Ghana seeks $ 1.7bn loan to acquire and develop oil and gas assets

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By Moses Mozart Dzavu, Ekou Donto and Yinka Ibukun on the 08/02/2021

(Bloomberg) – Ghana is seeking parliamentary approval for a $ 1.65 billion loan to accelerate oil and gas exploration through asset acquisitions and development.

The investment push came after Exxon Mobil Corp. withdrew from an offshore field in this West African country, hitting its burgeoning oil and gas sector. There are also growing fears that the pursuit of low-carbon energy could reduce the value of Ghana’s hydrocarbon resources over time.

The country estimates that it will take up to $ 1.3 billion to buy 37% of Aker Energy AS’s Deep Water Tano / Cape Three Points and 70% of AGM Petroleum Ghana Ltd.’s South Deep Water Tano field. , according to parliamentary minutes on Monday.

It’s time for Ghanaians to “become masters of their own destiny when it comes to our oil and gas resources,” Treasury Secretary of State Charles Adu Boachen told Bloomberg by telephone. “There will certainly be demand for fossil fuels in countries outside the West, which for the foreseeable future will continue to use diesel and gasoline-powered cars and consume energy generated from fossil fuels,” he said.

If approved, the shares will be acquired through Ghana National Petroleum Corp.’s subsidiary, GNPC Explorco.

Aker Energy is also in lengthy negotiations with authorities to cut development costs for its Pecan oil field, for which Ghana is now trying to borrow $ 350 million to cover capital expenditures, bringing the total required funds to $ 1.65 billion.

Ghana’s finance minister, Ken Ofori-Atta, warned last week that the country could be “left with idle assets” if it does not accelerate exploration amid the switch to renewables. According to BloombergNEF, the world’s nine largest oil companies sold $ 198 billion in assets between 2015 and 2020 in an effort to decarbonize in the long term.

A new strategy for the country to “become an operator by its own right” could require amendments to the law to allow the state oil company to enter into reserve-based lending deals that could raise funding without further putting pressure on the state wallet. Ofori-Atta said in his midyear budget speech on Thursday.

By the end of June, Ghana’s public debt stood at 77.1% of its output. The shortfall in oil revenues and the fallout from the pandemic resulted in last year’s budget deficit of 11.7% of gross domestic product, compared with the original forecast for 2020 of 4.7%.



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