ExxonMobil buys stakes in Ghanaian oil blocks (not)


UPDATE: The Ghanaian government refused to allow the ExxonMobil – Kosmos deal to go through and ExxonMobil was unable to acquire Kosmos’ share of the Jubilee Field. The reasons that President Mills’s government blocked the sale are complicated, but at the center of the dispute are alleged kickbacks that Kosmos made to the previous Ghanaian administration. Kosmos has become one of the operators of the Jubilee Field, a role the company did not originally envisage.

ExxonMobil heads west…

With the discovery of large offshore oil reserves, Ghana is set to be Africa’s next petro-state.  And as of October 12th, ExxonMobil is officially a partner in Ghana’s oil industry.

Not surprisingly, the Ghanaian government has pledged that oil development will benefit the population of the country. Ghana is not Chad, of course, but there are many lessons to be learned from the Chad Oil Project as much of what went wrong in Chad and Cameroon can easily happen in Ghana. A lack of meaningful citizen involvement, insufficient communication with local populations and a premium on speed (the Chad-Cameroon oil pipeline was finished one year ahead of schedule) all reduced the Chad Oil Project’s chances of success from the get-go. A recent report from Oxfam, “Ghana’s big test: Oil’s challenge to democratic development,” notes that citizen participation and communication are also lacking in Ghana’s oil planning.  The report warns of the risks associated with moving ahead too quickly — now that ExxonMobil is involved, this risk may become more significant.

Here’s the news from AP:

COLUMBUS, Ohio — ExxonMobil has bought Kosmos Energy’s stake in oil blocks offshore the West African country of Ghana in an area that contains huge crude discoveries, The Wall Street Journal reported Tuesday.

The deal would be the first by one of the world’s largest oil companies in the area, the newspaper said, citing a person familiar with the matter.

Bankers have put a value on the stake at $3 billion to $4 billion, the Journal said.

Houston-based ExxonMobil declined to comment on the report. A message seeking comment was left with Dallas-based Kosmos Energy.

The country’s Jubilee field plus a separate discovery off Sierra Leone last month have signaled the potential for multibillion barrel finds in an area that stretches through the waters of the Ivory Coast and Liberia.

Ghana’s president said nearly two years ago that offshore oil reserves totaled 3 billion barrels.

Kosmos, a privately held international oil exploration and production company with a focus on West Africa, owns a 30.875 percent stake of the West Cape Three Points Block and 18 percent of the Deepwater Tano Block. Tullow Oil PLC and Anadarko Petroleum Corp. are partners.

Kosmos said in July that the Jubilee Field could potentially hold 650 million barrels to 2 billion barrels of oil equivalent. It said it expected the first oil production to begin in late 2010.

ExxonMobil shares rose $1.08, or 1.6 percent, to $68.66 in trading Tuesday. The shares have traded between $56.51 and $83.64 over the past year.

More details at the WSJ.

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