Shell, Chevron Ink Initial Pact for Ghana Offshore Block Amid Output Decline

Oil majors Shell and Chevron have signed a non-binding agreement to acquire production rights over Ghana's South Deepwater Tano Cape Three Points oil and gas block. This move comes as Ghana looks to encourage investment and reverse declining output.

The memorandum of understanding with Ghana National Petroleum Corporation was signed on Tuesday, providing a framework for further negotiations of final licence terms. Shell stated that the agreement is subject to relevant approvals.

According to Energy Minister John Jinapor, the government is undertaking a comprehensive review of its legal and fiscal framework for upstream petroleum activities. Proposed reforms include reducing GNPC's initial interest in upstream projects from 15% to 10%, introducing a simpler tax regime, and adopting differentiated royalty treatment based on water depths.

Ghana's crude oil production declined from 71.44 million barrels in 2019 to 48.25 million barrels in 2024. However, major new investments in the Jubilee and TEN fields announced by Kosmos Energy could fund the drilling of up to 20 new wells and bolster output.

Chevron confirmed the MOU, saying it is 'constantly reviewing new global exploration opportunities'. The agreement marks a step towards increasing investment in Ghana's upstream petroleum sector.