There is a real test case on the hands of the government which can shake the foundations of its much-touted reset agenda. The Springfield Takeover may appear simple on the surface, but deep down, the undercurrents put the government in a very tight situation.
The government, through the Ministry of Energy and Green Transition, has announced plans for the state to take over the West Cape Three Points oil block 2 (WCTP 2) operated by Ghanaian-owned Springfield Exploration and Production (SEP) following delays in the development of the field.
The government says it wants to speed up the processes in the development of the field and bring to onstream to curb the decline in production in the country’s crude oil, resulting in dwindling revenues.
For now, the state says the Petroleum Commission and the Ghana National Petroleum Commission, GNPC, are jointly collaborating to appoint a “reputable Technical Consultant” and an “independent Transactional Advisor.” The mandate of the consultant and the advisor, among other things, is to conduct a full cost audit and verification of past expenditures, financial due diligence on the assets, and an independent valuation to determine the fair and equitable value of Springfield’s interest.
The mandate suggests the state’s intention to buy the block from Springfield and pay the company out of the field.
The Pushback
But it seems the approach of the government is not sitting well with some Civil Society groups and some energy sector players. For instance, the Africa Center for Energy Policy (ACEP) does not see the need why the government should purchase the block after Springfield has defaulted in its contractual agreement to develop the field.
Executive Director of ACEP, Benjamin Boakye, insists that an acquisition is a bad move. In his justification, he argues that the oil block belongs to the state and contractors are supposed to take the risk and share the benefits with the state only when they succeed.
However, if contractors fail, it is the state’s duty to repossess the asset and not underwrite the losses of the private contractor.
The Undercurrents
Sources say the story goes deeper than expected. It is emerging that there are invisible hands pushing the government to purchase the block for their own interests. These are people who are alleged to be very close to the current government and have invested heavily in Springfield. This means that a takeover of the field without any payment is a lost investment for them.
Their strong push is targeted at getting the government to buy back the block so that they can recoup their investments.
Other sources also reveal that the recent ordeal of the founder and Chief Executive Officer (CEO) of Springfield, Kevin Okyere, is playing a crucial role. The man has been a subject of numerous alleged fraud cases in Ghana, Dubai, and the UK involving millions of dollars.
Insiders say there is also a strong push from within to sell the block so that the proceeds can be used to settle the numerous alleged fraud cases.
Other Interests
The High Street Journal also gathers that there are other international oil companies interested in taking over the WCPT 2. These companies include ENI and others. But there is a twist.
The international oil giant, ENI, despite its interest, is not willing to take over the block from Springfield due to what can be described as the “toxicity” with Springfield. It will be recalled how the two companies clashed over their neighbouring oil fields.
The then Minister for Energy ordered them to unitize the Sankofa and Afina Reservoirs on the basis that they shared the same geological pool. Springfield sued ENI when it resisted the directive, leading to years of dispute.
ENI may be willing to take over the block only from the government. This means that the government must take over the block first before it can deal with ENI.
The Dilemma of the Government
The situation puts the government in a tight corner. On one hand is the pressure from within the administration, from persons with interests, pushing for the government to acquire the block so that they can recoup their investment.
On the other hand is the opposition by CSOs and energy sector players who are “up in arms” against the move, citing how it contradicts the country’s Petroleum (Exploration and Production) Act, 2016 (Act 919). Per the laws, when a contractor fails to meet the contractual terms, the block reverts back to the state to repossess and not pay for the expenses before reclaiming the assets.
This situation mirrors a similar incident during the previous administration over the GNPC-Aker Energy deal, where pressure from civil society organizations forced the hand of the then administration to backtrack its earlier decision.
Will the interest of connected persons pushing for the transaction carry the day, or will the mounting pressure from CSOs prevail?
This developing tension puts the government’s reset agenda, especially in the energy sector, to the test. For now, the pressure from persons with interests is piling, and the resistance is also growing.
The whole nation is watching the next move of the government.
