Italian energy major Eni SpA (E - Free Report) and Dutch commodities trading company Vitol have inked a Memorandum of Understanding (MoU) with the Government of Ghana. The government representatives include the Minister of Energy, and Ghana National Petroleum Corporation (“GNPC”).
The license of Offshore Cape Three Points (OCTP) Block spans over 268 square miles, reaching water depths of 160–4,500 feet. Eni – the operator of OCTP Block – holds a stake of 47.22%, while its partners Vitol and GNPC hold 37.78% and 15%, respectively.
Per the MoU, Eni and Vitol are responsible for the development and commercialization of natural gas resources discovered in the OCTP Block (located in the Tano Basin of Ghana) for the domestic market.
The MoU underlines the key ideology for the prospective development of the contracted area and marketing of the discovered gas. The MoU places special emphasis on the domestic gas market, where Eni and its partners wish to participate in an aggressive manner.
Eni’s signing of the MoU is in sync with its strategy of maintaining a lead in exploring indigenous gas resources and aiding the socio-economic advancement of the region where it operates.
Eni’s presence in Ghana dates back to 2009. Currently, the company controls two exploration blocks— OCTP and Offshore Keta — with daily operated output of about 450,000 barrels of oil equivalent in the region.
The company has been operating in Sub Saharan Africa since the 1960s and is now carrying out exploration and production projects in Angola, Congo, Ghana, Gabon, Mozambique, Nigeria, Democratic Republic of Congo, Togo, Kenya and Liberia.
With Ghana emerging as a regional energy powerhouse, Eni has advantageously positioned itself to benefit from the rising gas activities in the region. The country turned into an oil exporter when its first consignment of oil from the gigantic Jubilee field was shipped in January 2012. The field is estimated to hold significant gas reserves, which the partners plan to exploit in the future.
Eni – which recently inked a sale and purchase agreement with the U.S. super major Chevron Corporation (CVX - Free Report) for 25% farm-in to three exploration blocks, LB 11, LB 12 and LB 14, offshore Liberia – holds a Zacks #3 Rank (short-term Hold rating). Longer term, we maintain our Neutral recommendation.