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| All Set to Start Pumping |
12/14/2010 |
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Tomorrow is D-Day
Ghana is set to become Africa''s newest oil producer on Wednesday when one of the world''s biggest recent oil-field discoveries comes online, capping three years of fierce competition for the region''s energy resources.
The 1.5 billion-barrel Jubilee field has drawn interest from Western and Chinese oil multinational corporations as well as from American venture capitalists. At least $4 billion has been invested in the offshore field by various partners.
The field is operated by the U.K.''s Tullow Oil PLC, which has a 34.7% stake. Dallas-based Kosmos Energy LLC—which is backed by private-equity firms Blackstone Group LP and Warburg Pincus LLC—and Houston-based Anadarko Petroleum Corp. own 23.49% apiece. State-run Ghana National Petroleum Corp. is the other major shareholder, with 13.75%.
The light, easy-to-refine oil is expected to start flowing at an initial clip of 55,000 barrels a day, following a ceremony Wednesday attended by Ghanaian President John Atta Mills.
Stewart Williams, an oil analyst at Wood Mackenzie, an energy-research firm, says interest has been keen because of the oil''s quality and the field''s proximity to European and U.S. markets. Oil companies also could use investment in Jubilee as a foothold to explore elsewhere in the Gulf of Guinea, he says. "Ghana is a game changer," Mr. Williams says.
Development of the field hasn''t been entirely smooth, though.
Kosmos last year decided to sell its stake in the Jubilee field and eventually reached a $4 billion deal with U.S. oil giant Exxon Mobil Corp. But the Ghanaian government objected, saying it hadn''t been adequately informed about the negotiations. Kosmos denied wrongdoing, and Exxon walked away from the deal.
Ghana National Petroleum also sought to buy the Kosmos stake. The state-run oil company says it signed an agreement in June with Chinese state-run oil company Cnooc Ltd. to make a joint $5 billion offer for Kosmos''s stake. Kosmos says it is now committed to staying in Ghana, however.
Spokesmen for Kosmos and Exxon declined to comment Tuesday. A spokesperson for Ghana National Petroleum couldn''t be reached.
The Jubilee discovery led to several more oil-field finds in Ghana and neighbors along the Gulf of Guinea. Tullow in September said it discovered a 1.4 billion-barrel field, called Owo-Tweneboa.
Although Ghana''s estimated three to five billion barrels of reserves are about a third those of African oil power Nigeria, Ghana''s political stability and its potential for economic growth are attractive to foreign investors.
Oil production is set to deliver a sizeable economic dividend to Ghana, already a major producer of cocoa and gold. Oil is expected initially to bring in about $400 million annually, rising eventually to $1 billion a year. And the government has forecast that oil will help push economic growth to as much as 12% next year from around 5% this year.
Some watchdog groups have raised red flags, however.
Washington-based Oxfam America has expressed concern that the Ghanaian government hasn''t opened up oil contracts to public scrutiny. The nonprofit also has said that the nation needs an industry regulator and an oil-revenue management law. "Ghana''s challenge as an ''oil hot spot'' will be to manage this industry with transparent and accountable policies and practices so the people of Ghana can truly benefit over the long term," Ian Gary, an Oxfam America policy manager, said in a prepared statement.
The government has said it is working hard to put regulatory measures and an oil-revenue bill in place.
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