Gondwana’s rights over Tano Basin Block in Ghana confirmed
Ghana’s oil sector regulatory environment has come under pressure and will be experiencing changes in the next few months, particularly as the Ghana National Petroleum Company (GNPC) wants to grow on the basis of an actual business plan rather than government subsidies and taxpayers’ money. This may account for the confusion generated by a statement issued by the Ministry of Energy and Petroleum of Ghana dated April 10, 2014, which alleged that Gondwana’s subsidiary, Miura, has not approached the Ministry to negotiate the rights to the OCTPS Block. Effectively, the announcement says that Miura has not even applied for the exploration license, let alone secured it. On April 29, not surprisingly, Gondwana Oil Corp. (“Gondwana”, TSX: GO) was able to report that the Ministry has removed the announcement from its website and that “Gondwana continues to work cooperatively with Miura and the Ministry with respect to Miura’s application”.
The news was as surprising to Gondwana as it was to observers; however, the fact that such confusion has arisen, reflects the growing pains of the Ministry of Energy (MOE) itself. There is reason for optimism. Apart from the fact that Gondwana was genuinely surprised by the allegations, Miura Petroleum was confident that there was a misunderstanding related to pressure beyond the MOE itself. The fact that the MOE has ultimately confirmed that there was a misunderstanding beyond its control – proves that Gondwana enjoys good standing with the Ghanaian government and that it will be afforded all relevant consideration in the bidding process.Gondwana owns a 70% stake in Miura Petroleum Ltd., which, by all accounts, acquired the rights for an offshore exploration license at West Cape Three Points off the Ghanaian coast for the South Block, which comprises about 1,600 square kilometers.
As the MOE and Ghana itself learn to cope with the deep societal changes that rapidly emerging oil industry creates, problems will arise; especially, when the stakes and the quality of the resources so high, fueling competing interests. Indeed, the best reason for investors to remain confident is that as Troy Grant, Gondwana’s President and CEO has stated, “the State of Ghana is widely regarded as one of the most business friendly and transparent jurisdictions” in Africa. Junior oil companies such as Gondwana have attracted many investors who understand the opportunity represented by Ghana and the possibility that the Company could be sitting on another Jubilee field, as was discovered by Kosmos Energy in 2007.
Ghana and West Africa in general have become very important among the world’s emerging oil producers. Gondwana Energy will focus its activity in the Offshore Cape Three Points South Block (OCTPS), in one of the most important oil prospecting areas in the region. Gondwana announced that the Ghanaian Ministry of Energy confirmed the exploration license for the Block last March 18. Gondwana Energy will focus its activity in the Tano Basin, which presents over twenty discoveries of oil, liquids, and gas, including the Jubilee Field (2007), which is currently producing approximately 110 thousand barrels per day.
It is a very “big deal” for a junior like Gondwana to have acquired the rights to explore acreage of the Tano Basin’s quality, occupied until recently only by such oil majors as Italy’s Eni or Hess Corporation. Meanwhile, the improving US consumer confidence data suggests that as the US economy continues to show good performance, it will support greater private consumption and more oil demand. In addition, prices for gasoline are increased recently due to the strong decrease in stocks and a stronger demand. The only down side could be that tensions in Ukraine may push Russian oil demand down due to an expected weaker economic growth in Russia. Moreover, for oil producers, the established oil-producing regions of the Middle East and North Africa pose continued geopolitical risks. They have tried to confront this by searching sources in stable regions such as West Africa – a stable region compared to others – which has established itself as the new production site in the Atlantic. Gondwana Oil has the potential to become a major player in West African and Atlantic oil production, which has put it in the proverbial spotlight, such that misunderstandings can arise.
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