Monday, August 16, 2010

Will Ghana choose China over ExxonMobil for Kosmos’s Jubilee stake?

By Emmanuel K. Dogbevi

The government of Ghana about a week ago indicated in a press release that it will soon decide on the Kosmos Energy-ExxonMobil Jubilee stake issue that has become thorny over the period.

The government pledged to do ‘whatever it takes within the law to protect the national interest at all times,’ in the matter of the sale of Kosmos Energy’s stake in the Jubilee oil field to ExxonMobil.

And now there are speculations within the global oil industry that the government is likely to settle on the China National Offshore Oil Corporation (CNOOC) against Kosmos’ choice ExxonMobil. Indeed, government officials in the past have indicated their preference for the Chinese who have expressed interest in buying the stake.

At the height of the clamour for the stake, the Chairman of CNOOC, Fu Chengyu for the first time publicly declared in August last year that China was placing a bid for the stake.

Since Kosmos Energy put up for sale its stake in the country’s largest oil field, the Jubilee oil field which is also the largest oil field to be discovered in West Africa in the last 10 to 15 years, the field which according to Tullow Oil has about 1.5 billion barrels of oil and has 17 wells, the sales issue is yet to be resolved.

When news first broke in 2009 that Kosmos was selling its stake, the company denied the reports. The closely held Texas based company kept secret its intentions insisting the stake was not for sale. But it turned out Kosmos had opened its data room to Texas neighbours ExxonMobil much to the consternation of the Ghana National Petroleum Corporation (GNPC), Ghana’s national oil company, which is one of the stakeholders in the field.

Kosmos Energy offered to sell to ExxonMobil against the terms of the agreement binding the consortium holding stakes in the field, and the government of Ghana did not hide its displeasure with Kosmos’s action.

According to the terms of the agreement, any one member in the consortium who intends to sell its stake must first make the offer to members. It is only when members have no interest in buying or are unable to buy that outsiders would be invited to bid for the stake on sale and Kosmos has been accused of flouting the agreement by secretly making the offer to ExxonMobil.

The government subsequently, halted the deal between the Texan companies. And a section of the American media went on the offensive slamming Ghana and dragging the country’s image into the mud. There were even articles in some US media blaming President Obama for causing the halt.

But the drama must end at some point as the country begins commercial production of oil in November or December barring any other difficulty.

The government set up a committee to look into the matter. The committee has presented its report on which government will take a decision soon, and it could decide for China which has not hidden its interest in Ghana.

Relations between Ghana and China goes over 50 years and the two countries recently celebrated it. In recent times bilateral trade between Ghana and China has grown, recording in excess of $1.6 billion last year.

Chinese businesses in the country have invested in over 400 projects.

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