By Samuel Lartey(Prof)
Ghana has signed a fresh Memorandum of Intent (MoI) with Eni and its Offshore Cape Three Points (OCTP) partners—Vitol and GNPC to expand oil and gas production and roll out sustainable energy initiatives.
The agreement, witnessed by President John Dramani Mahama, comes at a pivotal moment: government is pushing a “reset” program to restore macro-stability, reduce energy-sector arrears, and lower the cost of doing business while protecting households. The pact signals a pragmatic course, using domestic gas more efficiently now, while preparing for a greener future.
What exactly was signed and why now?
The MoI frames a comprehensive, integrated investment plan to (i) lift OCTP’s oil and gas output, (ii) integrate offshore–onshore operations, (iii) evaluate new exploration (including Eban-Akoma in the Cape Three Points 4 block), and (iv) add sustainability projects.
It aligns with a July 2025 announcement that Ghana would boost Eni gas supply by ~30 mmscf/d (effective July 13, 2025), and with Mahama’s stated goal to maximize domestic hydrocarbons while the energy transition accelerates.
Why now?
Energy demand is rising (2025 system peak load is projected at ~4,125 MW), while sector debts and forex pressures remain binding. More reliable domestic gas helps displace pricier liquid fuels in power plants, dampening forex outflows and stabilizing generation costs—key for the “reset” agenda.
OCTP in numbers and what we’re working with
Ownership & footprint. Eni (44.4%), Vitol (35.6%), GNPC (20%). Eni has operated in Ghana since 2009; OCTP integrates oil fields with non-associated gas dedicated to the domestic market.
2.1 Resource base.
Early technical estimates put OCTP around ~1.5 Tcf gas and ~500 million barrels oil (project-level estimates; actual recoveries depend on development and prices).
Offshore Technology
What’s already flowing. Ghana’s gas supply averaged ~384 mmscf/d in 2024 across sources, up ~8% y/y. Non-associated gas production in 2024 averaged ~237 mmscf/d, with associated gas at ~137 mmscf/d (budget outturn). OCTP’s incremental 30 mmscf/d, if sustained, is material.
Context matters.
OCTP has not been free of friction, the 2024 arbitration ruling sided with Eni/Vitol in a unitization dispute, so a forward-looking MoI that resets collaboration is strategically significant.
The reset agenda: plugging the energy-sector hole
The government is targeting a reduction of ~$2.5 billion owed to IPPs and gas suppliers by end-2025, after restructuring ~$1 billion earlier. ECG’s ~40% revenue loss has been singled out, with private participation in billing under consideration. IMF reviews stress tariff realism and arrears clearance as keystones of stabilization.
Tariffs in 2025.
A comprehensive PURC review slated for September 2025 goes beyond routine quarterly adjustments, covering capacity charges, liquid-fuel reliance, and CAPEX, because legacy under-recoveries remain. A stronger cedi helps, but sector-wide reform (collections, losses, procurement discipline) is decisive.
How more domestic gas can bend the cost curve
Fuel switch economics. Displacing imported light crude oil (LCO) and diesel with indigenous gas reduces forex outflows and exposure to oil-price swings—supporting cedi stability and lowering the system’s variable cost over time. (World Bank documentation on Sankofa’s early years also shows why timely market offtake and payment discipline are crucial to avoid “take-or-pay” burdens.)
Reliability dividend.
Additional ~30 mmscf/d can support several hundred MW of gas-fired generation depending on plant heat rates, improving voltage stability and reducing load-shedding risk—conditions that drive business confidence and tax receipts.
Business implications—cost, planning, and local content
Cost of power & planning certainty.
If PURC aligns end-user tariffs with a lower fuel-cost trajectory (and losses fall), firms can plan with clearer medium-term electricity price paths. That underpins investment in cold-chain logistics, manufacturing, and digital services that are power-sensitive. IMF monitoring will keep policy on-track.
FX exposure.
Less LCO import reduces corporate FX risk and working-capital strain tied to fuel price spikes, especially for energy-intensive SMEs. The Energy Commission’s rising demand outlook reinforces the value of stable domestic fuel.
Upstream & services jobs.
New drilling, subsea tie-backs (e.g., Eban-Akoma), and onshore integration can stimulate local fabrication, logistics, and engineering services under Ghana’s local-content rules provided payment flows are predictable.
Household implications—tariffs, reliability, and welfare
Tariff path.
A credible shift to cheaper domestic gas and fewer technical/commercial losses can moderate tariff pressures versus a counterfactual of heavy liquid-fuel use. But near-term PURC adjustments may still be needed as arrears are unwound and true costs recognized. Expect some “pay now, save later” dynamics in 2025–2026.
Clean Air Task Force
Reliability & appliances. Fewer outages lower appliance damage, reduce generator/diesel spending, and improve study time for students. Welfare gains are real though diffuse, and they accumulate when blackouts decline.
Cooking fuels & by-products.
Gas processing yields LPG and condensates, supporting LPG availability if payment and evacuation logistics are managed—PIAC has tracked these flows and pricing gaps (WACOG vs. actual tariffs) that policy must close.
Risks and what to watch
Payment discipline.
Without durable arrears clearance and collections reform at ECG, new gas volumes won’t translate into lower system costs or tariffs.
Tariff politics vs. math.
The September 2025 review will test Ghana’s resolve to price electricity transparently while protecting the poor lifeline tariffs and targeted subsidies should be sharpened, not blanket under-recoveries.
Clean Air Task Force
Timely tie-ins (e.g., Eban-Akoma), FPSO maintenance, and pipeline integrity are execution risks to the promised incremental supply.
Legal/contractual stability.
The 2024 arbitration experience shows why steady fiscal and contractual frameworks matter for cost of capital and investment pacing.
The macro/financial angle
Growth & inflation.
The finance ministry’s “shock-therapy” reset aims for faster growth and lower inflation; energy reliability and cost are central inputs to both. The government faces $8.7 billion in external debt service over four years, so every dollar of avoided fuel import and reduced losses helps.
Balance of payments.
More domestic gas in the generation mix cuts refined-product imports, easing pressure on reserves and the cedi magnifying the benefit of improved tax collection from a more productive, powered-up economy.
8.3 Capital formation.
Reports suggest the agreement could catalyze ~$1.5 billion in upstream/processing spend if projects reach FID crowding in local services and supply chains. (Monitor official confirmations and FIDs.)
Conclusion
The Eni–OCTP MoI is not just another oil-and-gas headline; it is an energy-system productivity play that can reinforce Ghana’s reset agenda if coupled with tough but necessary reforms: enforce collections, right-size tariffs with targeted protection for the vulnerable, pay down arrears, and keep projects on schedule.
Done well, the payoff is tangible, steadier power for factories and clinics, less FX burnt on fuel imports, fewer blackouts for households, and a clearer investment signal for Ghana’s next growth chapter. The molecules are there; now the discipline must match.
The post New energy pact with Eni: What it means for businesses, and households appeared first on The Business & Financial Times.
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