Business News of 2014-07-16

Ghana Now Begging ExxonMobil to Come

In late 2008 after the Plan of Development (POD) had been signed to lead to first oil in November of 2010, Kosmos Energy was all set to cash out on its investment in Ghana and move on to another prospect in keeping with the company’s normal practice. One of the first multinationals to express interest was the global giant ExxonMobil. However, to their shock and dismay, the new NDC administration vehemently opposed the sale. But now Ghana is actively pursuing ExxonMobil to return.

This is but one of dozens of inexplicable mistakes into which the new NDC government, although counseled by experts, ignored all and adamantly bulldozed its way. For starters, it is common knowledge that the oil and gas corporate crowd follows ExxonMobil. Where the tiger goes, everyone goes with the belief that if the ground is fertile enough for the tiger, it must indeed be a fertile ground for oil and gas activities. This is why many nations go to great lengths to attract ExxonMobil.

ExxonMobil had offered Kosmos Energy $4 billion for its 23.5% stake in the Jubilee Field. In addition, as a sign of goodwill, ExxonMobil offered to purchase the EO Group’s stake of 3.5% and dash it to the Ghana government. By now the total stake owed by Ghana would be 22.25% instead of 18.75%.

But the Tsatsu-led GNPC leaned on the Mills administration to oppose the sale to give GNPC the opportunity to present a competing offer, which took over a year to manifest. By the time GNPC succeeded in getting China National Offshore Oil Corporation (CNOOC) to partner it to present an offer, not even their $5 billion was acceptable because subsequent discoveries had boosted Kosmos’ value to over $6 billion.

Experts believe Kosmos may have still negotiated, but was extremely angered by the treatment it received from the Ghana government that not even the market price of $6.7 billion from any group involving GNPC would have swayed their decision not to sell. Eventually Kosmos has dug in and decided to stay in Ghana for the long haul, and GNPC has all but given up on its pursuit of the Kosmos stake.

Early this year the Ghana government, through its contact in Houston, begun a quiet but aggressive lobbying effort to woo ExxonMobil back to Ghana with a promise not to oppose its purchase of Kosmos. But as one ExxonMobil official said on condition of anonymity, “we will look at Ghana when we become convinced that a certain level of seriousness is prevalent.”

Source: Ghana Oil Watchdog
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