The ITLOS Ruling Impact On Ghana

THE ITLOS RULING: IMPACT ON GHANA’S UPSTREAM PETROLEUM SECTOR
INVESTMENTS - THE PAST, THE PRESENT AND THE FUTURE

Gerald W. Adda - Petroleum Commission, Ghana ([email protected])
September 5, 2018.
Summary
The Special Chamber of International Tribunal for Law of the Sea (ITLOS) on September
23, 2017 ruled over the long standing maritime dispute between the Republic of Ghana
and the Republic of Cote D’Ivoire after both parties were unable to reach a resolution.
The Special Chamber prescribed a new maritime boundary based on the Equidistance
Method starting from a new land boundary terminus BP 55+. Prior to the final ruling, the
Special Chamber prescribed Provisional Measures over the disputed zone in September
2015. A consequence of this was a decrease in exploration and development activities
within the disputed zone in Ghana’s Western (Tano-Cape Three Points) Basin.
Background
The Republic of Ghana shares its western maritime boundary in the Gulf of Guinea Margin
with the Republic of Cote d’Ivoire (Fig.1). This boundary until September 23, 2017 started
from a land boundary terminus, BP 55. It has been reported that in 2009, Cote d’Ivoire
started to make representations to Ghana about their desire to alter the maritime
boundary. To resolve the matter, both nations had meetings over a five-year period
without resolution. After Cote d’Ivoire directly engaged offshore E&P license holders
within Ghana’s Western Basin, Ghana instituted proceedings against the former on
September 22, 2014. Both nations however, entered into a Special Agreement on
December 3, 2014 to submit the dispute to a Special Chamber of ITLOS. The Tribunal by
its Order dated January 12, 2015 established the Special Chamber and entered the case
as No. 23 in the List of Cases.
Impact of the Provisional Measures
The first oral hearing between both countries was held at the Special Chamber of ITLOS
in March 2015 after which the Special Chamber prescribed Provisional Measures over a
disputed maritime area on April 25, 2015.
1
The Provisional Measures among other things directed Ghana to ensure that there is no
new drilling within the disputed zone. The disputed zone encompassed all acreage
between the then Customary Maritime Boundary and the Bisector Line proposed by Cote
D’Ivoire. Portions (ranging from 9% -100%*) of seven Contract Areas (Fig.2) at various
stages of their work programmes within the western limit of the prolific Tano-Cape Three
Points Basin were affected.
Five of these Contract Areas were awarded between late 2013 – 2014 and the
Contractors had commenced the execution of their respective obligatory activities for the
Initial Exploration Phase. Collectively, the partnerships in these five Contract Areas had
an agreed minimum expenditure of approximately US$484 million for the first 2-3 years
and commitment of seven exploratory (7) wells. Due to the Provisional Measures about
10% of the amount was invested and none of the exploratory wells were drilled. This
affected the eventual discovery of oil and gas and the overall development of the
upstream petroleum sector. The Contractors were granted extensions to their exploration
periods mostly to periods after the final ruling.
Additionally, ~ 69% of the Deepwater Tano Cape Three Points Contract Area which is in
the pre-development phase was affected. Portions of the Cob oil discovery and the
entirety of the Pecan and Almond Oil Fields were affected. The latter two are planned to
be the hub for development to which five additional discoveries in the Contract Area will
be tied. Due to the uncertainty of the outcome of the final ruling, the operator of the field,
requested a suspension to their work programme and investment until after the final
ruling.
Perhaps the most impacted is the TEN Cluster of fields which was completely engulf in
the disputed zone. The TEN Cluster was approved for development in 2013 and is
expected to be produced utilizing twenty-four development wells. As of the time of the
Provisional Measures ruling, ten (10) wells, comprising five (5) producer-injector pairs had
been drilled and completed. These wells were used to commence production in August
2016. However, additional wells could not be drilled to ramp-up production. The
partnership could also not commit to additional investment due to uncertainty in relation
to the field location post the final ruling.
2
Impact of the Final Ruling
The maritime boundary prescribed by the Special Chamber was based on the
Equidistance Method starting from a new land boundary terminus. The result is negligible
loss of acreage in shallow water but gain in acreage further into deepwater. Fortunately,
apart from loss in time, no upstream projects or infrastructure within the then disputed
zone were negatively impacted by the new boundary. Following the ruling, partnerships
in previously affected Contract Areas gained renewed confidence and have resumed
operations in their respective areas. In the next few years, it is envisaged that additional
wells will be drilled in the TEN Field to bring it to full production capacity. Also, a Plan of
Development for the seven discoveries within the Deepwater Tano Cape Three Points
Contract Area is expected from its operator. The five exploring companies will undertake
their various exploratory programmes and drill the seven wildcats to establish the
hydrocarbon prospectivity of their respective Contract Areas.
Next Steps
The Provisional Measures ruling of April 25, 2015 and the earlier uncertainty regarding
the outcome of the final ruling negatively impacted investor confidence and resulted in
minimal investment within the disputed zone for close to two and half (2½) years.
Considering the attractiveness of Ghana’s offshore sedimentary basins and the
increasing investor interest, it is worth taking steps to delineate and establish the eastern
maritime boundary to decrease the political risk and boost investor confidence. This would
be a step in the right direction in preparation towards the first Licensing Round.
3
Fig. 1: Gulf of Guinea Margin showing the Ghana-Cote d’Ivoire Maritime Boundary.
Modified after Memorial of Ghana (2015).
4
Fig.2: Map showing the offshore Contract Areas in Ghana impacted by the
Provisional Measures. Modified after Counter-Memorial of the Republic of Cote
d’Ivoire (2016). Not to scale.
5
Fig.3: The new maritime boundary starting from BP 55+. Source: Petroleum
Commission, Ghana (2017).
6
Fig. 4: Key timelines of the maritime dispute.
Acknowledgement
My appreciation goes to the following people for their contribution towards this paper:
Mr. Egbert Faibille Jnr. and Mr. Prince Benjamin Aboagye of the Petroleum Commission,
Prof. Daniel Asiedu of the University of Ghana and Dr. Jemima Nunoo of the Ghana
Institute of Management and Public Administration.
*100% of TEN Development and Production Area (TEN DPA) was affected but not the entire Deepwater Tano
Contract Area within which the TEN DPA is located.

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THE ITLOS RULING: IMPACT ON GHANA’S UPSTREAM PETROLEUM SECTOR

INVESTMENTS - THE PAST, THE PRESENT AND THE FUTURE

Impact of the Provisional Measures

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