In 2007, in the deep waters off the coast of Ghana, a small U.S.-based oil exploration company named Kosmos Energy hit the mother lode - a vast reservoir of oil now known as the Jubilee Field. The extraordinary find was among West Africa's largest, promising to make a fortune for Ghana and Kosmos, and flaming the possibility of turning the infamous Gold Coast into a multimillion-barrel spigot of black gold. But with the first oil production scheduled for later this year, Ghana and Kosmos are bitterly fighting over who ultimately will control the field - where up to 1.8 billion barrels worth of oil is said to be contained and with the possibility of more discoveries. The once-promising partnership is mired in a string of charges and countercharges. Beyond the deal itself, the question remains whether Africa's latest rising star - which won the blessing of both the Obama and Bush administrations - can avoid the corruption, cronyism and bad governance that has entrapped its neighbors.
Ghana wants to block the estimated $4 billion purchase by ExxonMobil, the world's largest private oil company, of Kosmos Energy's stake in Jubilee Field. Government officials are demanding it be sold to Ghana's state-run oil company, the Ghana National Petroleum Corp. (GNPC). Some observers say Ghana is trying to stop the ExxonMobil deal so the GNPC can buy the Kosmos stake at a reduced price and resell it to another company at a profit. A number of suitors also have shown an interest in acquiring the stake, including the Korea National Oil Corp. (KNOC), the China National Offshore Oil Corp. (CNOOC), and India's Oil and Natural Gas Corp. (ONGC).
Ghanaian President John Atta Mills' administration, according to critics, has targeted foreign companies that invested heavily in Ghana under the prior administration. Mr. Atta Mills, of the opposition National Democratic Congress (NDC) party, was narrowly elected president in a runoff election. The NDC also won a majority in parliament. Since taking office in January 2009, critics said, the Atta Mills government repeatedly has sought to interfere with Kosmos' business, adding that it recently revoked a petroleum license for a Norwegian firm. Aker ASA recently was told by Ghanaian officials that its offshore exploration and development license - negotiated with the prior Ghanaian administration - was invalid.
Ghanaian officials maintain that Kosmos violated its contracts and the GNPC has the exclusive right to buy Kosmos' Jubilee stake - all of which Kosmos denies. J. Peter Pham, an Africa scholar at the New York-based National Committee on American Foreign Policy, said Ghana's recent actions toward foreign investors is "very worrisome," echoing what several other businessmen and scholars have said. He described the Kosmos case as "the most egregious," but not the only one.
"Ghana is behaving like it has the resource curse before it has even gotten any oil," said Mr. Pham, referring to a phenomenon that for some counties has meant that having a lot of natural resources has led to bad governance and left most people worse off.
Author: Chuck Neubauer
