Ghana Wants More Control Over Oil Production
Drew Hinshaw |
Dakar 25 August 2010
With Ghana’s first major offshore oil field on track to start pumping oil later this year, the country’s state-owned oil company wants to be a bigger part of that drilling.
Ghana’s Jubilee field is thought to hold nearly 325 billion liters of light crude. It was discovered by the American oil exploration company Kosmos in 2006. And the company still controls nearly one-quarter of the stake.
But Kosmos has been trying to sell that stake to ExxonMobil. Ghana’s government opposes that proposed $4 billion sale because it said the deal was negotiated without its consultation.
So last week, Kosmos called off the Exxon sale.
Opportunity for GNPC
Ghana’s Deputy Energy Minister Emmanuel Armah Buah says that decision is an opportunity for Ghana’s National Petroleum Company to submit its own bid.
“I think as a country, GNPC should represent us, as a responsibility to strategize to make sure they increase the stake of the government,” he said. “That is exactly what has been going on. But this is not going to be done by following any backdoor processes.”
Buah says Ghana welcomes foreign partnerships, but any agreement must be advantageous for Ghana as well.
“What we are saying here is that if Kosmos makes an independent decision to sell their shares, the GNPC has a right to put an offer on the table at the fair market value,” he said. “And I think that that is simply fair, I mean, unless the argument is that we in Ghana do not deserve to have enough oil of our own.”
High Demand for Africa’s Crude
Analysts say the inability of ExxonMobil, the world’s wealthiest oil company, to buy into Ghana’s oilfields, speaks to high demand for Africa’s crude.
African Analyst Alex Vines says the emergence of new national oil companies from China, Korea, and India gives African governments newfound strength to reject international oil companies, or IOCs.
“I think this is a trend that we are seeing,” he said. “African state oil companies are in a much stronger position. The time when you thought a Western IOC could call the shots are long gone.”
In Angola, he notes, the government, twice blocked attempts by Shell and Marathon to sell oil-drilling licenses. In Uganda, the government stymied a British oil explorer’s attempts to sell oilfields over a tax dispute.
In Ghana, Energy Analyst Keith Myers says oil conglomerates accustomed to making deals with more autocratic regimes may have to fine tune their operation to Ghana’s sensitive politics.
“When the authorities see large sums of money changing hands and large profits being made before revenues are generated, its quite hard politically for them to explain that, how profits of three billion plus have been made on Ghanaian assets, but not a cent of state revenue has been made,” he said.
Transfering Assets Could Become Easier
Myers says once Ghana’s oil starts flowing, Kosmos may find it easier to sell its stake.
“The feeling is that once the fields are producing and generating tax revenue for Ghana, the heat will maybe die down and make it easier to transfer the assets,” he said.
Analyst Vines says neither Kosmos nor Ghana’s government should rush to transfer control of the oilfield. In time, he says, more compelling offers may validate Ghana’s decision to block the Exxon bid.
“There is obviously politics involved in this, some of it clearly honorable, some of it we will have to wait and see,” he said. “But the judgment on this decision can not be made in the short term. We are going to have to wait and see in several years time whether this was wise or not.”
Vines says China’s National Offshore Oil Company and BP are both expected to propose partnerships with the Ghana National Petroleum Company.