Recommendations for a Strategic and Risk-Managed Approach to the Afina Acquisition

The Government of Ghana faces a critical decision regarding the potential acquisition of Springfield Energy’s Afina-1 oil discovery in the Deepwater Tano/Cape Three Points Block. While securing national control over this potentially significant hydrocarbon resource aligns with legitimate strategic objectives, pursuing an outright purchase of the asset in its current stage of development carries substantial technical, financial, and governance risks. Afina remains an appraisal asset, lacking sufficient data to confirm commercial viability, a proven development plan, or a sanctioned final investment decision. Adopting a structured, phased approach—rooted in global best practices—offers a pathway to de-risk the transaction, maximize value, and safeguard public resources.We recommend the following framework for proceeding with the Afina asset:

1. Adopt a Convertible Loan Structure as the Primary Acquisition MechanismRather than committing to an immediate outright purchase, the Ghana National Petroleum Corporation (GNPC) should structure its engagement with Springfield Energy as a convertible loan. This instrument would provide funding for a comprehensive appraisal program while deferring any permanent ownership commitment until key uncertainties are resolved.
   • Rationale and Global Precedent: Convertible loans are a widely recognized mechanism for managing high-risk, pre-commercial upstream assets. A prominent example is the United Kingdom’s approach to the Rosebank field, where Equinor and Suncor conducted phased appraisal and front-end engineering design (FEED) studies—supported by conditional financing—before advancing to a fully funded development decision. Similarly, Norway’s Equitable Resource Management Framework has successfully employed staged financing arrangements, where state participation is scaled incrementally following the completion of appraisal and certification of commercial reserves.
   The convertible loan should be explicitly conditioned upon achieving predefined milestones: a successful appraisal program demonstrating commercial viability, an independently verified reserves estimate, and the completion of a robust development plan.
2. Implement a Rigorous, Independent Appraisal and Validation ProcessTo mitigate the inherent risks of acquiring an unproven asset, any financial commitment must be preceded by a thorough, independent appraisal campaign.

   Recommended Actions	Purpose
   Secure an independent third-party reservoir engineering firm to design and oversee a multi-well appraisal program, including appraisal drilling, extended well testing, and dynamic reservoir modeling.	Establish a robust technical foundation to quantify recoverable volumes, production profiles, and development costs.
   Require certification of contingent resources by multiple internationally recognized competent persons.	Provide objective, auditable evidence of commerciality.
   Conduct an independent economic evaluation, including full-cycle cost analysis and sensitivity testing across a range of oil price scenarios.	Ensure the asset’s viability under realistic market conditions.

3. Establish Comprehensive Governance and Oversight MechanismsEffective stewardship of the acquisition process is as critical as its technical and financial components. The following measures will ensure transparency, accountability, and value preservation:

   Key Governance Requirements	Supporting Mechanisms
   Multistakeholder Oversight Committee	Comprising representatives from the Ministry of Energy, GNPC, Petroleum Commission, Ministry of Finance, and independent technical/financial advisors.
   Independent Transaction Advisory	Engage globally recognized firms (e.g., Wood Mackenzie, DeGolyer and MacNaughton, or Rystad Energy) to provide an arms-length valuation of the asset and review all appraisal outcomes.
   Explicit Exit Clauses and Valuation Protocols	Define clear conditions under which the loan would not convert to equity, including failure to meet commerciality thresholds, and establish independent valuation procedures to determine conversion terms.

4. Strategic Benefits of the Recommended Approach

By pursuing a convertible loan and phased appraisal strategy, Ghana can achieve several critical objectives:

• Risk Mitigation: Exposure to the asset’s significant subsurface uncertainties is limited until commercial viability is unequivocally demonstrated, avoiding the premature capitalization of contingent resources that have yet to be proven.
• Value Maximization: Appraisal success would position Ghana to negotiate an acquisition at a valuation informed by independently verified reserves and development economics, rather than speculative or seller-determined figures.
• Alignment with Fiscal Prudence: This approach conserves scarce public resources by deferring major capital commitments until technical and economic validation is complete, thereby reducing the risk of overpayment or stranded investment.

Global experience demonstrates that disciplined, milestone-driven approaches to high-risk asset acquisition yield superior outcomes. Norway’s state-owned Equinor has consistently applied such principles, participating in frontier developments only after rigorous appraisal and de-risking, resulting in a portfolio characterized by high success rates and economic efficiency.In conclusion, the Government of Ghana should refrain from pursuing an outright purchase of the Afina asset at this stage. Instead, a convertible loan structure, underpinned by a comprehensive and independently verified appraisal program, provides a prudent and internationally recognized pathway forward. This approach balances the strategic imperative of securing national ownership of a potentially valuable resource with the fundamental requirement to avoid premature and potentially value-destructive commitments.Should the Government elect to proceed, establishing a clear governance framework—anchored by independent technical validation and transparent decision criteria—will be essential to ensuring that any participation in Afina delivers measurable and sustainable benefits to the nation.

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This advisory post provides a clear, structured recommendation that prioritizes risk management while preserving the opportunity to acquire the asset on favorable terms. It draws on established international practices, such as phased appraisal, independent certification, and convertible financing, to offer a practical and defensible path forward that aligns with both technical realities and fiscal responsibility.Share and Comment so together we build Ghana!