oil reserves in Europe and America are fast depleting. West Africa, where new discoveries are happening, has not been spared, however, as the oil majors appear to be losing appetite for investing heavily in the continent’s reserves.
The global situation is not promising and may require policy changes to make West African wells competitive for the scarce resources available to develop fossil fuels.
Shell is not doing any exploration for oil in new countries after 2025. BP, which had earlier applied for the Keta Basin in Ghana, has said since then that it is not entering any new countries to engage in oil exploration.
Total is now also operating within a tight framework of strict capital discipline, high-grading its portfolio and not taking any wide exploration risks. ENI, which has acquired a new block in Ghana and is preparing for exploration drilling, is also disposing non-core upstream assets and shying away from any more mega projects for oil and gas elsewhere.
Meanwhile, Exxon has pledged to increase spending on low-carbon projects and lower the intensity of its greenhouse-gas emissions. Last April, Exxon floated $100 billion in shares, with a view to attracting both private and public funds in a new business that would initially focus on carbon capture and storage (CCS).
Hopes to decarbonize
CCS is one of the critical technologies required to achieve net-zero emissions and the climate goals outlined in the Paris Agreement. Exxon plans to invest $3 billion on lower-emission energy solutions through 2025.
CCS is the process of capturing CO2 that would otherwise be released into the atmosphere from industrial activity, and injecting it into deep geologic formations for safe, secure and permanent storage.
The United Nations Intergovernmental Panel on Climate Change and the International Energy Agency agree that CCS is one of the most important low-carbon technologies required to achieve global climate goals at the lowest cost.
CCS is also one of the few technologies that could enable some industry sectors to decarbonize, including the refining, chemicals, cement and steel sectors.
ExxonMobil, in its notice of withdrawal to the Energy Minister, copied the chief executive officers of the Petroleum Commission and GNPC. In the conclusion to its letter ExxonMobil also registered its appreciation to the government.
“We sincerely thank the Republic of Ghana for the good and constructive relationship we have enjoyed over the years and appreciate your consideration and support for this decision. Please be assured of our continued support,” the notice of withdrawal said.
