Mar(k): Travel, Hiking, and "Doing Good"

musings on our life of travel and volunteering

Ghana and its Black Gold

with one comment

Many of the readers of this blog would know that between us, we have spent in excess of 50 years (!!!) working in the petroleum industry. So you can imagine that we take more than a passing interest in the machinations of the Black Gold machine in Ghana!

 

Offshore Location of the Jubilee Field

For those who may not be aware, oil was discovered offshore Ghana in 2007, and the country’s first production is due to commence later this year. The Jubilee field is the most significant discovery in West Africa in years and hardly a day goes by when the local media does not have a story about some aspect or another of Jubilee’s impending development. In fact, it is quickly developing into a soap opera, complete with threads of hope, despair and deception……..There are basically three stories running:

 

<!–[if !supportLists]–>·<!–[endif]–>the original award of the offshore licences,

<!–[if !supportLists]–>·<!–[endif]–>the proposed sale of Kosmos Energy’s share of Jubilee and

<!–[if !supportLists]–>·<!–[endif]–>how Ghana will manage the oil revenue.

 

In this blog we’ll start with the first of these……… The story begins in 2002 with the formation of the E&O group, a company founded by two expatriate Ghanaians: Mr E (formerly a medical doctor in the US, but more recently a Ghanaian ambassador to the US (more of that later) and Mr O (a former Shell executive in Houston). The E&O group interested Kosmos Energy, a private company in Houston, in the acreage in which the Jubilee field was subsequently discovered. Kosmos took an 87.5% share, E&O 3.5% and the Ghanaian National Petroleum Company (GNPC) 10%. Kosmos also agreed to carry E&O (i.e. pay all their expenses), gave them $250,000 and appointed Mr O as their Ghanaian representative on a very handsome salary. At the time, the deal was reported to have been approved by Ghana officials in “record time”. Unfortunately, therein lays the problem…….. Both Mr E and Mr O were reportedly very close to President Kufor (hence the ambassadorial role) and his Energy Minister and it is alleged that favours were done…..

Rig being used to drill the wells in the Jubilee Field - Offshore Ghana

 

None of this may have led anywhere but Kosmos subsequently sold some of their interest to Tullow Oil and Anadarko, and while doing due diligence, Anardarko smelt a rat and notified US officials (as obliged under law) of their concerns….This also may have led nowhere, but and this is a BIG but, there has been a change of government in Ghana since the oil was discovered and the new government, on hearing about Anardarko’s concerns, jumped into the fray with relish. There have been various hearings, Mr O has been sacked by Kosmos, as has one of their senior executives, and accusations have been flying thick and fast……culminating in leaked documents from the Attorney General’s department indicating that E& O are about to be charged with 25 offences ranging from defrauding the Ghanaian people of $200 million (which seemingly equates to their 3.5% share of the Jubilee block), forging the signatures on company documents and failing to hold annual general meetings! In other words, they are throwing the book at them! The bottom line is that the current government believes that the deal originally struck was far too generous to the E&O group and Kosmos.

 

Now, if you are on the other side of politics, the story is somewhat different. To quote one report: “The vindictive and devilish persecution of the EO group orchestrated by the (current government)… is not only an assault on Ghana’s entrepreneurial spirit but also a slap in the face of Ghanaians in the Diaspora.”

 

Jubilee's Production Profile - a la Tullow

Stay tuned for the next instalment when Mr E & Mr O group have their day in court…..

Here it is!  Click here for a more up to date view of Ghana’s Black Gold (updated July 2011)….

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Written by Mar(k)

February 17, 2010 at 3:25 pm

One Response

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  1. A short plateau and an exponential decline. Mr. O must have used his Shell Production Handbook for this forecast; to smooth to have come out of a full field reservoir simulator. Are they looking for an RE there?
    Hope that the oil revenue will be of help to Ghana. 120MBBL/D for 5 years is good money. That will lots of tomatoes, biscuits, pasta, diet coke, etc!

    Petra and I had dinner with Rob Hogarth last Thursday evening. Philip and I are hoping to help him with his thermal simulation; for power generation. He told me he did visit your blog site once in a while. I am in Brisbane consulting for Santos – Coal Bed Methane. They told (joking of course) me that they may deduct Jurgen’s Santos Scholarship from my consulting fee.

    Tom

    February 19, 2010 at 10:06 pm


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