The oil industry in Ghana has sparked ongoing debate, particularly with the rise of Springfield Exploration and Production Limited (SGL) and its bold statements about its oil discovery.
Over the last five years, the company has attracted significant attention with its announcement of potential massive oil reserves, initially estimated to hold around 1.5 billion barrels.
This projection was widely disseminated and became central to the company’s narrative. However, several prominent industry analysts and experts, including those from top firms such as Wood Mackenzie and IHS Markit, have raised concerns about the reserves’ commercial viability.
The contrast between Springfield’s optimistic projections and the more cautious views from the global oil intelligence community has led to growing doubts about the actual worth of the discovery.
Despite reentering the well, Springfield has not seen the anticipated results. Moreover, the oil found in the Cenamomeum play, which was expected to be a key target, turned out to be less than what was expected.
This outcome has only intensified skepticism surrounding Springfield’s claims about the reserves’ commercial potential. Further drilling beyond the initial layers has also yielded only small amounts of gas, which has lowered expectations for a significant discovery.
Despite widespread skepticism, the Ghanaian government has continued to place significant trust in Springfield’s optimistic oil reserve estimates, using these figures as the cornerstone for a range of policies and legal actions that have adversely affected the nation’s oil industry.
A key element of the ongoing issue has been the government’s strong position on unitisation, particularly regarding the Deepwater OCTP fields managed by Eni, a leading figure in Ghana’s oil sector.
In its efforts to link Springfield’s discoveries to existing oil fields, the government has engaged in a series of legal confrontations and regulatory initiatives that many industry insiders view as poorly designed and potentially harmful to the country’s future investment climate.
This controversy comes amid a significant downturn in Ghana’s oil industry. Once a promising sector that attracted global oil companies, it has now been referred to by some as an “investment graveyard,” with many major players scaling back their operations or leaving the country altogether due to regulatory uncertainties.
Exploration activities have slowed, and numerous large projects have either been delayed or completely scrapped. The decline of the sector reached a critical point in July 2024, when an international arbitration ruling dealt a severe blow to the government. The tribunal found that Ghana’s attempts to enforce unitisation, particularly regarding alignment with the OCTP fields, were mishandled.
The ruling left the Ghanaian government in a state of embarrassment. In its defense, the government claimed that it had the right to enforce unitisation, pointing to the tribunal’s recognition of it as a general principle.
However, this response largely ignored the specifics of the case, which had favored the OCTP partners. Many saw the government’s response as an attempt to salvage its image, yet it failed to address the core issues that led to the arbitration in the first place.
Despite the tribunal’s ruling, the Petroleum Commission, which oversees Ghana’s oil sector, directed Springfield to continue its appraisal program, which had previously been halted while the company sought legal clarification. This move marked a pivotal moment in the ongoing saga, as Springfield confirmed it would resume its efforts at the 2029 oil well.
However, the manner in which the situation has been managed has raised concerns throughout the oil industry. Experts are questioning whether the appraisal is being carried out with the necessary diligence and if it serves the best interests of Ghana’s oil sector.
One geophysicist, who spoke to The Herald under condition of anonymity, voiced significant doubts about the handling of the situation. “Recently, the cost of the reentry of the well at $50 million is exorbitant and does not optimise Ghana’s interest. That amount is enough to drill a whole new well.
A competent Petroleum Commission would be alert to transfer pricing and the procurement of services for the operation,” the geophysicist said. These remarks reflect growing unease within the industry about the financial structures surrounding Springfield’s operations and the potential for inefficient or inflated costs being passed on to the Ghanaian public.
Further investigations by The Herald into Springfield’s operations uncovered troubling signs of potential transfer pricing. All service contracts associated with the current appraisal program have been sole-sourced to Fairfax, a subsidiary of Springfield.
Fairfax, in turn, is responsible for setting the prices of the services provided by international service companies involved in the project. This raises questions about the transparency and fairness of the pricing structures being used.
Given that Fairfax is a related party, it is possible that Springfield is inflating costs, a practice that could ultimately undermine the financial interests of Ghana.
The situation has created a sense of unease and frustration within the Ghanaian oil sector. As the appraisal programme continues, industry insiders are left questioning the legitimacy of the entire operation.
Some have even gone so far as to suggest that Ghana’s oil wealth is being mortgaged before actual production can even begin. There is a growing concern that the country is being taken advantage of, with oil reserves potentially being misrepresented to facilitate political agendas and business interests.
At the heart of this issue is the question of what is actually happening on the ground with the reentry operations. Despite the fanfare surrounding the appraisal, there has been a conspicuous lack of clear communication from both Springfield and the government.
Industry insiders are reporting dead silence in the atmosphere, and some are even shocked by the outcomes of the operation so far.
Further reports indicate that the Petroleum Commission denied the mandatory daily report on the operations.
There are reports that some politicians, who have invested heavily in their loot in the past eight years in the project, are beginning to lose confidence after hearing the initial outcome of the appraisal, with one high-profile political figure even said to have lost focus in his bid to become Vice President of Ghana as a result of the disappointing developments.
According to sources familiar with the operation, the pressure at the well was found to be the same as it was in 2019, which suggests that the well may not be connected to a producing field, as previously hoped. “The pressure at the well is the same as it was in 2019, an indication that the well is not in dynamic communication with a producing field,” one source confirmed. This is a significant finding, as it undermines the central premise of Springfield’s oil discovery—that the well could be linked to the larger, commercially viable reservoir on the OCTP field.
“The worst of it is that the oil encountered in the Cenamomeum play is lower than expected,” the source added.
With these disappointing results, Springfield appears to be falling back on its old playbook of political manoeuvring to achieve its objectives. There are reports of the company using political pressure to push for forced unitisation of the fields, a strategy that has drawn sharp criticism from industry observers.
Senior executives from Springfield are reportedly tracking President Akufo-Addo’s visits to Azerbaijan and France, likely in an attempt to rally political backing for the company’s objectives.
Furthermore, there are ongoing initiatives to involve key traditional leaders from the central region of Ghana to exert political influence in favor of pushing for the unitisation of the oil fields.
These political maneuvers could ignite fresh tensions between the Ghanaian government and foreign investors. Should the government proceed with enforcing unitisation, it could lead to additional legal confrontations and further deter potential investments in Ghana’s oil industry. As sources from The Herald note, “Springfield has revived its previous strategy of leveraging political connections to secure forced unitisation of the fields,” which could escalate tensions in an already volatile climate.
Currently, the future of Ghana’s oil sector is uncertain. The nation’s capacity to draw in new investments, promote transparency, and manage its resources effectively hinges on how the government and industry stakeholders navigate these multifaceted challenges.
If Ghana fails to address the persistent issues plaguing its oil industry, such as potential transfer pricing, political meddling, and a lack of clear communication with investors, the country may find itself locked in a cycle of stagnation and missed opportunities.
As The Herald prepares to unveil more details about Springfield’s financial arrangements, the demand for greater transparency and accountability in Ghana’s oil industry has never been more pressing.
To fully realize the potential of its oil resources, Ghana must move away from a model driven by political maneuvering and instead embrace robust governance, technical expertise, and strategic, long-term investments. Only then can the country truly harness its oil wealth for the benefit of all its citizens.