Ghana signs $7bn contract with Eni to produce oil, gas at Cape Three Points

The government of Ghana has signed an agreement for the development of the Offshore Cape Three Points (OCTP) integrated oil and gas project.

The US$7 billion project, being undertaken by Italy's largest oil company, Eni Spa, in collaboration with Vitol Energy, will see the development of the Sankofa and Gye Nyame fields. The fields contain enough gas to continuously supply Ghana’s thermal power sector until at least 2036.

In addition to the energy source, Ghana will benefit from enhanced oil production, Ghana National Petroleum Corporation’s (GNPC) participation in the project, and royalties and taxes generated by the oil and gas production.

The Chief Executive of GNPC and the Minister of Petroleum, Mr Emmanuel Armah-Kofi Buah, signed for Ghana, while the Executive Vice-President of Eni Spa in charge of Sub-Saharan Africa, Mr Ciro Antonio Pagano, and the President and CEO of Vitol, Mr Tan Taylor, signed for Eni and Vitol respectively.

Oil production from the OCTP is estimated at 80,000 barrels per day and will start in 2017, while gas comes on board in 2018. The project will deliver 170 million cubic feet of gas per day and it is expected to generate an additional 1,100 megawatts of power for Ghana.

Gas will be processed and transported via a dedicated pipeline to onshore gas-receiving facilities located near Sanzule, a coastal village in the Western Region. The gas will also be compressed and injected into the Western Corridor Gas Pipeline for transportation to industrial customers in Ghana. Crude oil will be stored in the FPSO and offloaded to tankers for sale on the international market.

This is the first major development of gas in Ghana and will enable the transformation of the economy.

Herbert Smith Freehills advised Vitol Energy in the transaction.