Making history in Ghana’s upstreamJanuary 22, 2020
Kevin Okyere, founder and CEO of Springfield Group, talks to TOGY about the company’s promising new discoveries, the challenges and opportunities in the Ghanaian market, and his message for African entrepreneurs and investors. Springfield Group is a Ghanaian company active across the oil and gas value chain. It operates West Cape Three Points Block 2.
What is your view of the announced policy changes intended to spur production in Ghana?
The upstream oil and gas sector is fairly new in Ghana and, like with any new industry, there are some teething issues. The fact that the government is working on reviewing laws and regulations to accommodate investors’ expectations is a positive indicator. We stand in a very peculiar situation as the only privately owned Ghanaian company in the upstream sector, so we appreciate the fact that the government is keen on making the changes necessary to attract more investment into the country.
How well placed is Ghana to become an oil and gas hub in the region?
Ghana has a very unique history. We were the first African country to gain independence, and one of the very few not to have had any civil wars. Security in Ghana is very good, so investors’ funds are secure here. Investors are comfortable coming to Ghana and are more comfortable working in Ghana than in many other countries.
In terms of business, everything is easier in Ghana. We have laid solid foundations and we enjoy an ease of doing business here. The government’s plan to make Ghana an oil and gas hub is a very good initiative and one that is achievable. Over the past few years we have seen a lot of activities geared towards that goal, including the entry of giants like ExxonMobil, which is a positive sign that the sector is growing.
How developed is Ghana’s supply chain for the upstream sector?
Despite oil and gas being a new industry here, there are some Ghanaian companies servicing the sector that are top notch. We use Ghanaian companies for most of our logistics and some of our equipment, and they met the same international criteria as foreign companies when our inspectors audited them. But people here are still becoming acquainted with the opportunities that are available.
The upstream sector is very capital intensive, but as time goes on businesses will be able to build the financial capacity to operate effectively in the market. Our banking sector also needs to come on board and understand the opportunities that exist to provide funding for service companies to enable them to fill these roles.
What role is Springfield Group playing in helping the government reach its production goal of 500,000 bopd by 2024?
A target like that is good because it enables the government to plan accordingly. At Springfield, we intend to add a lot to the country’s overall production, and I understand that Aker is looking at doing the same. Other asset owners may be engaged in that objective as well. The government’s aim is collectively achievable, and that is why they are trying to enhance the process of bringing these barrels of oil on stream by then.
Could you talk about Springfield Group’s journey from starting as a bulk distribution company (BDC) to having made history in the upstream sector?
Our journey to where we are today started back in 2006, before we even formed Springfield Group. We tried acquiring an oil block, but we did not have the financial or technical capability at the time, so we decided to build that capability. Two years later, we started Springfield Group and we started with the downstream sector. Then in 2010, we started officially trading in the BDC space.
We did well for ourselves in Ghana, so next we ventured out into landlocked countries such as Mali and Burkina Faso. To further our growth even more, we then went into Nigeria, which is the biggest oil and gas market in Africa. At the same time, we resumed pursuing our upstream ambitions in Ghana. We started that process in 2012, and four years down the road in 2016 we were awarded the asset that we have now [West Cape Three Points Block 2].
In 2017, we brought the biggest seismic vessel in the world at the time – the Ramform Titan from PGS – to shoot 3D broadband seismic. More recently, we brought the Stena Forth drillship to drill our Afina well. It has been a long journey, but we appreciate every minute of it.
What was the outcome of your Afina-1x well drilling campaign?
We just drilled Afina and more than doubled our existing discoveries, to the tune of 1.5 billion barrels of oil now in total, and we also added 0.7 tcf [19.8 bcm] of gas. We had the rig for 64 days and there were no accidents, HSE was fine and there was no downtime due to injuries. As this was our first-ever rig contract, we are very happy about it. Everything went successfully as planned, and we made a huge discovery.
The undiscovered potential on our block is about 3 billion barrels of oil in multiple proven leads and prospects. Our asset is almost 700 square kilometres in area, extending 65 kilometres into the ocean. We are situated right in between Tullow’s Jubilee field and Eni’s Sankofa field, and underneath us is the Aker field. Yes, there’s an exploration play, but it has been proven elsewhere within the same block.
The exciting aspect about this achievement is that it’s not just for Springfield, but is for the entire continent – to say that Africans can do things and we do them very well once we put our minds to it. We think that this will unleash the potential of Africa. We are going to inspire a lot of youth who see limitations and show them that there is nothing they cannot do if they pray, persist, have confidence and put a lot of work into it.
What is the quality of the oil like?
It is very light oil. This is a very significant discovery. As mentioned, our total volume in place is now about 1.5 billion barrels of oil and that is a lot of oil on any platform. We have very exciting times ahead.
What are Springfield Group’s development plans for its asset?
We are evaluating options. We just released the rig last Thursday [November 21, 2019]. There are existing FPSOs in the region and we are deciding whether to tie into an existing one or bring in a new one. We will be making our final decision on that very soon.
We believe in bringing our barrels into production as soon as possible. That is the only way that you can help society. The barrels need to be brought into production to enhance Ghana’s corporate investment initiatives and to invest in its people. This will also enable the government to get its royalties to carry out its social intervention projects.
Are you considering farming out part of your block?
All options are on the table. We own 84% of the block, while GNPC and its subsidiary Explorco own the remaining 16%. It’s a shared risk, shared rewards kind of approach. We will look at all options and opportunities, whether farming out, taking on debt or even getting listed, and then choose what we think is best for our company.
What future do you envision for Ghana’s gas market after your sizeable discovery?
There is huge potential if you look at what we discovered and what other operators may find. Gas creates a huge opportunity for employment and industrialisation because you have to lay pipes and build power plants, factories and fertiliser plants, all of which creates jobs and adds value to the economy. This would also enable us to export power or gas to neighbouring countries that may need this new energy.
Do you have further international ambitions for Springfield Group?
Our short-term plan is to cement our position in Ghana, but our near-term plan is basically looking out across the African region for opportunities. Then, we will look at all other opportunities worldwide. We have already been looking at some options, but we want to grow gradually. Our plan is to start with Africa and then go global.
What message do you want to send to indigenous companies to encourage them to pursue their aspirations?
We want to say to everyone that if Springfield can do it, you can do it much better. We believed in ourselves and we put together an amazing team. But what I want people to understand is that you are not going to get a “yes” often. Upwards of 99% of the responses you are going to get in this industry will be “no.” People are going to tell you that you have no experience and you will face all sorts of challenges, but you have to prevail.
It’s not easy; it’s difficult, but only for a period of time. After a while, you will be able to find ways to break through, and then it gets easier from there. It can be done. That’s the message we want to send out to the average Ghanaian or African looking at building a company and getting involved in the industry.