OPINION: It has been a tough week for oil executives experiencing challenges at operations off Ghana.
On Monday, Tullow Oil chief executive Paul McDade and exploration director Angus McCoss headed for the door after a plethora of issues at the Jubilee and Enyenra fields significantly eroded the Anglo-Irish independent’s output forecasts for the next few years.
The very next day saw Jan Arve Haugan step aside as chief executive of Ghana-focused Norwegian player Aker Energy, which has found its planned Greater Pecan development a far harder nut to crack than initially expected. All the departures were characterised as being, at least in part, of the executives’ own choosing. But all three have ultimately paid a price for failing to adequately navigate the challenges posed by working in Ghana’s offshore.
In Tullow’s case, what started as a review of production plans and assumptions at its cash-cow Ghanaian assets swiftly unearthed problems that led to a strategic review of the whole business. Its forecast output from next year up to 2024 has been slashed by up to 30%, with the reserve base at the Enyenra field set to be downgraded by the same amount.
The share price fared far worse, dropping up to 70% the day Tullow released the bad news.
Hoped-for regulatory reforms in Ghana failed to transpire to the extent necessary for Aker Energy to see its ambitions of an area-wide floater development at its operated Deepwater Tano-Cape Three Points (DWT-CTP) block come to fruition, parent company Aker ASA admitting it had “underestimated… the complexity of such a holistic approach”.
For Tullow, any new boss is likely to find the major repercussion of failures in Ghana will be the squeeze put on pursuing what are undoubtedly exciting exploration and development opportunities elsewhere in its portfolio — namely in Guyana, Uganda and Kenya. For Aker Energy, the ability to get anything off the ground on DWT-CTP is at stake.
For Ghana, then, it was a good week for local player Springfield E&P to peg in-place resources at its recent Afina discovery at 1.5 billion barrels of oil and 700 billion cubic feet of gas.