GHANA’S NEXT OIL BET: SHELL AND CHEVRON TARGET SOUTH DEEPWATER TANO

Ghana is making another major push to revive its upstream petroleum sector, and this time, two global energy giants are at the centre of the story.

Source: Aldrenor

The Government of Ghana, GNPC, GNPC Explorco, Shell Overseas Holdings Limited and Chevron Sub-Saharan Africa Ventures Limited have signed a Memorandum of Understanding (MoU) for the South Deepwater Tano (SDWT) Block offshore Ghana.

The agreement provides a framework for the parties to negotiate exploration and production rights for the block. Importantly, the MoU is non-binding and does not yet constitute a final petroleum agreement.

Why South Deepwater Tano matters

Located offshore Ghana, the SDWT block covers approximately 3,482 square kilometres and lies in deep-to-ultra-deep waters.

The block is believed to hold more than 3 billion barrels of hydrocarbon potential. However, this figure represents estimated potential—not proven commercially recoverable reserves.

There is also an existing discovery to appraise. Previous operator AGM Petroleum drilled the Nyankom-1X well and made a hydrocarbon discovery before relinquishing the block in 2023.

Shell and Chevron will therefore have an opportunity to appraise the existing discovery while exploring the wider block for additional resources.

Why Ghana needs this

Ghana's oil production has been declining as its mature offshore fields age.

The country produced about 71.4 million barrels of crude in 2019, but production had fallen to approximately 48.3 million barrels by 2024.

For a country whose petroleum revenues contribute significantly to government finances, reversing this decline is becoming increasingly important.

New discoveries and developments are therefore critical if Ghana wants to maintain production levels over the long term.

Why Shell and Chevron?

Deepwater exploration is expensive, technically demanding and risky.

It requires advanced seismic technology, specialised drilling capabilities, subsea infrastructure and significant financial strength.

The participation of Shell and Chevron—two companies with extensive global deepwater experience—could provide Ghana with access to the capital, technology and technical expertise required to explore the block.

A changing investment environment

The MoU also comes as Ghana seeks to make its upstream sector more attractive to investors.

Government is proposing reforms to the petroleum fiscal regime, including reducing GNPC's initial carried interest in new upstream projects from 15% to 10%, alongside other proposed incentives for deepwater and frontier exploration.

The objective is straightforward - make Ghana attractive enough for companies to invest billions of dollars while ensuring the country still receives a fair share of the value created.

What happens next?

The hard work begins now.

Ghana and the companies must negotiate the definitive terms, including exploration commitments, equity participation, fiscal arrangements, development obligations and local-content requirements.

Only after these processes—and successful exploration and appraisal—can South Deepwater Tano potentially move toward development and production.

THE BGB TAKE

The Shell-Chevron MoU is an opportunity, not yet a discovery or a production deal.

If the resource proves commercially viable, South Deepwater Tano could become an important part of Ghana's next generation of oil and gas assets and help cushion the country's declining production.

But the ultimate measure of success will not be the signing ceremony.

It will be whether Ghana can turn deepwater potential into investment, production, revenue, jobs and lasting value for the Ghanaian economy.

BLACK GOLD BULLETIN... 

...where oil minds unite

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