Italian energy major Eni SpA (E) reported its first oil discovery in the Offshore Cape Three Points (:OCTP) block, located in the Tano Basin, about 50 km off the Ghana’s coast.
This discovery is close on the heels of the Memorandum of Understanding (MoU) signed between the Government of Ghana and Eni as well as Dutch commodities trading company, Vitol. Per the MoU, Eni and Vitol will be responsible for the development and commercialization of natural gas resources discovered in the OCTP Block for the domestic market. The MoU primarily emphasizes on the domestic gas market, where Eni and its partners wish to participate in an aggressive manner.
The latest find holds significance as it has the potential for commercial growth, which was substantiated by the availability of oil, natural gas and condensates in the block. In order to establish the magnitude of the discovery and realize the viability of the commercial development, Eni intends to drill other wells immediately.
The discovery, which was made through the Sankofa East-IX well, was drilled to reach a depth of 3,650 meters, in 825 meters of water. A find of 28 meters of gas and condensate as well as 76 meters of gross oil pay was made in the Cretaceous sandstones.
During the production tests, wells generated a daily oil output of about 5,000 high quality barrels, although the flow rate was affected by inadequate surface infrastructures. The engineering studies for the growth and marketability of gas reserves of the block are ongoing, which is in sync with the ideology approved in the MoU, signed by Eni and its partners.
Eni, through its subsidiary Eni Ghana Exploration and Production Limited, operates OCTP Block, with a 47.22% stake, while its partners Vitol Upstream Ghana Limited and state company Ghana National Petroleum Corporation (:GNPC) hold 37.78% and 15% stakes, respectively. Further, GNPC has an option for an additional 5% share.
Eni – which recently inked a sale and purchase agreement with the U.S. super major Chevron Corporation (CVX) for 25% farm-in to three exploration blocks, LB 11, LB 12 and LB 14, offshore Liberia – holds a Zacks #4 Rank (short-term Sell rating). Longer term, we maintain our Neutral recommendation.
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