Africa Confidential alludes to politics over cancellation of Kosmos, ExxonMobil Jubilee oil field deal

By Emmanuel K. Dogbevi



The West is encouraging democracy, freedom of association and choice but not when it comes to other developing countries’ oil. And in the case of Ghana, both some politicians in the West and the Western media are showing how much interested they are in the country’s nascent oil industry, and so are not interested in Ghanaians making choices for themselves.

The London-based Africa Confidential is the latest to wade into the botched Kosmos Energy-ExxonMobil Jubilee deal, with an article suggesting politics behind the cancellation of the deal.

The two Texas-based oil companies had signed a secret deal in which Kosmos was selling its stake in Ghana’s largest oil field, the Jubilee field, which according to the major stakeholder, Tullow Oil contains 1.5 billion barrels of oil and has 17 wells.

The government of Ghana which is a partner in the field, saw something wrong with the deal and exercised its prerogative by refusing to endorse the secret deal, which it said was in violation of the terms of agreement binding the partners in Jubilee.

But a section of the Western media, particularly, the right-wing American media would have non of it and has been bad-mouthing Ghana for a while now. Surprisingly, the respected African Confidential has joined in the melee to seek to sully Ghana’s hard won international reputation.

Interesting development, it looks like coming in the heels of the controversial Standard and Poor’s downgrading of Ghana’s credit worthiness.

In the August 27, 2010 issue, the publication wrote “The announcement on 17 August by ExxonMobil that it is abandoning its campaign to buy a 23.5% stake in the Jubilee field, Africa’s biggest offshore oil field, is likely to precipitate a bid by the Ghana National Petroleum Corporation (GNPC), backed by the China Offshore Oil Corporation (CNOOC), Africa Confidential has learned.

Although some interpret the move as another tactical victory for China against big Western oil companies, ExxonMobil’s problems are due more to Ghana politics than geopolitics.”

The government of Ghana officials have indicated that Kosmos breached the terms of agreement binding stakeholders in the Jubilee field by opening its data room to ExxonMobil. According to these officials, any one member in the partnership who intends to sell its stake must first open its data room to other members of the consortium. It is only when the member or members fail to buy or are unable to buy the stake that an outsider would be invited.

While the issue was still being discussed after the government of Ghana refused to endorse the deal between Kosmos and ExxonMobil, Kosmos reportedly apologized to the Ghana government in March. What Kosmos apologized about is still not known.

Dr. Joe Oteng-Adjei, Energy Minister told the Dow Jones Newswires on the sidelines of an oil conference, “They sat down with the president and said they were sorry.” He did not say what Kosmos was sorry for.

The allusions of Africa Confidential to political reasons is hard to tell, even though the publication dragged in the EO Group and its association with former President Kufuor.

It writes, ExxonMobil’s entreaties to Accra have dragged on since last September, when a top delegation of the company surprised President Atta Mills, then in New York for the United Nations General Assembly, by telling him its company had secured a 23.5% stake of the Jubilee field in secret negotiations with Kosmos.

This infuriated GNPC officials, at loggerheads with Kosmos. Moreover, the governing National Democratic Congress (NDC) is deeply suspicious of Kosmos’s local partner, EO Group, which brought the company to Ghana and secured from it a 3.5% stake in the West Cape Three Points block (AC Vol 51 No 15).

EO’s directors, George Owusu and Kwame Bawuah-Edusei, are supporters of the opposition New Patriotic Party and close to former president John Kufuor. They stood to gain $200-300 million if Kosmos was able to sell its stake to ExxonMobil. NDC officials were convinced that a substantial part of this would find its way into the NPP’s campaign coffers before the 2012 elections.

Ghanaian officials call Kosmos’s deal with EO Group ‘the original sin’. They see the association as politically tainted and question why Kosmos was able to secure fiscal terms that were $3.8 bn. better on its West Cape Three Points field in 2004 than the terms secured a year later by its counterpart, Ireland’s Tullow Oil, on Deepwater Tano, an adjacent field of similar prospectivity, it added among other things.

While the a section of the interested parties in the West including sections of the media believe in protecting their parochial interests, the Ghana government has a responsibility to Ghanaians, and must do whatever it takes to protect that interest.

Commercial production of oil is due to begin in November or December this year, and but already it looks like for some interest groups in the West, the stakes are higher!

Tullow Oil, Ghana EPA in permit tango - Who is saying the truth?

By Emmanuel K. Dogbevi

Tullow Oil, the British oil and gas exploration company operating in Ghana has responded to accusations by Ghana’s Environmental Protection Agency (EPA), that it presented inaccurate Environmental Impact Assessment (EIA) reports to the International Finance Corporation (IFC) of the World Bank to acquire a loan of $115 million.

The EPA on April 7, 2009 accused Tullow Oil and its partner, Texas based Kosmos Energy of presenting inaccurate EIA reports to the IFC to secure loans to the tune of $215 million to finance their activities in Ghana.

According to the EPA the two companies are at the second stage of completing comprehensive EIA reports.

On a Joy News bulletin monitored by ghanabusinessnews.com Tuesday April 7, 2009, Mr. Ebenezer Acquah Sampong, who is Head of Environmental Assessment at the EPA said the two companies would be compelled to complete the EIA before they are allowed to start operations.

He said the Environmental Assessment Regulation of 1999 requires that before any company embarks on any project of that nature, it goes through the full EIA procedure and is given a permit.

He said the procedure requires that companies register, and then they do a scoping exercise and submit a scoping report with a terms of reference for the study. He said however, before a ‘scoping report’ is submitted “extensive consultations ought to be done with all major stakeholders to know their concerns about the project.”

He said the companies have done that and submitted a report, but they were told to go back and do wider consultations at all levels at the national, regional, and district levels.

Seeking to clarify this matter, ghanabusinessnews.com wrote to Tullow Oil and Kosmos Energy to get their side of the story, and after over a month, it is only Tullow Oil that has responded to our request, Kosmos Energy has not even acknowledged receipt of our email.

In an email response to ghanabusinessnews.com, signed by Tony Djokoto, Senior Legal Counsel for Tullow Ghana Limited, Tullow Oil said, “regarding the EPA accusations, as you know, we have a valid permit from the EPA that governs our current activities and regard ourselves as being compliant with the terms of the permit. We are still in discussions with the relevant Governmental stakeholders and will revert to you once we have an outcome.”

But the EPA says, “as far as we are concerned, no Environmental Impact Assessment report has been submitted to us and they know that and we have made our position known to them.”

Mr. Sampong said, emphatically that the only report the EPA has received from the oil companies is a scoping report.

Meanwhile, civil society orgnisations are also insisting that Tullow Oil and Kosmos Energy have not done comprehensive environmental impact assessments on the projects.

Ghana discovered oil in commercial quantities in 2007 leading to high hopes of economic boom for the country. Concerns were immediately raised by various interest groups about the dangers inherent in the discovery of oil to the country’s social and economic health.

Nigeria and some other African countries who have oil were cited as examples and calls were made for Ghana to get it right from the word go so that the country can avoid the canker associated with oil-rich African countries.

There have been perpetual violent conflicts particularly in the Niger Delta of Nigeria, where the bulk of the country’s oil is drilled.

With these developments, it is hard to tell, if Ghana is not already missing the point before commercial production begins in 2010.